Examining Warren Buffett's Portfolio: USG

USG Corp. (NYSE: USG) opened at $46.28. So far today the stock has hit a low of $46.26 and a high of $48.65. As of 11:10, USG is trading at $48.46, up $2.48 (5.4%).

After hitting a one year high of $113.45 in May 2006, the stock plunged in early summer and has been trading in a roughly $10 range between $45 and $55 over the last ten months. Warren Buffett has been adding shares of this company to his portfolio recently, and USG currently makes up just shy of 2% of his total holdings. Buffett is an investor who likes to buy and hold a stock as it rises over time, and the companies he's invested in have a history of strong long-term performance. Recent technical indicators for USG have been bearish but improving slightly.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $42.50 range. USG hasn't been below $42.50 at all in the past year and has shown support around $45 recently. This trade could be risky if this volatile stock breaks below $45, but even if that happens, the stock would have to fall by 10.8% before this position is in jeopardy.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls a position in USG.