Shares of conglomerate
Berkshire Hathaway (BRK-B) dropped slightly after reporting record earnings for the fourth quarter of 2023. One trader sees shares trending higher in the coming weeks.
That’s based on the April $430 calls. With 51 days until expiration, 11,615 contracts traded compared to a prior open interest of 292, for a 40-fold rise in volume on the trade. The buyer of the calls paid $2.75 to make the bullish bet.
Berkshire shares recently traded for about $410, so they would need to rise $20, or just under 5 percent, for the option to move in-the-money. The strike price of the option is also right at Berkshire’s 52-week high.
Berkshire shares are up nearly 367 percent over the past year. Earnings are up 108 percent, and a rebound in the company’s investment portfolio has helped fuel an increase in overall valuations. Improving profitability in the company’s insurance operations also played a key role.
Action to take: Investors may like Berkshire as a long-term holding. Interested investors should build a small stake now, and use future market pullbacks to add to the position. Berkshire does not pay a dividend.
For traders, the April $430 calls may not move in-the-money. But after the stock’s post-earnings report selloff, the calls can likely see mid-double-digit returns in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.