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This was a common Q this week for the Q&A but I will not answer it publicly but only mention it here in the community for obvious reasons.

Some members have woken up to the fact that they can profit by borrowing money at a low interest rate (around 5%) and using it to buy STRC, a special MicroStrategy stock that currently pays about 10.5% in dividends. On paper, that looks like a “free” 5.5% gain. But there are risks hidden behind that spread.

Tied to Bitcoin: STRC’s value and dividends depend on MicroStrategy’s huge Bitcoin holdings. If Bitcoin’s price drops sharply, the company could struggle to pay dividends, and STRC’s price could crash—possibly causing margin calls if you borrowed to invest.

Borrowing Risks: Margin rates can rise, which could erase profits or turn them into losses. Borrowing also magnifies any drop in value—you could lose much more than expected.

Dividend Uncertainty: Payments aren’t guaranteed. The company can pause dividends or buy back shares anytime, forcing you to reinvest at lower yields.

Tax Complications: After taxes and possible deductions, your “extra” return might shrink to just 2–4%, and paperwork or unexpected taxable income could make things messy.

Bottom Line:

This isn’t a “free money” opportunity. It’s a leveraged bet that Bitcoin and interest rates stay stable. The reward looks good on paper, but the real-world risks—market swings, borrowing costs, and taxes—can wipe it out fast. Suitable only for experienced investors with high risk tolerance.

PS I technically do this as I pay 5% on my Margin that I use for put selling etc... and I will need a lot of Cash and Margin in January to exercise my Jan 2026 TESLA LEAPS - between $140 Strike and $160 Strike etc

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MC

Thx James I have been considering the same question and appreciate the insight. my taxes are complicated enough and the risk reward only seem to be appropriate for buying STRC without margin. But it still does not improve my complicated tax situation.

brgringo

I was thinking about this before this came out, moving my high margin cost in etrade and moving it to low margin cost in Robinhood and buying STRC. It may be worth a relative short time risk