Dropbox announced a convertible note offering a few days ago. Overall number is $1.135 Billion.
Latest Q4 2020 results were solid earnings per share rose 75.00% year over year to $0.28, which beat the estimate of $0.24. Revenue of $504,100,000 up by 13.03% year over year, which beat the estimate of $498,640,000.
So maybe their intention is to follow Microstrategy and use the proceeds to buy bitcoin? They suffered from the recent tech sell off, but price action seemed steady before
Short term IV is around 55% ATM, nearly same as long term. Also very interesting smile for the March/Apr contracts, so you can think about selling puts and buying some calls. However, given that this is likely correlated to Bitcoin, you are taking a double bet here that cryptocurrencies will perform strongly and also the Tech selloff will not continue.
If you like this as a long term idea, you can buy the DBX US 01/21/22 C30. Having still 328d until expiration costs you 2.60 and is slightly cheaper at IV 53.9.
Alternatively you can consider getting more bang for the buck (gamma!) and try the DBX 4/16/21 C22 ATM at 2.34. However, if you believe the sell off is not over yet, how about adding DBX US 04/16/21 P20 to it and making it a strangle.The put is priced at $0.80.
I clearly haven't thought this all through. It's more that I'm looking to exchange some ideas/thoughts about this one. Options are definitely not super cheap at this vol, so I was hoping to find a short term gamma bomb that I might play...
@Weston Nakamura Any thougths on this?