To The Moon

SBET Soars 70% in July as ETH Treasury Hype Booms

Key Takeaway: SharpLink's ETH treasury strategy has made it the largest corporate holder of Ethereum, boosting its financials with staking income. Consider selling put options at $7.5 or $10 strike prices to potentially acquire shares at a lower cost while earning premium income.

$SharpLink Gaming (SBET.US)$ , once a sports betting marketing company, initiated a ETH treasury strategy last month and has transformed into the largest corporate holder of $Ethereum (ETH.CC)$ with 205,634 ETH, second only to the Ethereum Foundation. Other companies adopting this ETH strategy include $GameSquare (GAME.US)$ and $Bit Digital (BTBT.US)$ , while $DeFi Development (DFDV.US)$ and $Upexi (UPXI.US)$ are $Solana (SOL.CC)$ treasury firms.

This strategic pivot aligns it with companies like $Strategy (MSTR.US)$ , which is known for its significant $Bitcoin (BTC.CC)$ holdings. SharpLink's ETH investment, valued at approximately $546 million, is entirely staked, potentially generating an annual yield of $17 million based on 3% staking rate. This move could significantly boost their financials, as the staking income alone surpasses their previous annual revenue by 5 times.

$SharpLink Gaming (SBET.US)$ option trading volume reached an all-time high yesterday, with open interest primarily concentrated in call options expiring on July 18 at a strike price of $20. For options expiring next Friday, the put/call ratio is notably low at 0.21, indicating a bullish sentiment in the market. Furthermore, the options with a strike price of $12.5 not only have the highest open interest but also represent the point of maximum pain, where the most options will expire worthless.

Options Trading Idea

SharpLink's stock is now trading at $17, with a market cap of $1.1 billion. The theoretical valuation based on the company's ETH holdings suggests a stock value of $8.8 per share. Given the high implied volatility and prevailing market conditions, a strategic approach would be to sell put options at strike prices of $7.5 or $10. This strategy enables investors to potentially acquire shares at a reduced price if the stock declines, while also generating income through option premiums.

However, be cautious of the risk of share dilution. $SharpLink Gaming (SBET.US)$ saw a 69% drop to $9.98 in June 13 after filing for potential stock and warrant sales by investors. $Bitmine Immersion Technologies (BMNR.US)$ , another company with an ETH reserve strategy, experienced a 40% drop last night due to BitMine entered into a Controlled Equity Offering Sales Agreement in which the company may offer and sell up to $2 billion of its common stock from time to time.

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