Not sure what point you are trying to make.Of course stock prices change from day to day even second to second or millisecond to millisecond.obviously,the arrs for the option position on Berkshire that was being evaluated are only valid if the stock closes on the expireation date at $128.58 or $130.00.Knowing the arrs for the position is only one factor to use in making the decision to write the option or not.
I disagree.Interest rates especially in finance and rates of return are an annualized rate.Think about that the next time you go to your local bank to ladder some one year cds that pay.083% per month return.
1.87 x6 divided by128.58-1.87=8.85% if it expires. (1.87 +1.42)x6 divided by 128.58 -1.87=15.57% if exercised.
youbetcha,like free money.Plus the typical annualized returns on a short term call option strategy is far greater than the 4.5% that you talk about.Would be happy to share my calculations if your interested.
S&P is on board with a 5 star strong buy rating with a $150 price target.My number is $147 to $152 year end per share price.,Strong possibility assuming any significant acquisition announcement and no major insurance event over the next few months.Also looking at a $100 bv per share and a $120/share buy back support level. Very good investment situation;20% upside with very little downside risk.
Your view /perspective seems to be very technical and with a somewhat negative mindset.Not saying there is anything wrong with this,but is not the mindset for a successful put selling strategy for Berkshire.Last year I sold naked puts on BRKB 16 times and had one position put to me but only slightly into the money.This is a 94%win percentage which is a home run in investing.Also,would like to know what your assumptions are in saying that the annualized return on this strategy is only 5%.
Berkshire is up more than 2% in the first 3 days of the 3rd qtr on strong quarterly gains in their stock portfolio,strong 2nd qtr revenue and profit growth,and no major insurance events year to date.Second qtr performance will be outstanding.
Yours is a good conservative number,and with a $100 BV/share estimate, a $140 year end close is your number.Being more optomistic,and thinking there could be a acquisition announcment or two by year end ,my number is $150/share. I think everyone would be happy with a 26% yearly gain in Berkshires stock price.Dont want to get you riled up but this looks like a pretty good/safe put selling opportunity to me.
Typical government stupity .Mcdonald was promoted to ceo of P&G,screwed things up in short order,and they forced him out and brought back their former ceo to clean up the mess he made.Just the kind of guy we don't need to fix the VA.
Banks,and insurance are basic to our society and will never go out of style.Berkshire owns businesses essential to our economy.They are a widely diversified and safe business model. They are in the cash generating and investing business.Always a good business to be in.
Yes,your comment is technically correct,but as a practical matter the cost to me of posting the collateral is zero.If the underlying collateral is bonds,I still receive the interest payments,ditto on dividends on stocks,anddividends and capital gains if paid on mutual fund holdings.And,as has been the case with Berkshire Hathaway,if the price of the stock has risen during the option holding period,I have retained that value as well.Tell me what is wrong with this strategy
These are the facts.I am only talking about put options with relatively short durations 3 to 4 months out.I olny sell them on Berkshire Hathaway.I sell them in a brokerage account where I have a little over $3 million dollars of other stocks,bonds,and mutual funds.Sure there is a margin requirement during the period of time the put is active,but there is no interest charge made on the margin balance.The full amount of the premium for the put is credited to my linked money market account at the same brokerage account at the time of the sale..Yes ,I do understand the risk element in selling naked puts.You could end up having to buy ,in my case,1000 shares of BRKB at $115/share or $115,000.worth iregardless of the current market price.In the case of Berkshire I do not view this as a high risk position.I have owned Berkshire since the early 90s and with a current BV of$94.50 and a $113.buy back floor, wouldnt mind owning another 1000 shares..
I knew you would come out swinging,but whats your point?I made $3,900 with no investment.Your rant doesn't change a thing