GameStop Rolls the Dice on Bitcoin Covered Calls Again, Still Cashing Tiny Premiums 🪙

GameStop has renewed a covered call options strategy on Coinbase Prime that covers all but 1 BTC of its 4,709 BTC holdings, according to a quarterly filing submitted to the Securities and Exchange Commission on Thursday for the three months through May 2. The retailer first disclosed the arrangement in its annual report earlier this year, when it pledged 4,710 BTC to Coinbase under a structure that gave the exchange the right to reuse, mix, or sell the coins. Accounting rules required GameStop to remove the Bitcoin from its books and record a repayment claim in its place, a $369.6 million receivable sitting about $58 million below the cost basis of the underlying coins.

The earlier batch of options, struck between $105,000 and $110,000, expired worthless on May 29, per Protos, which was first to report the renewal terms. GameStop re-pledged the Bitcoin under similar terms but lowered the strike price to $80,000, putting the coins closer to the level at which Coinbase could claim them. The rollover generated $5.8 million in premiums for GameStop over the quarter, while the Bitcoin contribution to earnings came in at roughly $1 million in digital asset gains, listed in the filing.

GameStop began building its Bitcoin position in March last year, borrowing $1.5 billion to fund the purchases and creating a corporate treasury that bets on $BTC appreciation rather than holding dollars or bonds. During the quarter, the company posted record net income of about $390 million, with most of the profit traced to interest earned on its cash pile and a paper gain on its eBay options position, while the retail business made up a smaller share. The reclassification of the Bitcoin stash from an intangible asset to a receivable will change how gains and losses on $BTC flow through GameStop's quarterly earnings going forward.