Post #11203 by Bluehorseshoe on the Berkshire Hathaway board

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

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I think it was Bluehorseshoe who said when he writes covered BRK calls he only writes them for a strike price at least 20% above current price, as he always thinks a sudden 10% or more jump up to be possible with Berkshire.<\I>

I don't think I said that because that's not how I think about my covered call selling. Maybe I should consider it, your outcome is quite a bit better than mine so far.

I was selling covered calls against my non-taxable holdings starting early in August of 2023. I was targeting my all in exit price, should the shares be called away, at about 1.55x to 1.60x known trailing BV at the time. I was targeting that because historically ~1.6x was the maximum multiple of book we had seen since 2008 and the share price only stayed there very briefly. Once again the market made a bit of a fool out of me but such is life.

I had virtually all of my shares in my non-taxable accounts called away by end of June of 2024. I was not as adept at rolling up and out like Jim, i think my all in exit was about $400 on average. Since then I have switched to selling BRK puts and letting my pile of cash earn 4-5% interest. With the additional put premiums I have so far been earning in excess of 10-12% annualized (keeping up with BV growth) while i wait for valuations to come back in line. There is little doubt the market will make if fool out of me to some degree again.

Jeff

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