Hi, Shrewd!        Login  
Shrewd'm.com 
A merry & shrewd investing community
 Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Post of the Week! ¤
Search BRK.A
Shrewd'm.com Merry shrewd investors
Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Post of the Week! ¤
Search BRK.A

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
Unthreaded | Threaded | Whole Thread (18) |
Author: Engr27   😊 😞
Number: of 15051 
Subject: Re: Calls: end of an era?
Date: 10/28/2023 7:34 AM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 1
One aspect of long-dated BRK calls I've never seen discussed is that I wouldn't actually exercise the call. I would sell it (and possibly roll out) a year or so before expiration.

If you buy a call 2 years out and sell it one year out it will retain about 70% of its time value, which accounts for the implied interest. This means that the "interest" charged in the first year is only about 30% of the total, significantly lowering the implied interest rate.

I haven't had my coffee yet, so maybe this is an illusion.
Post New | Post Reply | Report Post | Recommend It!
Print the post
Unthreaded | Threaded | Whole Thread (18) |


Announcements
Berkshire Hathaway FAQ
Contact Shrewd'm
Contact the developer of these message boards.

Ticker or Board Name Author

Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Followed Shrewds