No. of Recommendations: 8
Am I missing something ?
I've done something similar from time to time. I like a bigger discount, so I prefer to go further out for the expiry, but same idea. The other benefits of longer dates are that you can benefit from the deal for longer as you don't have to try again every two months (open them only on those rare discount days), and Berkshire's value continues to grow during the interim so a price that looks good now will at expiry seem much better.
The only thing to be sure of is to ensure that you have picked the strike and expiry (and position entry date) such that you are precisely equally happy with the two outcomes, assigned or expired. Because, sure as shootin', Mr Market will give you the ones that looks worse on the expiry date. Which might not actually BE the worst with a longer viewpoint, but might feel bad.
If you want to lean the odds towards getting assignment and away from the cash return, with the benefit of a considerably higher cash return if it's NOT assigned, consider a slightly higher strike like $480 (or whatever). You might want to do that tilt when Berkshire is attractively valued. Conversely, if you prefer to stack the odds towards cash income to add to what you're earning on your cash pile, pick a lower strike. Suitable for when Berkshire isn't all that cheap at the time of opening the position.
The key thing for it to work out really well is to enter the positions on days that Berkshire's price seems lowish, and if possible on days that the market is a bit panicky. Great entry price, lots of time premium.
Jim
