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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: Engr27   😊 😞
Number: of 15052 
Subject: Re: Calls: end of an era?
Date: 10/26/2023 7:49 PM
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I don't know what an implied interest rate is.

An implied interest rate is just a way to view the call premium.

Since you can control a share for less money by buying a call versus buying stock, the difference can be viewed as borrowing that amount. To exercise the call will cost more than amount "borrowed". Thus, it is as if you paid interest on an amount borrowed.

In the recent past the implied interest rate hovered around 4% if I recall correctly. Now it is 7% to 8%, based on the higher time value of the calls.
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