Subject: Re: BRK options
Seems to be the question is, WHY would you do covered writes on illiquid brkb vs very liquid SPY , in size ? The correct comparison should be an spy covered write strategy vs a brkb covered write strategy.

So, so many reasons.

I haven't seen any problem with liquidity on Berkshire B options, so there's no need to switch. The bid/ask of one of my calls is around 0.07% of the stock price, and the trading friction each way is about 1/4 of that. The SPY bid/ask is tighter on the equivalent OTM SPY call, but the execution friction cost is not a meaningful difference in the grand scheme of things: about 0.01% of strike.

I have a pretty good idea of what Berkshire is worth, and how the market will value it on average in the next couple of years. Not a perfect idea, but the "very probable" range is relatively small. The secret to writing calls is to do it only when the underlying is richly valued. That requires having good metrics of its value, and a good handle on its likely valuation multiples by the market now and in the near future. The returns from SPY will be relatively poor in the next 5-10 years, but beyond that there's little one can say with confidence about how it will get valued. The price might do anything, for a remarkably long time.

For me, writing a call is just an answer to the question: given that the underlying is getting richly valued at the moment, would you be willing to sell it at a price X% higher in the next couple/few months? Either you get that nice exit price or you get a nice little cash return. I'm fine with either. For example, I wrote some September $415 calls for a premium over $25, which if exercised give me a net exit price of just over $440 per B share. I don't foresee any poor outcomes from that, as I figure the most likely market price range at expiry is under $400. If the stock gets called away, I think it extremely likely I could repurchase it some time at a price materially lower than $440.

But most of all, I can't do a covered call strategy with SPY because I don't own SPY, and won't. I wouldn't own a broad cap-weight US market tracker if you paid me. The poor return outlook from the low earnings yield is just one of the reasons.

Jim