GameStop renews covered call contracts on its Bitcoin holdings, reducing strike price to $80,000 and booking $5.8 million in premiums.
GameStop has renewed its covered call options on nearly all of its Bitcoin holdings with Coinbase, converting the assets into a $369.6 million claim for repayment. The new strike price dropped to $80,000 from a prior range of $105,000 to $110,000, bringing the coins closer to potential forfeiture.
The arrangement, disclosed in a quarterly filing, generated $5.8 million in upfront cash for the retailer during the period ending May 2. The previous options expired worthless on May 29, and GameStop re-pledged the Bitcoin under identical terms. The company initially borrowed $1.5 billion to build its Bitcoin position last year.
Covered calls allow holders to collect premiums while capping upside gains if the asset’s price exceeds the strike. GameStop’s Bitcoin holdings no longer count as direct assets on its balance sheet due to the structure.