MM52 - MSTR Showdown

Today I want to talk about the most asked question in Kilo Club right now. None of this is financial advice. So let me get started on MicroStrategy.

So many of you have been asking me for months. You want to get into MicroStrategy. You want to buy modified synthetic longs, you want to buy stock. And the whole time I have kept emphasizing one thing. Patience. What surprised me was how many of you were asking me when we were up at the highs. That is not when you enter a stock. Why? We had resistance that was very clearly defined, and we had the 200 moving average. Both of those were going to be major obstacles for the stock to overcome. So I said the same thing I always say. Let us wait for support.

So here we are. The stock has melted down. We have fallen through what should have been initial support, right around that 100 level. So why am I starting to talk about it today? Because my very first decision in this most recent drop was to adjust my modified synthetic longs. They are the low hanging fruit. They are the easiest trade to maneuver, and they also pay me a lot of money while I do it.

Here is what that looks like. When I roll a put down for a 10 dollar increase in margin, I receive a 5, 6, or 7 dollar credit. I take that premium and use it to reduce my call and drop it down by 10 dollars. I still walk away with a net credit for doing it. Then when the stock bounces back, I get paid roughly 3 to 1 on that money. Give or take 20 percent, but close enough. Good enough. This is the same repair logic I teach in Course 302, where I fund rolling my call down with the credit from rolling my put down. The only legs I move are the longs.

And when there is no modified synthetic long to adjust? It is simple. I resort back to the most basic way of entering a trade. I dollar cost average. So my first lever was lowering the legs on my MSLs. But then I went to put on a brand new trade, and that is where it got interesting.