Bullish Call OI at $500–$505 and 0.59 Put/Call Imbalance Signal BRK.B Breakout Potential: How to Position for a 500–507.5 Range

• Berkshire Hathaway B (BRK.B) trades at $498.79, up 0.77% intraday, with a short-term bullish Kline pattern and MACD crossing above the signal line.
• Options data shows heavy call open interest at $500–$505 strikes (expiring this Friday) and a put/call OI ratio of 0.59, signaling strong bullish sentiment.
• Block trades of 440–480 puts at $520–$525 strikes (expiring 2025-09-19) suggest institutional hedging or bearish positioning.

The confluence of technical indicators, options flow, and corporate actions points to a high-probability breakout above $500. BRK.B’s current price sits just 0.8% below its 200-day moving average ($489.61), while RSI at 42.99 suggests oversold conditions. The 0.59 put/call OI imbalance (calls: 285,045; puts: 168,730) underscores a structural bias toward upside, particularly with $500–$505 call strikes attracting 3,452 contracts of open interest this week. However, block trades of 1,880 puts at $520–$525 strikes (totaling $6.1M in turnover) hint at potential downside risks if macroeconomic pressures intensify.

Bullish Call OI at $500–$505 and Bearish Block Trades: A Tale of Two Sentiments

The options chain reveals a striking imbalance: 3,452 call contracts are concentrated at $500–$505 strikes (expiring this Friday), compared to just 1,338 put contracts at $475. This suggests institutional positioning for a $500+ breakout, with $505 acting as a critical psychological threshold. The MACD histogram’s positive divergence (2.10 vs. 2.65 signal line) further supports this view, indicating momentum is accelerating above the 30-day MA ($492.60).

Yet, the block trades tell a different story. Four separate trades totaling 1,880 puts at $520–$525 strikes (expiring 2025-09-19) suggest large players are hedging against a potential 4%+ correction. These puts are currently out-of-the-money but could become relevant if BRK.B’s intrinsic value weakens due to Fed rate cuts or portfolio underperformance. The $520 strike aligns with the upper Bollinger Band ($505.27), creating a potential "speed bump" if the stock approaches $505.27 without breaking through.

Corporate News: Strategic Expansion in Japan vs. China Exit

Berkshire’s recent $500M increase in Mitsui & Co. (a Japanese trading giant) directly supports the bullish case. This move aligns with Warren Buffett’s "buy what we understand" philosophy and signals confidence in Asia’s long-term growth. Conversely, the full exit from BYD (a 17-year holding) reflects risk-off positioning in China amid regulatory uncertainty. Analysts at Barrons and Zacks note this shift prioritizes stability over high-growth bets, which could stabilize BRK.B’s intrinsic value over time.

However, the Fed’s rate-cut risk remains a wildcard. A 1% rate drop could reduce Berkshire’s insurance float earnings by $300M+ annually, per Barrons analysis. This creates a "two-speed" scenario: while BRK.B’s diversified businesses (energy, railroads) benefit from lower borrowing costs, its insurance segment faces margin compression. Traders should monitor the 10-year Treasury yield as a proxy for this risk.

Actionable Trade Ideas: Calls at $500–$505 and a Bull Put Spread

For options traders, the most compelling setup is a call ladder at $500–$505 strikes expiring this Friday. With $2139 OI at $500 and $1321 at $505, these strikes offer leverage if BRK.B breaks above $500. A $500 call (currently at $1.25) could see 20%+ gains if the stock closes above $505.27 (Bollinger Band upper bound). For a longer-term play, the $510 call expiring next Friday (OI: 833) offers a 2.5% premium with a $505.27 breakeven.

Stock traders should consider entries near $488.49 (30D support) with a $505.27 target. A bullish case is reinforced by the 100D MA ($489.68) acting as a floor. A bearish alternative is a put spread at $495–$480 (OI: 3161/1022), which profits if BRK.B dips below $488.49 but avoids the block-trade risk at $520.

Volatility on the Horizon: Navigating BRK.B’s Path to $505.27

The coming weeks will test BRK.B’s resolve. A breakout above $505.27 could trigger a 3%+ rally as call OI at $505–$507.5 strikes (OI: 542) gets activated. Conversely, a close below $488.49 would validate the block-trade bearishness and force a reevaluation of the bullish case. Traders should also watch the 200D MA ($489.61) as a critical support level—if BRK.B falls below this, the 200D MA could become a resistance on the way back up.

In summary, BRK.B presents a high-conviction trade for those willing to balance the bullish options flow with the bearish block-trade risk. The key is to position with tight stops near $488.49 while targeting $505.27 as a near-term inflection point. As Warren Buffett once said, "Be fearful when others are greedy and greedy when others are fearful"—a mantra that feels particularly relevant as BRK.B navigates this pivotal juncture.