How I Made Money With MicroStrategy This Week
If you’re navigating the volatile waters of the stock market, you know that timing and strategy are everything—especially when you're dealing with a high-beta stock like MicroStrategy. With Bitcoin flirting with all-time highs, MicroStrategy often mirrors the crypto giant's movements, making it a powerful (yet risky) asset for strategic options trading. In this blog, based on Mark Yegge’s recent video, we’ll break down how he used a deep in-the-money covered call strategy to earn a safe and reliable return from MicroStrategy—despite its wild swings.
What Are Covered Calls?
Let’s start with the basics. A covered call is an options strategy where you own a stock and sell a call option against it. In simple terms, you’re renting out your stock to someone else for a fee. If the stock stays flat or moves slightly up, you get to keep that "rental income," known as the extrinsic value or “the juice.”
This strategy is perfect for investors who want to generate passive income while still holding onto quality stocks. It’s also excellent for those building retirement income streams since it can provide consistent, relatively low-risk cash flow.
A Real MicroStrategy Covered Call Trade
On May 19th, I had a covered call position on MicroStrategy (MSTR) with a strike price of $360. I had sold 12 contracts expiring on May 23rd. MicroStrategy had already gone up due to Bitcoin momentum, and I wanted protection in case of a pullback.
Why $360? Because it offered cushion. If the stock price pulled back, I was protected down to that level thanks to the intrinsic value.
At the time of the update, the stock was trading around $410. I had already collected around $10 per contract (or $12,000 total) in income from the initial trade. As the expiration date approached, those contracts had only $1.71 in extrinsic value left—meaning I had already earned most of the juice.
Rolling Up for More Juice
But I wasn’t done. Instead of letting the contracts expire and risk assignment, I rolled the trade. I bought back the $360 strike and sold new contracts with a $390 strike for the same expiration week. This allowed me to pick up an additional $425 in juice per contract, or about $5,100 total.
By doing this, I stayed in the money and kept a strong cushion. If the stock dropped from $411 to $390, I would still be protected. And if it went higher? I’d keep the full juice and not worry about the price movement.
Why Covered Calls Work for Passive Income
Covered calls are one of the few investing strategies that generate income regardless of market direction—as long as you manage them properly. Here’s how they can generate passive income:
- You get paid upfront when you sell the call.
- You keep the premium as long as the stock doesn’t shoot way above your strike.
- Even if it does, you make a profit on the stock appreciation up to the strike price.
This makes covered calls ideal for retirement income. Imagine generating $4,000 to $10,000 per month, depending on portfolio size, just from options premiums.
Risk Management: The Real Power
The key to this MicroStrategy trade wasn't the upside—it was the risk control. I made sure I was deep enough in the money to protect against volatility but still positioned to earn meaningful income.
Here’s how I managed risk:
- Strike selection: Choosing $390 gave me a $20 cushion from current price levels.
- Delta awareness: The position had a delta of 92, meaning it closely tracked the stock without excessive exposure.
- Chart analysis: I noticed a gap at $396, which had recently filled. This suggested a reversal or at least consolidation.
Best Practices for Covered Call Investing
If you want to use covered calls as part of your investing and retirement planning strategy, here are some best practices:
- Stay in the money when uncertain about market direction.
- Use weekly or bi-weekly options to maximize income.
- Roll your positions to extend trades and extract more juice.
- Analyze charts to identify gaps and price trends.
- Know your delta. Stay around 70-90 delta for balance.
- Don't chase hype. Stick with stocks you know and believe in.
- Have a rolling schedule every Friday to manage expiring trades.
- Track your juice. Log every trade to measure performance accurately.
- Don't fear assignment. Sometimes it's the most profitable exit.
- Focus on income, not capital gains. The goal is cash flow.
FAQs
- What happens if the stock goes above my strike price? You’ll likely have your shares called away, but you still keep your original premium plus any stock appreciation up to the strike.
- Is this strategy risky? There is risk if the stock drops below your strike price minus the premium collected. That’s why strike selection and cushion are important.
- Can I use this strategy in my retirement account? Yes, covered calls are allowed in most IRAs, making them a perfect fit for retirement income generation.
10 Tips to Improve Your Covered Call Strategy
- Always know your breakeven point.
- Choose high-volume stocks with strong fundamentals.
- Use technical analysis to guide timing.
- Don’t panic during pullbacks—use your cushion.
- Keep a trade journal.
- Focus on consistency over big wins.
- Use alerts to monitor strikes and prices.
- Understand your tax implications.
- Don’t overtrade—let the strategy work.
- Educate yourself weekly—never stop learning.
If you’re looking to make safe, reliable income from the stock market, covered calls might be your answer. Whether you’re building a retirement nest egg or just want extra monthly income, strategies like the MicroStrategy example can help you take control of your financial future.
Call to Action
If you're intrigued by the idea of generating weekly income from your existing investments, it’s time to learn more about the Cash Flow Machine™ System. Mark’s elite training program offers step-by-step guidance for creating a reliable income stream through covered calls—no matter the market conditions.
Ready to build your own cash flow machine? Visit cashflowmachine.io to explore free resources, subscribe to insider tips, and get started on your journey toward financial independence.
And don’t forget to subscribe to Mark Yegge’s YouTube channel for real-time trade breakdowns, strategy updates, and actionable investing insights designed to help you grow and protect your portfolio.
Conclusion
MicroStrategy’s recent price action reflects the inherent volatility of Bitcoin-related stocks, but by strategically using in-the-money covered calls, you can turn this volatility into opportunity. As Mark Yegge demonstrated in this real-world example, it’s not about predicting market direction—it’s about positioning for high-probability outcomes and capturing consistent premium income. By selling calls with thoughtful cushion, rolling at smart price levels, and prioritizing juice over capital gains, investors can harness market movements instead of fearing them. It’s a strategy designed for those who want passive income with measured risk, especially in unpredictable markets like these.
Whether the price of MicroStrategy surges with Bitcoin or pulls back to fill nearby gaps, the focus remains the same: consistent cash flow through carefully executed options trades.
