Subject: Re: Strategy - covered calls in retirement
Anecdotal comments---

I've done it, and it works, but I find it often isn't really worth the bother with Berkshire.

Two reasons:
* Berkshire isn't frequently valued highly enough that you would want to add what amounts to a bearish position.
You don't want to write a covered call if it's still cheapish, because you're saying you're willing to sell at a price not too much higher.

* But more importantly, premiums for Berkshire generally aren't very high.
There is a price at which writing an option is a smart idea, and a price at which it's less so.

It also isn't very well suited to a taxable account.

I do write covered calls, but only when the valuation level gets quite good and I'd be interested in lightening up anyway.
Or I'm about to lighten up for other reasons (money to spend!) and I want to get just that little bit of extra dosh in return for some timing uncertainty.
Most recently I wrote some Jan 2023 $350 calls in March 2022 for $28.50 and bought them back for $12.05 in May 2022.
I could have done better in absolute terms by simply letting them expire worthless, but it would have been a lowish rate of return on the remainder of the term.
And of course in May it wasn't known that the price wouldn't crack $350 again for the rest of the year.


There are option strategies that do better, I have found, but they require picking different underlying stocks because of reason #2 above.
I find it's not too hard to do repeated cash-backed put writing against a group of stocks you consider cheap or fairly valued,
and end up with a rate of return that is roughly half way between [the total return on the stock in that period] and [10%/year].
The ideal candidate is a stock that isn't richly valued, ideally really cheap, but isn't going away, and stays unloved for long stretches so you can do it over and over.
I wrote repeated puts against WFC for a very long time, and did very nicely.
In years that option premiums are low, or prices too high, just don't do it that year. Do something else.
There is a price at which it's a great idea, and a price at which it's a poor idea.
You are running an insurance company. In a soft market for premiums, just cut back on writing policies.
It's a fair bit of work, though, like gardening. You have to check things regularly, culling the ones no longer offering a decent rate-of-return harvest and planting something new.

Jim