BRK.B's Bearish Options Setup: A $495 Call vs $487.5 Put Battle and What Traders Should Watch

• BRK.B trades at $492.66, up 0.51% with volume surging to 1.7M shares.
• Options data shows a 0.57 put/call OI ratio, with heavy put interest at $487.5 and call OI spiking at $495.
• Block trades in deep puts (BRKB20250919P525) suggest institutional bearishness ahead of 2025 expirations.
• Technical indicators (bearish engulfing pattern, RSI at 39.7) hint at near-term support tests.

Here’s the thing: BRK.B’s options market is screaming "watch the $487.5 support level" while technicals hint at a potential bounce. But the bearish OI and block trades? They’re like a bear in a tuxedo—polite but dangerous. Let’s break it down.

The $487.5 Put Wall and the Call Buyers’ Dilemma

The options chain is a chessboard. Right now, the $487.5 put strike has 2,241 open contracts—nearly double the next put. That’s not just noise. It’s a "soft floor" where smart money is hedging. Meanwhile, call buyers are piling into $495 and $500 strikes, but with a MACD of -0.71 and RSI near oversold territory, those calls might be fighting a losing battle.

The block trades are the real kicker. Four separate trades totaling $5.8M in puts with strike prices between $520 and $525 (expiring in 2025) suggest big players are locking in downside protection. Think of it like a storm warning: they’re not just preparing for rain—they’re building a dam.

News vs. Options: Buffett’s Legacy and Abel’s New Era

Warren Buffett’s recent $9.7B petrochemical buy and UBS’s "Buy" rating keep the long-term story intact. But here’s the rub: the market isn’t buying the bullish narrative yet. The bearish engulfing candle and Bollinger Bands (price near the lower band) suggest short-term pain.

The news about Abel’s operational focus and energy bets is solid, but options traders are pricing in $487.5 as a critical test. If BRK.B breaks below that, the $475 put OI could become a feeding frenzy. On the flip side, a rebound above $495.79 (middle BB) might trigger a short-covering rally.

Actionable Trades: Where to Play the BRK.B DramaFor Options Traders:

• Sell the $487.5 put (expiring Friday) if BRK.B holds above $489.42. The 2,241 OI means this strike could act as a magnet.
• Buy the $495 call (Friday expiry) if the stock breaks $492.74. The 3,075 OI at this strike suggests liquidity, but watch the RSI—RSI 39.7 is low, but a break above $495.79 (middle BB) could spark a bounce.
• Avoid the $500 call unless the 30D MA ($494.92) flips to bullish. Right now, it’s a trap for overeager bulls.

For Stock Traders:

• Entry near $492.15 (30D support) if the stock holds above $489.42. Target $495.79 (middle BB) as a short-term goal.
• Stop-loss below $487.5 if the put wall fails. That’s where the block trades and OI suggest a breakdown.
• Consider a bullish strangle if the RSI crosses 45 and volume spikes. The $495 call and $487.5 put could form a tight range.

Volatility on the Horizon: BRK.B’s Crossroads

The next 72 hours will be critical. If BRK.B can’t hold $489.42, the $487.5 put OI and block trades could push it toward $475. But if the stock reclaims $495.79, the bearish engulfing pattern might reverse into a bullish setup.

Here’s the bottom line: BRK.B is at a fork in the road. The options market is pricing in a bearish near-term scenario, but the fundamentals (Abel’s energy bets, UBS’s $593 target) suggest long-term resilience. Play the short-term with caution, but keep an eye on the $495.79 level—it could be the spark that reignites Buffett’s legacy.