No. of Recommendations: 10
Of course, no investment is win/win; with put options, you always have to also consider the possibility that you are in effect picking up nickels in front of a steamroller. If the shares go down to $300, I won't be so happy about being forced to buy them in June at $409, when I could buy them for $300. This is where the price comes into play; if I can only get a 'nugatory*' return, then I am better to avoid the possibility of a really bad return like that one.
Though that makes good sense when considering any given put trade in any short/finite time period, personally I'm not one to apply that reasoning to Berkshire. Since the low prices never last all that long, neither does the bad feeling, so there is no real reason for the bad feeling at all. Cheap BRK would be great for backing up the truck, so the only "risk" is writing so many puts that you can't buy even more at the bottom.
I find it difficult to picture a situation that the value of a share doesn't keep rising in any given 6-12 month period. It might be hard to measure well, but (a) the cash does roll in and (b) the firm seems to be more or less proof from large permanent losses, as a rule. The squiggles in any line representing fair value are generally all about the measurement method, not the actual value.
Jim
