"STRC could go to $40!"
If that happens, Strategy can just buy back the shares. It would be a great deal too.
Sold shares for $100, buy them back for $40. The $60 per share profit isn't taxable. Didn't pay any borrow rates on the short either.
Why don't people understand optionality?
Also, is STRC not going up to $100 bad for the STRC investor?
Not necessarily. They can keep raising rates and you will earn higher yield.
It all depends on the reason it doesn't go back up.
Bitcoin trending towards zero for years would be bad. Bitcoin going up an underwhelming 10% per year is fine for an $STRC investor. If you stay at 5% discount to par but make 15-17%, you're actually better off than before.