Subject: Re: BRK covered Calls: Lesson (learned?)
1 year ago I received a premium of $8.15. ..

Certainly that isn't a very high premium. You may be right that it wasn't worth the bother.

But do remember the information available when you opened the position. The stock was at $390, so I'm guessing this was around February 2, give or take. Known book per B share was $242.27, so the stock was trading at 1.61 times book. You agreed to (conditionally) sell the stock at $438.15 per share, which was 1.81 times book per share at the time, or (conditionally) pocket some "free" cash. All you had to do was sit and wait to see which outcome obtained. Presumably you thought both sounded fine.

If nominal book had risen by (say) 9% by expiry (a little under a year at around 10%/year?), you'd have expected to be selling at net 1.66 times book-at-expiry. That too isn't exactly a bad exit at planning time, given that the 20-year average is under 1.4 times book.

You've closed for a realized loss of 19-8.15 = -$10.85, which is a drag--I'm sure it feels bad. But do bear in mind that this was a covered call position, not a naked short call, so you did have a long stock as well. That has gone up by a lot, and it's the sum of the two positions which matters. With B shares trading at $441 right now, and figuring in your realized loss on the options you bought back, you could still sell right now achieving a net exit of $430.15, which is still 1.47 times current book, meaningfully above what one could usually expect. As "bad" outcomes go, that's excellent.

I started writing calls against my longs earlier than you, so my initial breakeven was far worse than yours. I wrote shorter term ones, closer to the money, for much higher premiums. Each time they got old, I rolled them up and out for approximately zero net cash change. My mark-to-market total right now is negative, about -$2.70 a share I think. But the time value keeps eroding. If the stock price stays where it is now, I will have made an overall "extra" profit around 4.1% of my long position, fairly modest. But not a bad outcome given how much too early I started: this has been a longer stretch of high valuation than I expected! If the stock price fades just a bit more over the next few months, say $420ish, I'll have made a profit on the short-call side of about 8.1% of my long position. The absolute number is quite meaningful. Conversely if the stock soars and I just let everything get called away (latest June), the net exit price will be over $490 per B, probably in the general vicinity of 1.56 times then-current book.

Jim