MicroStrategy (MSTR) is experiencing a dramatic spike in volatility, now 2.5 times higher than Bitcoin’s, presenting both significant opportunities and risks for options traders.

As the largest publicly traded holder of Bitcoin, MicroStrategy owns over 380,000 BTC. Investors seeking indirect exposure to Bitcoin have pushed the company’s stock up by 500% this year, while Bitcoin itself has risen by 124%, according to data from CoinDesk and TradingView.

The surge in MSTR’s price is paired with heightened implied volatility. As of Monday, MSTR’s 30-day implied volatility (IV) stood at an annualized 140.86%, according to OptionCharts.com, which is 2.5 times higher than Bitcoin’s 30-day IV of 55.65%. This data comes from Deribit’s DVOL index, reflecting market expectations of greater price swings in MicroStrategy shares compared to Bitcoin.

For options traders, the increase in implied volatility presents an opportunity to earn more income. Implied volatility directly affects the premiums for options contracts, which give the buyer the right to buy or sell an asset at a specific price. When volatility rises, the premiums on options increase, meaning traders can collect more money by selling or writing call/put options.

Traders who hold the underlying asset, in this case MSTR shares, can take advantage of this by selling call options at higher strike prices, generating additional income on top of their spot holdings. This strategy, known as a covered call, is particularly effective when the market is volatile. If the market rises, the gains from the underlying asset often outweigh the losses from the written call options.

With MSTR’s volatility being 2.5 times greater than Bitcoin’s, using a covered call strategy with MSTR options could potentially generate significantly higher returns than using Bitcoin options. This has led to widespread chatter among traders about leveraging MSTR’s volatility for profits.

However, the covered call strategy does come with its drawbacks. While it can provide additional income, it limits the potential for significant gains. If MSTR’s price experiences a large rally, traders who have written calls may miss out on those profits, suggesting that simply holding the stock could be more beneficial in certain market conditions.