The analyst who wrote this piece owns shares of Semler Scientific (SMLR) and MicroStrategy (MSTR).
Shares of Semler Scientific (SMLR), the small-cap medical device maker that adopted a bitcoin treasury strategy earlier this year, are now available for options trading.
This comes after six months of share-price growth for the company driven by its bitcoin (BTC) pivot and capital-raising initiatives. Semler had requested approval on Dec. 5 from options exchanges to allow options trading as the company believed it met the eligibility requirements.
Though no official announcement has been made, a check of brokerage accounts Tuesday morning U.S. hours showed the options as available to trade.
Options are financial contracts that give the investor the right, but not the obligation, to buy or sell a stock at a specified price before a certain date. The introduction of options on a stock gives investors new tools to hedge risk and speculate on price movements.
Among the requirements needed for an options market to be granted are a minimum share price of around $3-$5, a minimum market capitalization of at least $75 million and sufficient trading volume of around 500,000 to 1 million shares per day. Additionally, a minimum number of publicly available shares and sufficient number of shareholders are required.
Semler’s stock price has almost tripled to more than $74 as of Monday’s close since making public its initial bitcoin purchases on May 28. It has a market cap topping $600 million. SMLR is ahead 5% in premarket action Tuesday to $78.20.
The company recently filed a second prospectus supplement under its S-3 Shelf, which has seen an additional $50 million in share offerings under its existing at-the-market (ATM) program, increasing the total offering to $150 million. To date, the company has raised approximately $100 million in proceeds through ATM issuance.
Semler to date has acquired 2,084 bitcoin for $168.6 million, or an average price of about $81,000 each. Those holdings are worth about $222 million at bitcoin’s recent price of roughly $106,500.
Semler may be looking to recreate the success mammoth bitcoin holder MicroStrategy (MSTR) has achieved through the issuance of convertible notes to raise capital for accumulating more tokens. By not causing immediate dilution of existing shares, convertible offerings can be a more attractive way than share offerings to raise cash. The active options market Semler is hoping for allows investors an easy way to hedge, thus making convertible paper more attractive to potential buyers.
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