Berkshire Hathaway, under Warren Buffett’s leadership, has made new investments in UnitedHealth, Nucor, Lennar, and DR Horton, while reducing its stakes in Apple and Bank of America. Following Berkshire’s US$1.6 billion purchase, UnitedHealth’s shares increased, even though the company has faced a tough year, with its stock price dropping about 50%, a DOJ investigation, and a CEO resignation. The investment in Nucor caused its shares to rise nearly 8%. Similarly, Berkshire’s increased stake in Lennar and its new investment in DR Horton both led to a 3% uptick in their stock prices. Berkshire also picked up smaller investments in Lamar Advertising and Allegion. Meanwhile, it has continued to cut back on its holdings in Apple and Bank of America. Berkshire’s overall portfolio is roughly valued at US$300 billion. The SEC had previously mentioned undisclosed holdings, which included DR Horton, Nucor, and Lennar. Warren Buffett plans to step down as CEO at the end of 2025, with Greg Abel set to take over. After these announcements, shares of UnitedHealth, Nucor, Lennar, and DR Horton rose, with UnitedHealth gaining extra interest as it trades at a P/E ratio just below 12. With this news, we are thinking about how to position ourselves for the upcoming weeks. The investment in UnitedHealth (UNH) is a strong indicator, showcasing a bold counter-market move. Since the stock has already dropped around 50% in 2025, we believe this suggests that the worst may be already reflected in its price. For derivatives traders, selling puts on UNH with strike prices well below the current market level could be a smart approach. This strategy takes advantage of the high implied volatility stemming from the news and aligns with the idea that the stock has hit a bottom. This perspective is supported by a recent report from the Centers for Medicare & Medicaid Services in late July 2025, which indicated that patient enrollment numbers are finally stabilizing after earlier disruptions. Berkshire’s new investments in homebuilders like Lennar (LEN) and DR Horton (DHI) signal a positive outlook on the housing market. We should think about buying call options with expirations in late 2025 to take advantage of potential gains. This timing seems favorable, as data from the National Association of Realtors for July 2025 showed a surprising 1.5% increase in new home sales, breaking a six-month downtrend. The new investment in steelmaker Nucor (NUE) suggests a bet on domestic infrastructure and industrial growth. This move seems to be in response to the latest Industrial Production Index numbers for July 2025, which exceeded expectations. Purchasing call spreads on NUE could be a lower-risk way to capitalize on anticipated strength in this sector. On the flip side, cutting back on Apple (AAPL) and Bank of America (BAC) might signal caution. With Apple trading close to its all-time highs from late 2024, this move hints at a belief that the stock’s valuation is becoming too high. We should contemplate selling call credit spreads to profit if the stock remains flat or dips slightly. The immediate outcome of these filings is a spike in implied volatility for all the mentioned stocks. Over the next few weeks, we expect this volatility to gradually decrease as the initial excitement calms. This presents an opportunity for premium sellers who can employ strategies like short strangles on these stocks, betting on a return to more typical trading ranges.

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