No. of Recommendations: 7
I sold those calls looking for easy money... what flaw's do you see in my original thinking?
Berkshire's share price valuation level is certainly above the average of the last 10-15 years. So it's rational not to expect the price to be much higher after inflation in a year, maybe two. So maybe the valuation is vaguely near a cyclical high and writing calls can make a little extra money. That has been my thinking.
BUT...
an average can hide a lot of variation. A lower price is a bit more likely than higher, but either can happen, and either move could be very big. I don't know what the price will be in 3 months or a year, just a spread of rougy probabilities.
If I did know, I wouldn't have started writing calls against my position so long ago. I have been generally rolling them forward over and over, higher strikes and later dates each time, so my breakeven is much higher than it was.
Jim
