No. of Recommendations: 18
For those aggressive folk with a long term bullish BRK position some of which is held via long dated deep-in-the-money calls, they have to be rolled from time to time. i.e., sell the current ones before they expire (or are assigned), buy longer dated ones.
The ideal time to do this is when:
* The stock price is fairly high
* The market is relatively calm
* Interest rates are relatively low
I just thought I'd mention that the current situation is quite close to that ideal, if you have any options for which you'd like a longer date. The implied interest rate for the implied loan built into these options has fallen a lot based on market expectations of upcoming interest rate cuts, so taking into account the likely trades within current bid/ask spreads there are several contracts with rates in the 4.8%-5.0% range, which is not bad. e.g., January 2027 with strikes $300-340, January 2028 with strike $280. Actual fill prices will be different, of course, but those current examples give an idea. We rarely saw better than that even when policy rates were much lower.
Since the stock price is reasonably high at the moment, there is a good chance that one can switch from an older lower strike to a newer higher strike, freeing up cash / taking profits.
Note, this is not an ideal time to buy new calls, just a good time to roll old ones to new ones without increasing the position size.
Jim
