Metaplanet Rolls Up Bitcoin Options, Adds 5.90 BTC to Holdings, Boosting Profitability

• Metaplanet repurchased 223 Bitcoin put options, selling new ones at a USD 66,000 strike price, adding 5.90 BTC to holdings.
• The roll-up of Bitcoin put options boosted Metaplanet’s total yield to 13.40%, with the break-even price set at USD 57,156.
• Metaplanet earned JPY 57.9M in premium income from Bitcoin put options, set to be recorded as revenue by December 2024.

Metaplanet Inc. has rolled up its Bitcoin put options, generating an additional 5.90 BTC in revenue. According to a formal document dated October 16, 2024, the company repurchased existing put options and sold new ones at a higher strike price. This strategy is expected to enhance the firm’s profitability while maintaining a strong Bitcoin exposure.

Details of the Transaction

The original put options, which had a strike price of USD 62,000 per Bitcoin, were bought back. Metaplanet then sold 223 new put options with a strike price of USD 66,000, both set to mature on December 27, 2024. 

The transaction generated a net premium of 0.0265 BTC per contract, totaling 5.9095 BTC. This roll-up resulted in an additional nominal yield of 2.65%, bringing the total yield from the put option sales to 13.40%.

The break-even price for the transaction now stands at USD 57,156, which is 13.40% below the new strike price. Importantly, the margin collateral of USD 13,826,000 remains unchanged, sourced from a prior stock acquisition disclosed on October 3, 2024.

Purpose and Updated Bitcoin Holdings

This roll-up aims to capitalize on Bitcoin’s volatility while strengthening Metaplanet’s long-term Bitcoin holdings. The firm expects to generate further revenue from its options trading strategy, which is aligned with its goal of supporting overall profitability. 

As of now, Metaplanet has received an additional 5.9095 BTC, bringing its total Bitcoin holdings to 861.387 BTC. The company also updated its average purchase price to 9,313,428 yen per Bitcoin, with a total aggregated purchase amount of 8.022 billion yen.

Risks and Financial Impact

Despite no additional collateral being required for the new options, the company remains exposed to potential financial risks if Bitcoin’s price falls below USD 66,000 by the maturity date. 

In such a scenario, Metaplanet would be obligated to purchase Bitcoin at this price, resulting in a USD 14.7 million liability for the 223 contracts. However, the company acknowledges these risks and has reiterated its commitment to increasing its Bitcoin holdings over time.

Metaplanet expects the additional 5.9095 BTC premium to be recorded as revenue for the fiscal year ending in December 2024, adding JPY 57.9 million to its financials.