A bit late, boys. Why didn't you do so when Berkshire´s price was really far ahead of itself?

Some people did. I wrote some $550 calls on May 2, the day of the high, and got a premium of $41.84 for them, breakeven $591.84. So far I've made 84% of the maximum possible profit. (I've been net short Berkshire since then).


The price is lower, but not cheap right now. Even so, writing cash-backed puts could already make some sense depending on a person's situation.

Suppose you have a pile of cash earning interest, and want to deploy it into Berkshire but only at a good valuation multiple, or at least not worse than average. To take a random example, if that person write January $460 put for a premium of $14.50, the two outcomes are: (a) you get 6.0%/year return on your committed capital in addition to the ~4%/year you're earning on the cash deposit, total 10%/year rate. Not so shabby. Or, (b) you get an entry to Berkshire at $445.50 a share. Year end on trend book might be around $322ish as a wild guess?? So that would be an entry price of 1.38 times book, not richly priced. It is highly unlikely for options to be exercised early if they can be sold for any positive time premium, so you'd probably also get the interest on your cash for all or almost all the period.

It would be better to do this on a panicky day in the market, if Mr Market is in the mood to offer one. And of course at a lower price for a B share.

Jim