No. of Recommendations: 11
Should I get fancier with the options and sell cash backed puts for a better entry price?
To each their own I say.
I had some shares called away in March due to covered calls I had sold. Recently I have been selling some cash backed puts for June and July trying to target owning the shares at or below long term median price to peak book. The annualized return on the premium earned is quite low but the cash I’m holding is still earning 5%+, so in total it doesn’t take much to get to a decent overall expected return, IF the stock price stays flat.
The outcomes are either I make a 9-11% return on my cash at risk or end up owning shares at a price I’m ok with. If the stock price runs up then maybe I have some FOMO, but if that happens the game has changed on BRK and I need to re-evaluate based on the new rules to the game.
FWIW, I think Q1 book value will come in at something like $263.90 when we get the numbers Saturday. Median price to peak book is around 1.37 so median share price should be around $362. I’m guaranteed to be wrong but close enough can be useful.
Jeff
