Metaplanet Sells 223 Bitcoin Put Options, Gains 23.9 BTC
Japanese investment firm Metaplanet recently announced that it will gain 23.9 Bitcoin, worth approximately $1.4 million from the sale of 223 Bitcoin put options to QCP Capital, a Singapore-based digital asset trading company. With this fat deal, the company was able to cash in on the market volatility of Bitcoin to improve its holding and financial standing.
Bitcoin Put Options Sale Profits
Metaplanet earned a total premium income of 23.9 BTC from selling put options. Each option earned him a premium amounting to 0.1075 Bitcoin. A put option is a sort of contract between two parties where one party earns a right but not an obligation to sell a specified amount of Bitcoin at an agreed price on or before an agreed-upon date. In this case, Metaplanet had sold the put options against the selling price of $62,000 per Bitcoin.
This strategy allows Metaplanet to reap premium revenues while staying fully cash-covered, implying that the company is well poised to buy Bitcoin once market prices fall below the strike price at expiration. This will provide an avenue for potentially building more Bitcoin at cheaper prices, a very important part of their long-term financial strategy.
Potential of Increasing Bitcoin Holdings
If, at any time before the date of expiration, the price of Bitcoin is below the strike price of $62,000, this would likely be exercised by the buyers of the put options and would obligate Metaplanet to buy the underlying Bitcoin at the strike price. As risky as this sounds, Metaplanet views the potential for adding to its Bitcoin inventory at a good price in concert with its long-term objective of fortifying its Bitcoin reserves.
Increasing Reserves Further
Apart from the revenues generated from selling put options, Metaplanet has been aggressively adding more Bitcoin to its stash. It recently acquired 107.9 Bitcoin valued at about $7 million. With this latest purchase, the total holding of Metaplanet in Bitcoin has reached 530.7 BTC amounting to approximately 4.96 billion yen ($34 million).
Long-Term Strategy Appears to Be in Sync
The strategic use of Bitcoin Put options by Metaplanet enables the firm to manage volatility while increasing its Bitcoin reserves. This is a balance sheet reinforcement that strengthens its long-term exposure to Bitcoin to support its path of moving toward more profitability in the cryptocurrency market.
