In brief – GameStop renewed an options deal that ties up nearly all its Bitcoin with Coinbase Credit. – The pledged coins no longer count as a direct holding and sit below their cost. – The strategy only added about $1M in a quarter when GameStop posted record profit of over…
90 million. Video game retailer GameStop has kept nearly all of its Bitcoin tied up in options contracts that trade away potential price gains for upfront cash, renewing the arrangement with crypto exchange Coinbase after an earlier batch expired in late May
GameStop laid out the arrangement in a quarterly filing submitted to the Securities and Exchange Commission on Thursday, covering the three months through May 2 this year. It’s worth noting those coins no longer count as a direct holding and now sit as a $369.6 million claim for repayment, about $58 million below their cost, while selling the options brought in $5.8 million over the period, per the filing. The strike price on the rolled contracts fell to $80,000 from a range of $105,000 to $110,000, putting the coins closer to the level at which Coinbase could claim them, according to Protos, which was first to report on the renewal terms.
Options tied to the earlier strikes expired worthless May 29, and GameStop re-pledged the Bitcoin under the same terms. A covered call is a deal where you own something, sell someone else the right to buy it at a fixed price, and pocket a fee for your trouble. The fixed price is the strike, and if the asset climbs past it, the buyer can take it, so the seller keeps the fee but loses the upside.