The Short Answer: What Strike to Target on MSTR This Week

If you already own 100 shares of MicroStrategy (MSTR) and want to sell a covered call this week, the most practical starting point is a short-dated call with a delta between 0.20 and 0.30, sitting roughly 5–10% above the current share price. That range lets you collect meaningful premium — MSTR's implied volatility (IV) regularly runs above 100% — while keeping a reasonable buffer before your shares get called away.

This article walks you through exactly how to find that strike, size the trade, and understand what can go wrong. Because with MSTR, plenty can go wrong fast.

Why MSTR Is a Different Animal for Covered-Call Writers

MicroStrategy is not a normal tech stock. The company holds Bitcoin as its primary treasury asset, which means MSTR's share price can move 15–25% in a single week when crypto markets swing hard. That extreme movement is a double-edged sword for covered-call sellers.

On the upside: high volatility inflates option premiums. When IV is elevated, you collect far more premium per contract than you would on a calmer stock like Johnson & Johnson. The Options Industry Council (OIC) explains this directly — implied volatility is the market's forecast of future price swings, and sellers of options benefit when IV is high relative to what actually happens (realized volatility).

On the downside: that same volatility can send MSTR soaring past your strike in hours, capping your gains at exactly the wrong moment. It can also crater the stock 30% in a week, leaving you holding shares that have dropped far more than the premium you collected. Neither outcome is theoretical with MSTR — both have happened multiple times.

How to Read MSTR's IV Before You Pick a Strike

Before you touch the options chain, check two numbers: current IV and IV Rank (IVR). IV Rank compares today's IV to the past 52 weeks. An IVR above 50 means IV is elevated relative to its own history — a good time to be a seller. An IVR below 30 means you are selling cheap premium into a quiet market, which is usually not worth the assignment risk on a stock this volatile.

CBOE publishes volatility data and educational material on how IV is priced into options. Most retail brokerage platforms (TD Ameritrade/thinkorswim, Tastytrade, Interactive Brokers) display IVR directly on the options chain. If MSTR's IVR is above 50 when you are reading this, the environment favors selling. If it has collapsed after a big move, consider waiting a few days.

As a rough benchmark: when MSTR IV is running at 120%, a one-week at-the-money call might carry $8–$15 of extrinsic value per share, or $800–$1,500 per contract. That is not a typo. The premium is real, but so is the risk that justifies it.

A Worked Example: Selling a Weekly Covered Call on a High-IV Stock

MSTR's price changes daily, so let's build the example with a structure you can replicate on any given Monday morning. We will use round numbers that reflect realistic MSTR price levels and option premiums.

Assume MSTR is trading at $340 per share on Monday morning. You own 100 shares (cost basis $290). You open the weekly options chain expiring Friday — five trading days out.

You scan the calls and find: - The $360 strike (about 5.9% OTM) has a bid/ask of $9.00 / $9.50, delta 0.25 - The $370 strike (about 8.8% OTM) has a bid/ask of $6.50 / $7.00, delta 0.18 - The $380 strike (about 11.8% OTM) has a bid/ask of $4.20 / $4.60, delta 0.13

You sell one $360 call at the $9.00 bid and collect $900 in premium (before commissions).

Scenario A — MSTR closes at $352 on Friday: The call expires worthless. You keep the $900. Your effective sale price if you had sold shares would have been $349 ($340 + $9). You still own the shares.

Scenario B — MSTR closes at $375 on Friday: Your shares get called away at $360. You receive $360 per share plus the $900 premium already collected, for an effective exit price of $369 per share. You miss the move from $360 to $375 — that $1,500 of upside is gone.

Scenario C — MSTR drops to $295 on Friday: The call expires worthless, you keep $900. But your shares are now worth $295, a $4,500 paper loss on the position. The $900 premium offsets only 20% of that drop. This is the scenario most beginners underestimate.

The math is straightforward. The discipline is harder.

The Real Risks You Need to Understand Before Selling on MSTR

FINRA requires brokers to ensure options strategies are suitable for the customer. Covered calls are considered a conservative options strategy — you already own the shares — but 'conservative' is relative. On a stock that can move 20% in a week, even a covered call carries meaningful risk. Here is what can hurt you:

1. Gap risk. MSTR can gap up 20% overnight on a Bitcoin rally. If that happens, your shares get called away at your strike and you miss a large move. There is no way to avoid this with a standard covered call.

2. Downside is not protected. The premium you collect is a small cushion, not a hedge. If MSTR drops 30%, you lose 30% minus the premium. Selling covered calls does not transform a volatile stock into a safe one.

3. Early assignment. American-style options (which MSTR options are) can be exercised early. This is rare but can happen, especially if the call goes deep in the money before expiration. The OIC has detailed guidance on early assignment risk in its options education materials.

4. Liquidity and wide spreads. MSTR options are liquid by most measures, but bid/ask spreads can widen sharply during volatile sessions. Always use limit orders. Selling at the bid is usually better than using a market order.

5. Tax treatment. In the US, the IRS treats covered call premiums as short-term capital gains in most cases. If your call is exercised, the premium is added to the proceeds of the stock sale. The IRS also has qualified covered call rules that can affect the holding period of your underlying shares — consult a tax professional before trading. Canadian investors should note that the CRA has its own rules on options income classification, which can differ significantly from IRS treatment.

Strike Selection Rules of Thumb for MSTR Specifically

Given MSTR's behavior, here are practical guidelines refined for this stock:

Stay at least 7–10% out of the money. MSTR can move 10% in a single session. A 5% OTM strike that looks safe on Monday can be in the money by Wednesday. Going further out reduces assignment risk at the cost of less premium.

Favor weekly or 14-day expirations over monthly. Theta decay — the time value that erodes daily — works fastest in the final two weeks of an option's life. Shorter expirations let you collect that decay quickly and reassess. They also limit how long you are exposed to a gap move.

Target delta 0.20–0.25. This means the market is pricing roughly a 20–25% probability that the option expires in the money. For most covered-call writers, that is an acceptable tradeoff between premium collected and assignment risk. Going below delta 0.15 on MSTR often means the premium is too small to justify the downside exposure of holding the stock.

Do not sell calls below your cost basis. If you paid $290 for MSTR and the stock is at $340, selling a $295 call to collect extra premium puts you in a position where you could be forced out at a loss if the stock reverses. Always make sure your strike is above your adjusted cost basis (cost basis minus premiums already collected).

Size the position so that a 30% drop in MSTR does not wreck your portfolio. If MSTR is 5% of your total account, a 30% drop is a 1.5% portfolio hit — manageable. If MSTR is 40% of your account, the same drop is devastating. FINRA and the SEC both publish investor education materials emphasizing concentration risk.

How to Actually Place the Trade Step by Step

Step 1: Confirm you own at least 100 shares of MSTR in a margin or cash account approved for covered calls. Most brokers require a Level 1 options approval for covered calls.

Step 2: Open the options chain for MSTR. Filter to the expiration date you want — this Friday for a weekly, or two Fridays out for a 14-day trade.

Step 3: Find the strike that matches your target delta (0.20–0.25) and is at least 7% above the current price. Note the bid price — that is the most you will realistically collect.

Step 4: Place a limit order to sell one call contract at or near the bid. Do not use a market order. Set your limit one or two cents below the midpoint of the bid/ask spread and adjust if you do not get filled within a few minutes.

Step 5: Once filled, record the premium collected, the strike price, and the expiration date. Set a calendar reminder to check the position on expiration day.

Step 6: Decide in advance what you will do if the stock rallies past your strike before expiration. You can buy back the call (closing the position at a loss on the option but keeping your shares), or let assignment happen. Having a plan before the trade prevents panic decisions.

What is the best strike price for a covered call on MSTR this week?

A delta of 0.20–0.25, sitting 7–10% above the current MSTR share price, is the most practical starting point for most retail traders. This balances premium income against the risk of having your shares called away. Check IV Rank first — if IVR is below 30, the premium may not justify the risk of holding such a volatile stock through expiration.

How much premium can I collect selling a covered call on MSTR?

When MSTR's implied volatility is running above 100%, weekly calls 7–10% out of the money can carry $6–$15 of extrinsic value per share, or $600–$1,500 per contract. Exact numbers change daily with the stock price and IV level. Always check the live bid price on your broker's options chain before assuming any specific premium.

Can I lose money selling a covered call on MSTR?

Yes. The premium you collect is a small offset, not a full hedge. If MSTR drops 25% in a week — which has happened — your loss on the shares will far exceed the premium collected. The covered call strategy reduces your cost basis slightly but does not protect against large downside moves.

What happens if MSTR gets called away before expiration?

MSTR options are American-style, meaning the buyer can exercise early, though this is uncommon. If your call is exercised early, your 100 shares are sold at the strike price and the premium you collected is added to your proceeds. The OIC has detailed educational content on early assignment if you want to understand the mechanics further.

How does the IRS tax covered call premiums on MSTR?

In most cases, the IRS treats covered call premiums as short-term capital gains, regardless of how long you have held the underlying shares. The IRS also has qualified covered call rules that can affect the holding period of your MSTR shares, which matters if you are trying to qualify for long-term capital gains rates. Consult a tax professional for your specific situation.

Should I sell weekly or monthly covered calls on MSTR?

Weekly or 14-day expirations are generally preferred on MSTR because theta decay is fastest in the final two weeks of an option's life, and shorter cycles let you reassess your position more frequently. Monthly expirations expose you to more potential gap moves and give you less flexibility to adjust. That said, monthly calls further out of the money can reduce assignment risk if you want to hold your shares long term.