Why Berkshire Hathaway Stock Could Keep Surging
There's plenty of room for optimism among analysts
Market-makers were forced to buy the stock to hedge their positions
The shares of Berkshire Hathaway Inc (NYSE:BRK.B) are breaking out above the 200-day moving average, as well as trendline connecting May and August peaks. The stock has also moved above its year-to-date anchored volume-weighted average price (VWAP) and year-to-date breakeven level. With these levels of support in place, now looks like an excellent opportunity to speculate on a move higher for the equity.
Analysts are skeptical of Berkshire Hathaway stock, leaving plenty ample room for upgrades. In fact, four of the five analysts in coverage still carry a tepid "hold" rating. Meanwhile, the stock broke calls at the 300-strike, which were bought to open, forcing market-makers to buy the security to hedge their positions.
It’s also worth noting implied volatility (IV) ranks in the 15th percentile of readings from the past year. Plus, Berkshire Hathaway stock’s Schaeffer's Volatility Scorecard (SVS) sits at an elevated 84 out of 100, meaning the security has exceeded option traders' volatility expectations during the past year.
Our recommended February call has a leverage ratio of 8.96 and will double in value on an 11.7% pop in the underlying shares.
Subscribers to Schaeffer's Weekend Trader options recommendation service received this BRK.B commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
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