Under the current market landscape, an increase in short interest often garners attention from investors. In theory, such accumulation of bearish sentiment could signal trouble for the targeted security. Nevertheless, short traders face risks, particularly when the underlying asset starts to gain value instead of losing it. In a notable example, short interest in Strategy Inc. (MSTR) has not drawn significant interest from speculators.
For contrarian investors, this lack of short action may present an appealing opportunity. The phenomenon of short squeezes logically incentivizes bullish investors. Typically, investors enter a position by buying to open, while short traders start by selling to open. This process relies on borrowed shares from brokers, which must eventually be returned, creating pressure for short sellers if the stock price increases.
Profitability in short trading hinges on the stock’s decline, allowing bears to buy back the shares at lower prices before returning them to the broker. However, if the stock rises instead, short traders must make difficult decisions, often cutting losses early to close their positions by buying to close, which can lead to a short squeeze.
MSTR previously saw high short interest levels, particularly during 2022 and 2023, but a robust stock price performance recently has prompted a noticeable reduction in short selling interest. Historical data between January 2021 and September 2025 reveals a strong inverse correlation coefficient of -0.796 between MSTR’s short interest and its price action, indicating that bearish traders are hesitant to engage given the stock’s recent upward momentum.
Adding to this narrative, MSTR stock’s performance has attracted bargain hunters. In the last ten weeks, the stock experienced four up weeks and six down weeks, demonstrating a downward price trend. Despite this downward trajectory, past data indicates that dips often lure investors seeking to purchase at lower prices. Statistical analysis from January 2019 to July 2025 suggests that this trend could push MSTR’s price between $341 to $391, based on its historical price drift.
An analysis targeting the 2021 to 2023 dataset aimed to assess the predictive power of recent stock behaviors. The findings indicated that MSTR’s recent 4-6-D sequence could signal an upward trend, reinforcing a bullish outlook for the stock despite a recent decline of 12% in the preceding month.
Given the current market dynamics, an attractive options strategy appears to be the 350/360 bull call spread expiring on October 31. This involves purchasing the $350 call and simultaneously selling the $360 call, resulting in a net debit of $395. This strategy presents potential maximum profits of $605, which translates to a 153% return if MSTR’s stock rises past the $360 mark by expiration.
While an approximately 11% upward movement within seven weeks may seem ambitious, the context of Strategy Inc.’s position as a cryptocurrency market proxy renders this target achievable. With bears apparently holding back, it adds an interesting dimension to the upcoming trading activity for MSTR.
Investors are advised to conduct thorough research and consider various factors before proceeding with any investment decisions.
