Monday, June 28, 2010
BRK-B idea
I was in this name a few weeks back and got out for a small loss. But it was still on my radar and I saw an opportunity I might want to play. I've put a day order in to short the $85 calls. Unfortunately the stock pulled back today from the weekend prices I scouted the trade out at. I would close the trade out for a loss if it hit a new high, depending on how much time was left. That just looks like an extremely steep incline that I don't feel is sustainable. I haven't researched this fully yet, I heard something about a Russell 2000 re-balancing having something to do with this price action.
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I was filled on this at .41. I had penciled in .50 over the weekend using Friday's closing prices but the stock had fallen a bit by the time I took a look today. Since these are naked calls I would have to consider closing it out for a loss should be breach a new 52-week high. I would probably look to close this trade out early for a smaller than max possible gain if it pulls back in the next few days. This is an uncharacteristically volatile looking chart for what is basically a mini basket of pretty conservative stocks.
ReplyDeleteAgain I think that selling calls and call spreads in this market place makes a lot of since. And like you mentioned in your post above, a lot of the up move the other day was related to the Russell 2000 re-balancing which we saw when BRK-B was first listed and included in the S&P 500. I think it is a fadable event in this market place, Sorry Buffet.
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