MicroStrategy (MSTR) is Dropping – Here’s How I’m Handling It

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MicroStrategy (MSTR) is dropping. Here is how I handle it

Stock trading can be unpredictable, and MicroStrategy (MSTR) is proving that once again. This week, the stock dropped from $320+ to below $300, making it a challenge for traders like me who use covered calls and spreads to generate consistent income.

In this post, I’ll walk you through my strategy, key lessons learned, and how I’m managing the trade to stay ahead.

Why Did MicroStrategy (MSTR) Drop?

MSTR has been in a volatile phase, experiencing a $30 drop in a single day. The stock had been trading near $340 when I adjusted my position, thinking I was securing a $30 cushion for potential downside protection. However, as the market shifted, the stock dropped below $300, making my earlier move less effective.

Lessons Learned from This Trade

Avoid Rolling Up in a Sketchy Market

Initially, I had $307.50 puts, but I rolled them up to $322.50 when the stock was at $340 to collect extra premium.
While this seemed like a good move at the time, the market quickly turned bearish, and now I would have been better off sticking with my original position.

Stick to the Core Strategy – Collecting the Juice

My strategy revolves around collecting weekly premiums ("juice") from options trades.
Even though the stock dropped significantly, I’m still earning $10 per contract in premium, which adds up over time.

Have a Contingency Plan

Instead of panicking, I followed my trading plan and added one more contract at a lower price to strengthen my position.
This isn’t about averaging down but rather strategically positioning for a potential bounce.

How I’m Managing My MSTR Trade Right Now

I’m Holding My Position

Even though MSTR is below $300, I’m not closing the trade yet.
The weekly premium collection strategy allows me to stay ahead over time.

I Adjusted My Contracts

I added one more contract when the stock dropped significantly to give myself an edge if the stock rebounds.
My new asymmetric position means I have more flexibility in case of a price recovery.

I’m Staying Focused on the Bigger Picture

Trading isn’t about catching every top or bottom—it’s about making calculated moves and managing risk.
By focusing on consistent premium collection, I maintain a long-term edge in my trading strategy.

Life-Improving Trading Tips

Stick to Your Strategy – Don’t get shaken by short-term moves; focus on your tried-and-tested approach.
Don’t Chase the Market – Avoid making emotional decisions when stocks drop or spike.
Use Options for Income – Selling options weekly can help you generate consistent cash flow.
Know When to Hold and When to Adjust – Small tweaks to your position can maximize returns and minimize risk.
Always Have a Backup Plan – Expect the unexpected and have a strategy for every scenario.

FAQs (Frequently Asked Questions)

Why didn’t you sell your position when MSTR dropped?

Because I’m playing the long game. Selling would lock in a loss, whereas holding and collecting premiums allows me to stay profitable over time.

What would you do if MSTR drops even further?

I would reassess my position and possibly roll my options to a lower strike price to adjust for the new market conditions.

Can beginners use this strategy?

Yes, but it’s essential to understand options basics before using advanced strategies like covered calls and spreads.

Call to Action – Learn to Generate Passive Income from Trading!

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Conclusion

MicroStrategy’s (MSTR) drop is a challenge, but sticking to my strategy helps me navigate the market’s ups and downs. By focusing on collecting weekly premiums, managing risk, and adjusting positions when necessary, I stay ahead—even in volatile conditions.

MicroStrategy (MSTR) is Dropping – Here’s How I’m Handling It

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