Okay before we head in this week a few notes for the applied level tomorrow is week one for buy side modeling Here we're going to use apartment REITs specifically out of Canada buy side Modeling includes first of all stock picking then a deeper dive and we'll see how that is done there is a difference between sell side modeling and buy side modeling the sell side usually has a small universe buy side has to go through hundreds of stocks right how do we get that done we'll use canadian apartment REITs to get that done or apartment REITs in canada i don't want to say canadian apartment REITs because that's a name of a REIT also tomorrow in the applied options folder in the volatility folder i will put up a video on gamma trading on micro strategy shares which is the game that is being played by the convertible bondholders you should know how they play the game you can play the game too i'll show you how although it's not for the faint of heart january 15th the applied level is splitting into two sections applied analysis and applied asset management 425 each this begins january 15th if you have cfa level one standing you get a hundred dollars off each one If you are a markmellor.com subscriber, you get another 50 off. So you're down to 275 on each one. For each of these, I will most likely extend this discount, the $100 discount, if you have any FRM standing or any CAIA standing.
We do have an FRM subscription on our site. This may also apply to you. I don't know. know but I probably will extend the hundred dollar discount if you have any standing in frm or CAIA starting January 15 these are one-year subscriptions so from January 15 to January 15 to the next year you get access to the entire content plus any new content I put up as of this date you have access forever except you the new content would no longer get added but whatever you have as of this date you would have If you want new content after that, it's a $25 a month recurring fee after that to continually get new content. The January 14th will be the end of the applied level at $440 or $320.
$320 is the $100, sorry, the $120 off if you have CFA level standing. All subs up to January 15th, you will have lifetime access, no further fees, which means you'll always get new content. continue to get the new stuff forever and ever it will never end uh and if you um are in before the prices change you're good none of this applies to you after that then yes this is the the new series because um a significant amount of value has been added to the applied level at this point that this price just doesn't reflect uh doesn't reflect the sheer amount of value that's in there now okay uh let's head in last Last week I talked about microstrategy. I'm going to continue on this week.
We're going to go into detail about what the convertible bonds are doing. Some of the comments left under the video last week. And just as an aside, the comments were interesting.
If you watched the evolution of the comments throughout the week, I put the video up on Monday. And I mostly got... scoffs you know ha ha ha you keep making comments and we'll keep making money and nobody was really rude just sort of laughing at you because they thought you didn't understand what was going on and you're missing the boat and but by the end of the week the comments had turned nasty and angry and a lot of name calling I had to block one person who just was just right angry I think they were Irish just by the uh the the words that they used but i had to block one person because just they were just angry you don't get that angry without losing money and that by the end of the week people were losing money on this and they were just angry at anybody who wasn't saying things they already agreed with any anybody who was critical of this uh they just got angry with like just sheer sheer rage sometimes it was interesting to see the uh the the change in tone throughout the week as microstrategy took a big dump last week week.
But let's understand convertible arbitrage and what the bondholders are doing. When we understand what the bondholders are doing, we understand what the bondholders are doing. are doing will understand the game a lot better. And you will see that if you are a Delta trader, Delta trader... meaning that you buy shares and you want the price to go up.
See that if you're a Delta trader, you're playing a random game so that you will, over the next little while, I don't know how long this will last, you will make money, then you will give it back, and you will make money, and you will give it back, and you will make money, and maybe you'll blow up, maybe you won't blow up, but you won't keep a lot of the money you make because you... you won't understand the game that's being played. You're thinking that you're playing basketball, but you're playing basketball on a soccer field. So every time you pick up the ball, the whistle blows, you get a penalty and you can't understand why because that's what you're supposed to do in basketball. But again, you're playing the wrong game.
Let's deal with convertible ARB. It's a type of capital structure ARB. And what it relies on is in the capital structure, you have senior and junior securities, usually involved in the game.
involves a long position in a senior security and a short position in a junior security. What makes the convertible bond attractive is it has a call option in here so you can delta hedge the junior security so that you're long a bond and you are delta neutral. You're delta neutral but you have positive gamma which is what you're doing, you're gamma trading.
The biggest reason for the convertible bondholders being here is to take advantage of volatility in fact with convertible debt this is the most common reason for convertible debt because with convertible debt you're getting almost 0% interest usually very low coupon the last convertible debt Microsoft Microsoft MicroStrategy sold had 0% coupon only because they have such high volatility so you do have a conversion factor in here that converts to to a number of shares. The belief is that that means something. And some of the comments last week were, why would large institutions be interested in getting exposure to microstrategy shares this way if they didn't believe in it? Well, they don't care about the conversion feature. The conversion is more of a penalty.
They would rather it not convert while volatility is high. Most convertible bonds have a clause. called a forced conversion, meaning that if the shares are a certain percentage above the conversion price for a certain number of days, the company can call the bonds at par, which forces the bondholder to convert because they would lose money.
And once they convert, it's like, oh, well, it's over. They'd be very willing to do more convertible bonds to get back into the volatility game. So the conversion price is...
is not important. What is important is the delta on the call. What initial delta do you want on the call?
And the higher the volatility, the higher the conversion price can be for a given delta. So they say, well, let's start with a delta of 0.4 on the call. That will set the conversion price, right? Because this is what they're interested in here, not the conversion price. The conversion price actually is more of a penalty.
They really don't want the shares. It's to take advantage of volatility. Another motivation is to take advantage of market inefficiency.
That is a mispricing between securities in the same company. It's hard to say that you have a mispricing in securities in the same company. What you can say is you have a mispricing between the equity and Bitcoin, that the value of the equity being 300 and at one point last week over 400 times the price of Bitcoin. You could say, well, that's. an inefficiency but that's a cross asset arb that's not a capital structure arb that would be a long bitcoin uh short micro strategy trade uh and you would short it uh on a volatility relative basis so if the volatility of bitcoin i'm gonna make up numbers okay i'm just making it up out of thin air to to to give my example so if you're gonna leave a comment saying oh that's not the volatility of bitcoin i'm just making numbers up out of thin air here let's say the volatility of bitcoin was 50 Let's say the volatility of MicroStrategy was 150%.
You would go long $30 of Bitcoin and short $10 of MicroStrategy stock. You would do it such that you were volatility, as volatility neutral in your long and short positions as possible. So that is an ARB trade from Bitcoin to MicroStrategy shares. For market inefficiency in a capital structure, The convertible bond would have to be mispriced based on where the stock is and where the conversion feature is. That's really not a motivation here.
This is it right here. Take advantage of volatility. What provides the volatility for MicroStrategy shares are a combination of two things.
Number one is that you do have shares that are trading at a ridiculous premium to its net asset value. And you have a story that you can feed potential traders of the stock that they buy into that story. And you convince them that they're playing basketball.
Even though you know this is a soccer field, you can... them that they're playing basketball. We'll talk more about that on the next screen.
Let's look at how convertible bond holders make money. If they don't really care about the stock price and they don't care about the conversion factor and they don't care about the bitcoin which they don't they really don't they only care about the bitcoin in as much as it provides credit protection um how do they make money uh these are the last bonds they issued were zero percent convertible uh which means there is no coupon if if the there was a coupon if anything greater than zero percent they do they do make the coupon albeit it would be low they would make the coupon the lower the volatility of the stock the higher the coupon would be because that's what they want they're not interested in the conversion in fact they'd rather it not convert for as long as possible they're interested in the volatility so if micro strategy can deliver very high volatility they can get to zero percent other companies that have convertible debt have sometimes you'll see a 0.5 percent coupon maybe a one percent coupon 0.625 percent the lower the volatility the higher the coupon would be so if you can deliver very high volatility you can get zero percent money uh if there is any premium uh the bond holders are going to get the coupon and any pull to par the pull to par can be positive or negative that's if the price at which they issued the bond does not equal uh its face value they would get something there this is the big money here with the volatility yield being the really big one this is nice right here the short rebate so to say there is no coupon they're really There kind of is a coupon. So let's say that the convertible bond was issued and they negotiated a delta of 0.4 on the call, on the embedded call.
Whatever Black Scholes Merton would spit out, you'd put in whatever the implied volatility is, the risk-free rate. It will spit out a strike price. There's your conversion. There's the conversion price on that strike to equal the delta. that they want.
For every $1,000 in bonds, they'll be short $400 in MicroStrategy shares. That $400 earns the overnight rate. So they are getting a coupon on the proceeds of the short sale because they are long 0.4 delta and now they're short 0.4 delta. So their delta equals zero on this one.
But their gamma is greater than zero. That's what they want is. the gamma greater than zero, but the delta equal to zero. And, of course, they are long a bond. That is collateralized by the Bitcoin. Senior unsecured, yes, but senior to equity, which means they're first in line to all the assets.
All that Bitcoin belongs to them. And I'll talk about enhanced credit features that MicroStrategy provides that is being sold to you as a feature. But it's not a feature for you. It's a feature for the bond.
So the short proceeds will get the overnight rate, less any dividends that are paid. Most often the dividends are zero. Companies that issue convertible debt usually don't have dividends, so there usually are no dividends. So you would have a borrow fee, whatever the fee is to borrow the shares. The fee to borrow the shares would be very high if the float was low.
The fee to borrow the shares would be lower if the float was low. were higher so how you get a very low fee on borrowing the shares is I don't know split your stock ten times and and you'll have a whole bunch of shares out there and it will the size of the float the larger the float the more widely it's held the more liquidity in it the lower the borough the borough rate would be so it would be helpful if the company had a large float if it doesn't it can always do a ten times a ten a ten for one reverse split I wonder if that sounds familiar to anybody. get this then they get a volatility yield this is the big one because the call has convexity um i drew this out wrong let me let me redraw this it's the right shape i just drew it in the wrong place anybody from level three who has been through the first two readings of the fixed income readings for immunization will understand the role of convexity in a portfolio uh let's do whoops let me try to draw this out a little bit better here there we go there is convexity um And let's say that this is the current share price right now. And we'll just draw a vertical here.
There's the share price. If the share price doesn't move, convexity is actually a bad thing because you're paying for convexity. You'll underperform.
When you have convexity, you want things to move. This is the benefit of having convexity in a bond portfolio if you're immunizing a stream of liabilities. And you expect...
volatility to increase, what would you do to your bond portfolio? For the same duration, you would attempt to increase the convexity of that portfolio so that it would outperform whether rates went up or whether yields went up or whether yields went down. You would outperform the benchmark, the benchmark being the liabilities, right?
Same thing applies here. The convertible bondholder is long the bond plus a call. The bond plus call will increase in value more than the short. position if you are originally delta neutral and the price really went up the bond plus the call option would outperform the short position and you make money if it really went down the bond plus the call will decrease by less than the short position you will make money now you understand what the convertible bond holder likes about micro strategy is if you want a gamma trade you need volatility the more volatility the more profitable the trade becomes.
You need volatility. You don't care if the price goes up. You don't care if the price goes down.
The convertible bond is the mechanism by which you can set up the trade. Without the convertible bond, you can still do it with call options in the market. It's just a lot more work to get done.
The bond gives you all the leverage that you want. So if I got to pay a billion dollars... for the bond and I get 400 million on the short sale I'm really only out 600 million at that point am I not right and if the price of the shares go up the delta of the call will go up I will short more so then at some point I'll be short 500 million I'm really only out 500 million at that point so you can see that I'm getting a little bit of leverage in there as well so this is this is the game being played okay so let's get to what this would mean for the shareholder here is a replication of what I had on the last screen and yeah it should look like this if we're going to draw it out right and this is the price increasing this is the price decreasing and the convertible bondholders are gamma trading Delta trading means that you're trading the change in the share price in it's a directional trade either you have positive Delta and you want the price to go up or you have negative Delta and you want the price to go down gamma trading is you just want the Delta to change you don't really care if it goes up or goes down you're agnostic about the price move what you want is a price move and a significant price move the other thing the convertible bonds want because if they don't convert the Face value has to be paid back. At maturity, the bondholders will go, okay, well, give us our money back now. You're going to need some kind of credit protection because at the heart of microstrategy is a money-losing software business.
It doesn't generate the money to pay back these bonds. So what is there to pay it back? It's the Bitcoin.
You would have to sell the Bitcoin, but what happens if the price of Bitcoin drops? Remember now, I gave you a billion dollars and you went and bought... bought Bitcoin, but you're not buying a billion dollars of Bitcoin because there's a leak here, right?
Usually about 1% in underwriting fees. You got about 1%. So you're not really buying 100%. You're only buying 99% of the value in Bitcoin.
But what if Bitcoin drops 10%? I'm kind of in trouble. So I would like you to over collateralize if you can. Is there any way that you can double the amount? on a bitcoin that you have well okay what we can do is issue equity at the same time uh that we're in the same quantity we're issuing convertible debt uh is micro strategy doing something like that uh yeah they Their 42 plan is 21 billion in convertible bonds and 21 billion in equity and the this is to collateralize to to offer credit protection for the convertible bonds Yes, they're unsecured.
That's not the word. The word is senior. They're senior to equity, which is junior. So all of that Bitcoin belongs to the bondholders. So if this all falls apart, all that Bitcoin belongs to them.
They sell it off. If there's anything left, you guys can get it. So let's look at how this works out.
Let's start with a delta neutral position. You bought $1 billion of convertible bonds from MicroStrategy. And you have...
a call and let's say the Delta of the call is 0.4 and based on the volatility it sets the conversion price or the strike price but you have 0.4 you will immediately a short 400 million of micro strategy stock because you are basically long 400 million on the call your Delta neutral but you have gamma in the in the option but the short position has no gamma right it has a consistent delta the delta will not change but the delta here will change by the rate gamma measures the rate of change in delta so you are delta neutral to begin with if the price then goes up the delta on this will go up you'll sell more shares at higher prices so you will outperform and you will the value of your portfolio will be higher that day yay we made money let's get delta neutral again so you will short more shares but no Notice you're shorting shares on the way up. Watch what happens when the price goes down. We'll just jump to that now. If the price drops, the delta will drop.
You will cover shares at lower prices. So you'll outperform on the fact that you have convexity, and you'll be covering the shares that you shorted at the higher price at the lower price. Thank you very much.
If the price of MicroStrategy is greater than the conversion rate, price the Delta on the call will start to approach one as the price keeps going up and up and up and up and up and up the Delta on that call will start approaching one and since you're selling more shares on the way up the short position will equal the conversion position so that when the shares are delivered to the bondholders it basically just covers a short position they end up with zero position so the belief that the bondholders are in this because they want the shares No, they do not. They do not want the shares. They specifically do not want the shares.
Once the shares are converted and assigned to them, it basically just covers their short position. So there is a built-in cover. They're not interested in the shares. The new shares simply just dilute the existing shareholders. The bondholders don't suffer anything on this.
The existing shareholders suffer all the downside. You cannot have a situation where you have an asset that does not... that doesn't create an income stream but somehow bondholders make money shareholders make money management everybody makes money from something that doesn't produce an income stream this is a zero-sum game which means for somebody to make money here somebody has to lose money that's the shareholders if the price of the micro strategy shares are below the conversion price and they keep dropping below the conversion price the delta will approach zero the convertible bond becomes a straight bond which is senior to the equity, which means it has a first claim on all the Bitcoin of which the equity bought half the Bitcoin. Thank you very much for the collateral protection.
It'll approach the straight bond. The question I have, and I don't have an answer for this, is for convertible bond traders, sometimes they have a floor under which they won't hedge. By that I mean they made... decide that their floor on hedging is 0.3, that if the delta of the call drops to 0.2 and 0.1, they will not change from 0.3. And that is another form of credit protection.
What that is saying is that if there's going to be a default on the bond, the short position provided at least 30% downside. So if this whole thing collapses and the shares go to zero and all the Bitcoin go to the bondholders, the bondholders at least on their short position. and have 30% of their face value covered.
They may have a floor. I don't know if anybody knows how they would be trading that. Go ahead and leave a comment.
The typical... amount is 0.5. Typically, you wouldn't hedge below 0.5, but this is a unique situation with very high volatility. I don't know if they would even play with the floor or not.
Being that they're issuing equity to add Bitcoin to the balance sheet so that there's two times the amount of Bitcoin versus the value of the debt, Bitcoin would have to fall by 50% before it threatens the bondholders. That might be enough collateral in there without having to worry about this, but there still might be a floor to the downside. I don't know. That would be interesting if anyone...
knew what that was. Here's the best outcome for everybody involved. When I say for everybody involved, it's the best outcome for the shareholders as well. If you want to keep this game alive is you have big price swings.
You don't really care what direction. The market price is not critical. Volatility is this will keep the convertible bondholders in the game.
So I'm just going to erase some stuff so I can draw out a few charts for you. So this. a price doing this is okay as long as it does this.
A price doing this is okay as long as it does this. And a price doing this is okay as long as it does this. What we don't want to see is volatility start to do this.
And even if the price is going up like this, but volatility disappears like this, the game is over. Because the output, which is volatility, is gone. It would be like me still showing up to your restaurant.
restaurant and you saying, oh, we're out of food. We don't serve food anymore, but come on in and pay and just pay an imaginary bill. It's like, well, I'm here for the food. If you don't have the food, what would I come to this place for?
The convertible bond traders are saying, we're here for the volatility. If you don't have the volatility, we're not really interested. Just give us our money back.
Well, now that's a problem. Because if the volatility disappears and you got to get the money back, here's what's going to happen to the share price. It is going to drop very quickly uh so it is not what's keeping the share price up is the volatility not not not this magic bitcoin yield that you're being sold there that that's just that's just a story that's being told to you um and uh if we listen to michael saylor and what he what he tells you he's filling you up with a heavy dose of misinformation you see nbc interview he says we're making we're basically making $500 million a day. That is Enron style math.
Okay. So what Enron did was it had these SPVs and then it would book all future profit, whether it was real or not based on their assumptions, they would find the present value of all those future profits and call it profit today. If they wanted more profits, they changed their assumptions.
So what, what is a better statement that he made last week is the same. sale of the convertible debt that we did opens the door to the possibility that we may end up with 500 million more of Bitcoin than it costs us in shares if we'd sold shares today. That relies on those shares, on those bonds being converted into shares. In other words, they didn't make 500 million that day. They opened up the possibility that they may get that at some point in the future.
future or may not. They didn't make it that day. To say that you did is to mark, to market all of your gains today without the market going in, without knowing what direction the market's going to go in. That is some Enron style math that's involved there. But he did say one thing that's true.
He said, we are selling $1 bills for $3. Now, if you're listening to that, you say, that is fantastic. What a great business to be in until you realize that they're selling these three of these. These $1 bills for $3 to you.
They're issuing equity at 300% premium to Bitcoin. They're selling $1 bills for $3. That is beautiful for the bondholders. What great collateral.
Thank you. Thank you, shareholders. You just keep providing us this collateral.
The larger and more frequent the move, the greater the gain is for the convertible bondholders. And if you can keep this alive, let's say you keep this alive. and the price is down here way below the conversion and you're at expiration the convertible bondholders will gladly roll over and say we'll go another four years thank you very much they'll gladly roll over you keep doing what you're doing you keep providing the volatility Um, if you're Delta trading, you're going to get random results. Why? Because you need this thing to move up and down and up and down and you make money and you give it back and you make money and you give it back and you make it and you give it back and all you blew up.
You're playing the wrong game. You got to get lucky. If you're playing basketball on a soccer field, you got to get lucky and hope the ball is never passed to you because as soon as it touches your hands, that's a soccer game penalty. Uh, the game here is Gamma Trading. the bondholders will be as long as this is here they get consistent results so you gotta get smart about the game that's being played so let's look at the arm the business model for micro strategy let's look at their output first what are they selling other selling volatility and they need some kind of operational asset how you producing this output that you're selling selling because you have to have a way to produce this output the operational asset is the micro strategy shareholder and there is a process in which you misinform the micro strategy shareholder and you keep them in the game so that they will continue to produce the volatility you need to sell to the convertible bondholders because that's the game you are an operational asset you are the the input.
You are a depreciating asset. Like any operational asset, there's going to be an estimated useful life, and there's going to be some sort of depreciation that you apply to that estimated useful life, and you'll have a salvage value of whatever Bitcoin is left over after the convertible bondholders get all of their money back. So the question is, well, what is the useful life of the assets?
That's the whole thing about these volatility games is you don't know you have implied volatility now of 213% so let's say that it drops to a hundred percent and let's say the price goes up and you are short shares right now well you're going to lose on the short position but you're gonna gain on the call however implied volatility is dropping so your convexity is going to start to do this So if this is your short position, if implied volatility falls too much, now the game is over. Now you're losing. Now you're going to lose. And if that becomes the case, because everybody knows that's the game. If that's the case, these shorts are going to pile into this very fast because the second type of arbitrage is going to show up, which is long Bitcoin and short micro strategy shares down to its net asset.
asset value and even lower because you're going to have to pay back those bonds with all that Bitcoin you bought, which means the residual for the shareholders is going to be rather tiny. So what should you be looking at to determine how safe this is to play? You should be looking at the volatility.
If volatility on this starts dropping, you're in trouble. How do you keep volatility alive? Well, if the price is moving in one direction, can we get a short report in on this and can we get some negative stories maybe wall street journal would be good maybe one of the convertible bond holders may call a contact you know blackrock calls wall street journal a contact say have you looked at how crazy the math is on this micro strategy thing i think there's a story here and of course that should send it right back down then of course you have management that can then uh you know make uh you know go on cnbc go on bloomberg go on stage somewhere and talk about the bitcoin yield we're making 500 million a day we're selling $1 bills for $3 you know these institutions want access to us all somewhat truths but a heavy dose of misinformation in there and some Enron style math and hopefully you can get the price to go back up but you can't have a go in one direction which means hopefully we can get another short report in here it would be help helpful you know on the next time if we had somebody that issued a long report BTI G does that for MicroStrategy.
It continues to be bullish, which makes no sense when you look at paying 300% of NAV, even if you have 30%. I grant you, even if you had 30% leverage, I'm just, we won't even question it because they do. all convert and the bondholders are short so it's questionable whether there is leverage to begin with but let's say 30% leverage you would have a premium of 30% over Bitcoin, not 300% and 400%. Nobody who is an analyst would ever suggest that that makes a lot of sense.
So that is part of your production process. You are not shareholders. You are operational assets.
You are depreciable assets. You are assets from which we will extract value for our output. for our true customers, which are the convertible bonds.
The narrow window in which this works out is the price keeps going up on very high volatility so that the inefficient stock price becomes even more inefficient. You need to be 300% of now, 400%, 500%, 600%. And all of these people oblivious, oblivious to the fact and completely drinking. the Kool-Aid and sold on the idea that this is going to be incredible. This is going to be a $20 trillion company and it has to keep going that way or it all falls apart.
And when that volatility disappears, you all disappear. This whole thing disappears. This is a one-way bet. A one-way bet. It must work out.
It's a one-way bet. Everything else is absolute destruction. If you... want to entertain yourself a little bit more, I want you to go to the SEC, go to Edgar, and look up MicroStrategy, and just look for Form 4. Form 4 is insider buying and selling. MicroStrategy has a lot of share-based compensation.
So not only does it sell equity to buy Bitcoin to back up what the convertible bondholders would have as assets, it prints shares for itself at a very rapid pace. So there's another leak that you have as well. So if you look at form 4 you will see an A followed by a bunch of D's.
A is acquired, D is disposed. So the acquired is your share based compensation is vested. You have now 50,000 shares.
Sell, sell, sell, sell, sell. It's not a matter of thank you. Sell, sell, sell, sell, sell.
And the next one, call up the next one. Same thing. Sell, sell, sell, sell, sell.
Next one, sell, sell, sell, sell, sell. Look at the sheer number of form fours. Why? Because they are selling $1 bills for $3. Why wouldn't they do it?
If they really believed in the Delta story. story they wouldn't be sellers but they know this is a gamma story not a delta story so yeah they're more than willing to sell you their shares at a 300 premium to bitcoin you give me three bucks and you'll get a dollar of bitcoin and i'll go buy three dollars of bitcoin thank you very much you're getting fleeced in so many ways because you think you're playing basketball you can't see it once you see that this is a soccer field you'll stop playing the way you're playing now I can show you how to trade how to gamma trade MicroStrategy without the bonds you don't need the bonds MicroStrategy has options you can you can buy calls yourself and you can short shares yourself and you can trade the selection of what strike to buy and what date to expiration requires that you understand theta decay which if you don't understand and theta decay don't even try to do this you will get murdered if you don't understand uh how volatility stays alive don't even try to do this if you have a small account if you have less than 25 000 don't even try to do this because you will be classified as a pattern day trader very quickly because this does require you to delta hedge uh every day sometimes uh intraday because this thing does move and what you're hoping for at this point in time is not the price to go up or the price to go down but for the price to move and you don't care what direction it moves in that's how you make money and if you can do this you can use leverage there's where your magic leverage comes in is on this particular trade because you're Delta neutral I will put this video up Monday as I described in the opening screen I will put it up in the applied level in the applied options in the volatility trading folder because this is The purest form of volatility trading which is which is gamma gamma trading That's the game being played out there now to keep this alive You got to keep you got to keep going you got to keep this kind of thing going how do you keep this going? You have to continue to add Bitcoin.
You have to continue to keep this alive. You have to issue more bonds. You have to issue more equity because the more bondholders you have, the more they're going to short shares on the way up, the more they're going to cover the short on the way down. They will provide some of the volatility as well.
And you got to keep the story alive for the shareholders and saying, oh, we raised even more money. People can't wait to get in. institutions are throwing money at us and you will think, ah, what a great Delta game. And they're there for the gamma game, right? It's like walking down the street and seeing a long lineup and thinking they're going into your bar, but they're not.
They're going into the bar next door. That's what's going on here. So this will be up in the applied level tomorrow.
I'll show you how gamma trading would work on MicroStrategy shares.