Berkshire Hathaway (BRK.B) Options
Berkshire Hathaway’s (BRK.B) B shares are a good choice for this strategy if you are a very conservative investor. The premiums aren’t huge, so if you’re a bit skittish about trying options, you’ll want to try them on a stock that you want to own for the long-term if it gets put to you or isn’t called away. Berkshire should give you the most comfort out of all of these.
Right now, BRK.B stock is at $113.10. If you bought it here and sold the March 115 call for $1.06, you’d earn a roughly 1% premium, or about 11% annualized. Or you could sell the March $115 naked put for $2, for a premium of just less than 2%.
As of this writing, Lawrence Meyers was long BRK.B. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at firstname.lastname@example.org and follow his tweets @ichabodscranium.