Metaplanet Sold BTC Options to Increase Its Bitcoins

Tokyo-listed bitcoin holder Metaplanet Inc. is using bitcoin (BTC) options to increase its holdings, a departure from Microstrategy’s debt-fueled accumulation strategy.

On Tuesday, Metaplanet announced the sale of 223 contracts of $62,000 strike bitcoin options expiring on December 27. Transactions involving Singapore-based QCP Capital as the other party generated a premium of 23,972 BTC ($1.44 million).

Metaplanet posted $13.826 million in margin collateral, with a premium of 0.1075 BTC offered on each contract. The transaction resulted in a nominal return of 10.75% and an annualized return of 45.63%.

Metaplanet will use the premium earned from selling the options to buy more bitcoins. The company’s total bitcoin assets currently stand at 530,717 BTC ($32 million).

If the price of bitcoin falls below $62,000 by the expiration date, the buyer will likely exercise this option, forcing Metaplanet to purchase 223 bitcoins at the higher strike price. Therefore, Metaplanet’s bitcoin holdings will increase by 223 bitcoins by December 27 even if the market price is lower, but the premium will partially offset the spot price risk.

If the price of Bitcoin rises above $62,000 by December 27, the buyer is unlikely to choose this option because he can sell his bitcoins at a higher price. Therefore, while the option expires worthless, Metaplanet will keep its 23,972 BTC premium as profit.