GameStop caps Bitcoin upside again as Coinbase deal rolls over

GameStop has extended a Bitcoin options deal with Coinbase after the previous contracts expired worthless, preserving $5.8 million in premium income and resetting the strike at $80,000.

Summary

• GameStop renewed a covered-call Bitcoin strategy with Coinbase, collecting $5.8 million in option premiums.
• Nearly all 4,710 BTC remain pledged under the arrangement, with the strike price lowered to $80,000.
• Most quarterly profit came from interest income and eBay-linked gains, while Bitcoin added about $1 million.

According to the company’s quarterly filing submitted to the U.S. Securities and Exchange Commission on Thursday, GameStop rolled over the Bitcoin-linked contracts with Coinbase after a previous batch expired unexercised on May 29.

The filing showed that nearly all of the retailer’s Bitcoin remains pledged under the arrangement, which allows Coinbase to gain the coins if Bitcoin rises above a predetermined strike price before expiration.

After the original contracts expired, GameStop entered into a new set of agreements with an $80,000 strike, down from the earlier $105,000 to $110,000 range.

As per reports, previous options expired worthless because Bitcoin remained below the strike level through May 29. As a result, GameStop retained the premium income and re-pledged the same Bitcoin under updated terms.

The Bitcoin position no longer appears as a direct holding

Under accounting rules disclosed in the filing, the pledged Bitcoin is no longer recorded as a direct digital asset holding on GameStop’s balance sheet. Instead, the company reports a $369.6 million claim for repayment from Coinbase, a figure roughly $58 million below the original cost of the coins.

A covered call allows an investor to collect an upfront fee by granting another party the right to buy an asset at a fixed price. While the seller keeps the premium, any gains above the strike price are surrendered if the option is exercised.

GameStop first disclosed the strategy earlier this year after moving all but one of its 4,709 BTC into the arrangement. At the time, company filings stated that Coinbase could reuse, sell, or otherwise transfer the pledged Bitcoin during the life of the contracts.

Although Bitcoin formed a central part of GameStop’s treasury strategy, the filing showed the cryptocurrency contributed only about $1 million in gains on digital assets during the quarter.

Most quarterly profit came from cash and eBay-linked positions

Elsewhere in the report, GameStop posted roughly $390 million in net income for the quarter. According to the filing, most of that profit came from interest earned on its large cash reserves and an unrealized gain tied to its eBay options position rather than from its retail operations.

Recent corporate activity surrounding eBay also featured prominently. As crypto.news previously reported, GameStop submitted an unsolicited, non-binding proposal last month to acquire eBay for $125 per share, valuing the marketplace operator at approximately $55.5 billion on an undiluted basis.

The proposal would be funded through a combination of 50% cash and 50% GameStop stock. At the same time, GameStop disclosed a 5% economic stake in eBay through derivatives and common stock ownership.

In its proposal, the company stated that an acquisition could generate about $2 billion in annual cost reductions within twelve months of closing, with savings expected from sales and marketing, product development, and administrative functions.

By the end of the reported quarter on May 2, Bitcoin (BTC) was trading close to the new $80,000 strike level, increasing the value of the options.

More recently, according to crypto.news market data, Bitcoin traded near $63,500 on Friday, around 34% below its yearly high and roughly $43,000 below GameStop’s average purchase price, while spot Bitcoin exchange-traded funds recorded $2.1 billion in net outflows through June.