As Strategy’s Stock Approaches Record High, Convertible Bonds Surge

Strategy’s Convertible Bonds Surge as Bitcoin-Linked Stock Climbs Toward Record Levels

Strategy (MSTR) is seeing a strong rally in both its stock and convertible bonds as investor confidence returns and Bitcoin remains near historic highs.

The company, known for its sizable Bitcoin holdings, has issued six convertible bond tranches totaling $8.2 billion. With MSTR stock rebounding to around $450—up from lows near $235 earlier this year—five of those six bonds are now trading “in the money,” meaning the stock price exceeds their conversion thresholds. The only exception is the 2029 bond, with a conversion level of $672.40.

These ultra-low-coupon bonds, averaging just 0.421%, allow bondholders to convert their debt into equity once certain price levels are met. With MSTR stock approaching its 2024 peak of $543, the total market value of these convertible notes has surged to $13.4 billion—approximately $5.2 billion above their face value.

Despite the strong market performance, Strategy has not issued new convertibles recently. Analysts point to signs of softening speculative activity, especially in the derivatives market, as a possible reason.

Implied volatility in MSTR options has dropped sharply to 53.1%, down from highs above 200%, signaling a calmer outlook from traders. Though open interest remains robust at 2.4 million contracts, options trading volume has cooled to just 20% of its 30-day average. Meanwhile, the put-call ratios (0.93 for open interest and 0.62 for volume) indicate a neutral stance from market participants.

With investor appetite for risk moderating, any future convertible issuance could require more favorable terms for buyers—potentially higher interest rates or lower conversion prices, which could accelerate shareholder dilution.

Still, Strategy’s current convertible bondholders are benefiting from the rally, underscoring the strong link between the company’s equity performance and Bitcoin’s price momentum.