Post #6986 by Engr27 on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

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* Up a lot (above strike+premium), the case discussed above. You got an exit price maybe 10+% above a high starting valuation level, so you did well, but worse off than if you hadn't done the deal AND had sold at the high price at the expiry date. You might be able to buy back in at a lower price, possibly not.

One aspect of BRK covered calls that hasn't been mentioned: if your shares are about to be called away (and you wrote the calls when the valuation was high) then the current valuation is very likely even higher. So buy back the call (at a loss) and write another. Eventually, the call will expire worthless.

Profitability of options is a probabilistic question. Strictly avoiding your call being in-the-money at expiration isn't necessarily the most profitable strategy.

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