Strategy’s Convertible Bonds Surge in Value as Bitcoin-Linked Stock Rebounds

Strategy (MSTR), the Virginia-based company known for its aggressive Bitcoin accumulation, is now seeing its convertible debt trade well above face value—thanks to a sharp recovery in its stock and Bitcoin’s stability near record highs.

Out of the six convertible bonds issued by Strategy, five are now trading deep in the money, meaning the company’s share price has surpassed the bonds’ respective conversion thresholds. The only exception is the 2029 issuance, which has a steep conversion price of $672.40—still out of reach for now.

Strategy has raised a total of $8.2 billion through convertible notes, featuring ultra-low average coupon rates of just 0.421%. These bonds, maturing between 2028 and 2032, give holders the right to convert their debt into equity at predetermined prices based on MSTR and BTC valuations at the time of issuance.

Shares of MSTR, which had fallen as low as $235 three months ago, are now rallying and approaching the late 2024 peak of $543, recently trading near $450. As a result, the market value of its convertible bonds has surged to $13.4 billion—roughly $5.2 billion above face value. The premium reflects investor appetite for exposure to the underlying equity conversion potential.

Despite this rally, Strategy appears to have paused new convertible issuances. Analysts suggest this may be linked to a cooling in speculative sentiment, as reflected in the options market.

As of July 15, MSTR’s implied volatility stood at 53.1%, a significant drop from previous highs above 200%. This lower volatility suggests that traders are pricing in fewer large swings in the stock.

While open interest remains strong at over 2.4 million contracts, sentiment looks balanced: the put-call open interest ratio sits at 0.93, and the volume-based ratio is 0.62. These figures point to a market that is neither strongly bullish nor bearish. Trading volume, too, has dropped to just 20% of its 30-day average—another sign of waning speculative momentum.

This shift implies that while the existing convertible bonds have become highly valuable, market conditions may no longer support the kind of ultra-favorable terms Strategy previously secured. Any new issuance could require higher yields or lower conversion thresholds, potentially diluting existing shareholders more quickly.