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Below is a worked example for BRK using numbers from mid-morning Sept 15 2025 with BRK at 490 (VIX at 15):

Jan 15 2027 (487 days) strike 250 BRK call: bid 255 ask 257 mid 256
Jan 15 2027 (487 days) strike 490 BRK put: bid 30.80 ask 32.10 mid 31 ish
(You don't have to choose the put date to match the call date, but I had to pick some long date, so why not)

If roll put at 1/3 the way in, then that'd be about 162 days from now.
That may be too much time for BRK to (hopefully!) rise, and then it could potentially run away from the put strike, i.e. you'd not be as well hedged with the existing put.
So, roll perhaps every 60 days, which is about 12% of the way in. Time decay of long dated puts at 12% in might be in the 15% or so range (very roughly, details depend on numbers at the time, but the point is that it won't be large).
For a long term strategy you'd want to roll the call too, say about 1/3 of the way in or about 487/3 = 162 days (about every 5 to 6 months).
The cost of the put per day is 31/487= 0.063 or about 6 cents per day.
Checking the cost per day of a a shorter dated put, picked arbitrarily:
March 20 2026 (186 days) strike 490 put, bid 19.35 ask 19.65 mid 19.50
Cost per day of shorter dated is 19.50/186= 0.104 or ten cents per day.
The cost per day of the shorter dated put is considerably more than the longer dated put.
This is often true but it's folklore and not a law (I've seen it violated), so best to check both.

Summary:
With BRK at 490 and a 250 strike call, you spend $256 ($25,600 per contract).
You're controlling $490 priced shares using a $256 call, so you "save" 490-256= $234

You spend $31 dollars of this for the ATM put, so now you've got $201 in 'savings'.
201/234= 0.86 or 86%, so you've still got 86% of the 'savings' that you started with without buying the hedge.
But now you're also hedged quite well.
So transaction costs, time decay costs, etc have a pretty big 'savings account' to draw down against.
Perhaps you put the 86% in T-bills and get some risk free premium to fund theta decay etc.

What am I missing?

I find it interesting that you are thinking of buying
a Jan 2027 490 put. I'm currently short that same put.

:-)

Cheers,
Stopped Clock

" Jan 2027 490 put. I'm currently short that same put. ""



That put is currently about 32 $. 490 - 32 = 458 $ to fully secure that short put position. 487 days to expiration, so that's about a 5.25 % annual return plus the interest earned on the cash, figure 3.80 ish looking out 487 days as short term interest rates drop. For an American in a taxable account, is that return commensurate for an at the money put at current valuations?

Good luck.

A short Jan 2027 490 put with a $30 premium is a commitment to buy BRKB at effectively $460, in 16 months.

In 16 months, 1.3 x book value will likely be about $460, and BRK will be buying their own shares if
it's at that price. $490 will likely be about 1.4 times book value in Jan 2027.

So instead of buying 100 shares of BRKB at $490 today (for $49,000) , I get paid $3000 + 16 months interest
on $49,000 (about another $2400) to wait for 1.3 x book before buying. That's 11% in 16 months, or
a little better than 8% per year, to wait for BRKB price to come down before buying.

If BRK price stays flat for the next 16 months, which I think is likely given the current
valuation, at least I get the put premium plus the interest.

Selling puts on BRKB is like insuring the house next to the fire station.

If I had a better idea of where to invest $49,000 now, I would do it.

Anyway, that's my thinking. I already have plenty of stock exposure, and am not
thrilled about buying more BRKB at $490 now.

Cheers,

Stopped Clock

" If I had a better idea of where to invest $49,000 now, I would do it."


Keep in mind 16 months is a long time. IF we get a sell off and brkb drops to 460 and the VIX doubles that put might trade, 40 bid offered at 50, bid spread in a fast market. IF you are willing to lose the liquidity and hold until the stock is put to you, ok. You know you can't be certain you can close the position at a reasonable price in an illiquid option. Good luck with it.

Good points!
But to clarify, I wasn't addressing whether now is a good time to buy BRK stock, or to buy DITM calls, I was just outlining the general strategy.

As far as the specific numbers used here - well, I had to pick some real world numbers and the current ones are all I've got!
But no, I wasn't necessarily suggesting to do this now.

However, I did find it interesting that you could buy ATM puts (as of yesterday) to go along with your 50% OTM DITM call and still retain 86% of the 'savings' of using the call instead of long stock. As mentioned, roll the long dated puts fairly frequently to minimize time decay.

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