Post #13988 by mungofitch on the Berkshire Hathaway board

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

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Now I've got a June 540 covered call against a long-held holding in a taxable account with a rather large unrealized gain, that I really don't want to get assigned and the gain realized.

If BRK-B is still above 540 might need to buy shares the day before expiration (on margin) so those new shares will be the delivered lot. Will that work?

What I would do is allow the market to pay me more money to wait for the weighing machine. Buy back the June 540 and sell September 540 (or Jan 550 or whatever). The premium and breakeven (net exit price) will be higher, so you keep that extra money, and the odds of exercise drop back near zero.

You can do this pretty much forever. Sooner or later there will be some price weakness and you pocket the entire price of the last contract.

It's true that the most likely price rises over time, but not that much that soon.

Jim

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