What's behind Berkshire call selling
Berkshire Hathaway saw heavy call selling yesterday as it came off Friday's multi-year highs.
optionMONSTER systems show that a trader sold more than 5,000 September 100 calls, including a block of 1,025 for $3.05 and another 4,100 for $3. The previous open interest at the strike was just 71 contracts, so this is clearly new activity.
The calls selling wasn't tied to any trading in the underlying shares identified by our systems yesterday. The options could have been sold naked, but they were much more likely traded against an existing long position in a covered call strategy. The latter would suggest that the trader sees the stock in a limited range in coming months. (See our Education section)
BRK.B was down 1.5 percent to close at $96.51 yesterday. Friday's close of $98 and intraday high of $99 were the financial conglomerate's highest levels since the all-time adjusted high just above $101 from the end of 2007. Shares have run up from support at $84 in the last three months.
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