Bad idea, selling brkb calls because it was fairly priced at 420 earlier this year. Bought them back and took the loss.

I started writing calls way earlier than that, with a much lower exit price, so you'd think I'd be in a bad way.

But I just plugged along and stuck with it, rolling the calls out to later dates and higher strikes repeatedly, occasionally adding a pinch more. Each roll raises the breakeven. I get no benefit so long as the price is rising, but I make a little money while it's flat and fair bit of money if/when it falls. My weighted average breakeven exit price (counting losses to date) if all my calls were exercised is now $476. Certainly not that high compared to today's price, but much higher than when I started this cycle of writing calls, and an exit price I could live with.

It could still turn out to have been worthwhile. Perhaps. As an example of the potential benefit, if the stock were to settle in around $420 per B share for a while (which would be a pretty normal valuation level these days), I'll have made an extra 8.5% on my long position compared to never having written any calls in this cycle.

Jim

Berkshire Hathaway FAQ

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