BRK.B Options Signal Bullish Bias at $500, But Whale Puts at $520 Warn of Hidden Dangers

• BRK.B trades at $490.81, up 0.65% with a bullish engulfing pattern on the charts
• Options market shows 0.60 put/call ratio (calls dominate) and heavy call open interest at $500 strike
• Massive block trades in $520 puts ($1.5M+ turnover) hint at institutional hedging ahead of 2025

Here's what I'm seeing: The options market is clearly leaning bullish with a 60% call dominance, but there's a shadow play in deep OTM puts that traders need to watch. The stock is sitting at a critical inflection point between its 30D and 200D moving averages, and the options data suggests a potential breakout scenario... but with a twist.

Bullish Calls at $500 vs Bearish Whales at $520

The options chain tells a fascinating story. For Friday's expiry, the $500 call has 3,611 open contracts—the highest of any strike. This suggests a lot of money is betting on a short-term pop above $500, which would break through the 200D MA at $494.70. But here's the catch: there are massive block trades in $520 puts expiring in September 2025. One trade alone moved 440 contracts of the $520 put for $1.5M, indicating big players are hedging against a potential 4% drop from current levels.

This creates an interesting tension. Retail and institutional buyers are pushing for a $500+ move, but deep in the options market, whales are preparing for a worst-case scenario. The $490 put (3,243 OI) and $480 put (3,768 OI) also show significant bearish positioning, suggesting support levels to watch if the stock stumbles.

News Flow: Buffett's Cash Pile vs Leadership Uncertainty

Berkshire's Q3 earnings beat with $13.485B operating profits and a record $381.6B cash hoard should be bullish. But the market is pricing in uncertainty—Warren Buffett's retirement timeline and Greg Abel's leadership transition are creating a cloud over the stock. Jim Cramer's recent warning about profit-taking as Buffett steps down has added to this tension.

The cash pile itself is a double-edged sword. While it's a strategic advantage, the absence of buybacks ($0 in Q3) has investors questioning capital allocation. The recent sale of Apple and Bank of America positions also suggests a shift in strategy. But here's the kicker: the stock's technicals still look strong. The RSI at 41.87 is in oversold territory, and the MACD is showing signs of a potential crossover.

Actionable Trade Ideas

For options traders, the $500 call (expiring Friday) is a high-probability play if the stock breaks above $493.89 (intraday high). Entry near $492.50 with a target at $500 makes sense. For those wanting to hedge, the $480 put (next Friday expiry) offers downside protection if the stock dips below the 30D MA at $491.92.

Stock traders could consider a breakout strategy:

• Entry: $494.70 (200D MA) if the stock holds above $487.34 (intraday low)
• Target: $500 (breakout level with heavy call OI)
• Stop: $487.34 (support level)

For a more aggressive play, consider a call spread using the $500 and $510 strikes. The $500 call has 2,605 OI next week, while the $510 call has 557 OI—this gives you upside potential with defined risk.

Volatility on the Horizon

The next few weeks will be critical. If BRK.B can hold above $491.92 (30D MA) and break through $493.89 (intraday high), the $500 level becomes a self-fulfilling prophecy. But keep an eye on those $520 puts—they're like a canary in the coal mine for a potential 2025 selloff. The leadership transition timeline and capital allocation decisions under Greg Abel will be key catalysts to watch.

This is a classic case of "buy the rumor, sell the news." The options market is pricing in a short-term pop, but the block trades suggest some big players are preparing for a longer-term correction. As always, position sizing and risk management will be your best friends in this setup.