GameStop has disclosed that nearly all of its 4,710 bitcoin have been pledged to Coinbase as collateral, rather than being liquidated. The move is part of a covered-call options strategy the company is using to generate premium income from its cryptocurrency holdings. The disclosure clarifies the current status of the bitcoin position, which had drawn significant attention from investors.
Under the strategy, GameStop wrote short-dated call options with strike prices ranging between $105,000 and $110,000. By selling these options, the company collects premium income upfront while capping the potential gains it could realize if bitcoin’s price rises above those levels. The approach allows the company to maintain some exposure to bitcoin while monetizing the position in the near term.
As a consequence of pledging the bitcoin as collateral, GameStop no longer holds the asset directly on its balance sheet. Instead, the company now records the bitcoin as a receivable rather than as a directly held asset. This accounting treatment reflects the transfer of the bitcoin to Coinbase in connection with the options arrangement.
The strategy represents a notable shift in how GameStop is managing its cryptocurrency holdings since first acquiring bitcoin. Covered-call strategies are commonly used by investors seeking to generate income from assets they hold, though they come with the trade-off of limiting upside participation. In GameStop’s case, any bitcoin price appreciation beyond the strike prices would not fully benefit the company.
The disclosure is likely to prompt scrutiny from shareholders and analysts who have been monitoring the company’s bitcoin strategy closely. The reclassification of the holdings from a direct asset to a receivable also raises questions about the risk profile of the position going forward. No further details regarding the duration or total premium income generated from the options were provided in the disclosure.
Originally reported by CoinDesk.
