Options Corner: BRK/B Ahead of Earnings

Core Viewpoint - Berkshire Hathaway is currently underperforming compared to the financial sector and the S&P 500, making it challenging to directly compare with other stocks due to its sprawling nature [2]. Company Holdings - The top five holdings of Berkshire Hathaway—Bank of America, Chevron, Apple, American Express, and Coca-Cola—constitute approximately 70% of its portfolio, indicating a concentrated investment strategy [3]. Technical Analysis - The stock chart shows a pattern of lower highs and a triangular shape, with a notable double bottom formed at a low point of 473 after the last earnings event [4]. - Key resistance levels are identified at 512 and 516, while moving averages are consolidating around 495-496, with the 251-day EMA providing significant support at approximately 488 [5][6]. Volume Profile - The volume profile indicates significant trading activity between 490 and 505, with the point of control near 498 being the heaviest trading area. There is also notable activity in the 475-480 range, which could serve as a support level if the stock moves lower [7][8]. Trade Strategy - An example trade is proposed with an expected move of 5.7% over the next 49 days, targeting a short put vertical at a $1 credit, with a maximum profit of $100 and a maximum loss of $400, indicating a risk-reward setup of 1:4 [9][10]. - The break-even point for this trade is set at 479, which is approximately 4.6% below the current price, aligning with the expected move and supportive factors identified [11][12].