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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
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Author: Engr27   😊 😞
Number: of 16628 
Subject: More cash-secured put arithmetic
Date: 08/14/2025 2:15 PM
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In https://www.shrewdm.com/MB?pid=882213795 robm pointed out that with a cash-secured put you earn interest on the entire strike price, not just your backing cash.

So, if earning interest on $500 is good then earning interest on $700 must be really good.

Writing a $700 Jan '27 put will yield almost no time value -- it might even be negative.

However, at an interest rate of 3.6% / year you would earn about 5% for 17 months (til Jan '27). That's about $35 a share.

This put discussion was all in the context of wanting to own the stock. What is the downside of buying the stock via the $700 put, given the 5% discount?
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