Post #2749 by StoppedClock on the Berkshire Hathaway board

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

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If you sell a june 2024 $370 call to get a $1440 premium, you risk 100 shares getting called away next year.

Compare that with selling just 4.2 shares now to get the same $1440, which you can put in savings earning about 4.7% interest until you spend it.

A quick look at the options tables shows that the $370 calls (and other high-strike price calls) have the lowest implied volatilities (which is the crappiest premiums) compared to calls at lower strike prices.

This suggests that the call premiums may not be sufficient to compensate for the risk of getting 100 shares called away next June, at what could be an unattractive price.

I guess the problem comes down to your confidence in predicting the future.

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