No. of Recommendations: 6
For those who can't stomach the idea of selling shares short or maintaining a semi-permanent position in puts (at, say, $100/share)...
One could write long dated high strike calls to fund the purchase of the long dated low strike puts. Both of them at strikes pretty far from the current price.
The risk here is that the price of Apple soars but the price of Berkshire doesn't, so your hedging account loses money that you can't pull from your long side.
This is unlikely to be true forever, especially since we're primarily concerned about something very bad happening to Apple, but that's why the emphasis on "long dated".
It's pretty certain that nobody is going to exercise those calls you wrote, even if they go into the money, so long as they still have material time value left that could be realized.
I'm not recommending this, just mentioning it as another approach to consider.
Yet another possibility comes from observing that the risk to a Berkshire holder of an Apple business crash is actually a fall in the price of Berkshire, not that of Apple.
One could therefore consider hedging one's Berkshire position. It's likely a whole lot cheaper.
Insuring Berkshire's share price against a drop of 21% or more for a year (Jan 2025 $290 puts) currently costs about 0.6% of the current Berkshire share price.
Again, I'm not recommending this, just mentioning it.
What would be even better is if someone would let you by a put option against Berkshire's book value...give Goldman a call : )
Jim
