According to CNBC, MicroStrategy (MSTR) stock has been wrecked, plummeting a staggering 67% since its highs in July, massively amplifying bitcoin’s own recent correction. Contributor Nishant Pant argues it remains a key vehicle for betting on bitcoin without directly owning the crypto. He sees early technical signs of a potential reversal, noting the stock is approaching deep oversold territory and that a custom MACD indicator has already triggered a bullish crossover. Pant is stalking a specific trade setup: a bull call spread using the $170 and $175 calls with a January 2 expiry, which would cost $2,500 for 10 contracts for a potential 100% return. He cautions that the final entry is pending confirmation from other indicators like the Directional Movement Index (DMI) and the Relative Strength Index (RSI).
The technical setup for a bounce
Here’s the thing about trading a stock like MSTR: it’s pure volatility. Trying to catch the bottom is famously like catching a falling knife. Pant’s analysis hinges on waiting for three technical indicators to align. The first, a faster custom MACD, has already flipped bullish. But the other two are still pending. The DMI shows the downtrend is still technically intact, and the RSI, while trying to climb out of oversold territory, needs to definitively break back above 30. This isn’t a “buy now” signal. It’s a “get ready” signal. The whole idea is to wait for that moment of seller exhaustion—that’s when these violent crypto-related names can snap back hard. But if the broader market or bitcoin takes another leg down, all these technical levels can just blow right through.
The options trade: a call spread
So why use a bull call spread instead of just buying the stock or a plain call option? It’s all about managing risk in a chaotic environment. This strategy involves buying an in-the-money call (the $170) and selling an out-of-the-money call (the $175). You’re capping your maximum gain, but you’re also drastically reducing the cost of the trade and your potential loss. Basically, you’re betting the stock will bounce to a specific zone, not that it’ll go to the moon tomorrow. With the stock’s wild swings, this is a more defined, capital-efficient way to play a potential short-term rebound. But let’s be real: an expiry of January 2 gives you very little time to be right. This is a tactical bounce play, not a long-term investment thesis.
The bigger picture on Microstrategy
Look, MSTR isn’t a tech company you analyze on fundamentals anymore. It’s a leveraged bitcoin bet housed in a corporate shell. Its value is almost entirely derived from its massive bitcoin treasury. That’s why it falls harder than bitcoin itself—it carries corporate debt and operational risk on top of crypto volatility. Trading it based on these technicals is a pure momentum game. You’re not betting on software sales or industrial panel PCs; you’re betting on market psychology and short-term price momentum. For a certain kind of trader, that’s the appeal. But for most investors? It’s a rollercoaster best observed from a safe distance. Pant’s system tries to impose rules on that chaos, which is the only sane way to approach it. Whether the signals work this time is the billion-dollar question.
