Post #4339 by Engr27 on the Berkshire Hathaway board

Stay on topic in your discussions, and avoid making off-topic or irrelevant posts. If you want to discuss a different topic, it is okay provided you mark the subject starting 'OT:', and also consider posting on a different board.

- Manlobbi

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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If you buy a call 2 years out and sell it one year out it will retain about 70% of its time value

This is true if the price of the underlying is the same and the implied volatility is the same one year later.

A DITM call will lose more of its time-value as the underlying stock price rises -- I'm willing to accept that penalty.

The relative implied volatility a year later could be higher or lower. So one of the criteria for buying the DITM calls in the first place is to be sure that implied volatility is not unusually high.

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