Analysis of Reddit User's Catastrophic Loss From MSTR Short-Dated Call Trading With Margin

On November 22, 2025 (01:04:34 EST), a Reddit user reported wiping out most of their portfolio due to repeated trading of short-dated

call options, likely using margin and Canadian registered accounts. The event highlights the extreme risks of leveraged trading on highly volatile assets tied to cryptocurrency markets.

• MSTR Stock
  : MSTR fell by
  33.18%
  over the 14 trading days ending November 21, 2025 (from $255.16 to $170.50), driven by a sharp decline in Bitcoin prices [0]. This direct correlation to Bitcoin (MSTR is the largest corporate holder of Bitcoin) amplified losses for option traders.
• Options Market
  : Short-dated MSTR options (Nov 21 expiration) had an implied volatility (IV) of
  95.66%
  —indicating extreme market uncertainty and risk for option holders [1].

• Volatility Continuation
  : MSTR’s price will remain tightly linked to Bitcoin, which experienced a
  ~27% drop in November 2025
  (falling to ~$80k from mid-month highs) with $2B in liquidations [3][4].
• Leverage Risks
  : MSTR’s use of leverage (e.g., $700M in preferred stock with 10% annual interest to buy Bitcoin) will continue to amplify price swings [4].

• Market sentiment toward MSTR has turned negative: the stock is down
  43% year-to-date
  vs. Bitcoin’s 10% drop, as investors price in deleveraging risks [2].

Metric	Value	Source
MSTR 14-day price decline	-33.18%	[0]
Bitcoin November 2025 drop	~27%	[3][4]
MSTR Nov 21 call option IV	95.66%	[1]
MSTR leverage: Preferred stock interest rate	10%	[4]
MSTR YTD price decline	-43%	[2]

• Directly Impacted
  : MSTR (stock and options), Bitcoin (BTC-USD).
• Related Assets
  : Crypto-exposed stocks (e.g., Coinbase), Bitcoin ETFs, and MSTR’s preferred stock.
• Markets
  : U.S. equity options market (MSTR), global cryptocurrency markets.

• Exact details of the user’s trades (strike price, expiration date, margin level) are unknown and would help quantify risk exposure.
• Rules for margin trading in Canadian registered accounts (e.g., RRSPs, TFSAs) need further investigation to understand regulatory constraints or additional risks.

• Trader’s Risk Management
  : The user’s decision to trade short-dated options (high time decay) with margin on a volatile asset (MSTR) violated basic risk principles.
• Market Conditions
  : Systemic factors (Bitcoin crash, global risk-off sentiment) exacerbated losses, as MSTR’s price is a proxy for Bitcoin [2].

• Users should be aware
  that trading short-dated options on highly volatile assets like MSTR (tied to Bitcoin) with margin can lead to catastrophic losses, as demonstrated by this event.
• This development raises concerns
  about MSTR’s high leverage (including preferred stock with 10% annual interest) and close correlation to Bitcoin—factors that introduce extreme volatility for investors and traders [4].

• Bitcoin price movements (critical for MSTR’s valuation).
• MSTR’s leverage levels (e.g., debt-to-equity ratio, preferred stock issuance).
• Regulatory news on cryptocurrency (e.g., Canadian margin rules for crypto-linked assets).