Last Friday I dipped my toe into the water, selling 2 covered calls for the first time. Skin in the game focuses the mind a little better. I learned what other questions I might have and the basics of how the options market operates.

I went with a 6/24 and 9/24 expiration and a 400 strike price.

Over the weekend I decided that what I wanted to focus on was the 1/25 420s and planned to close out the 400s on Monday. I closed them on Monday morning with the stock down around 1%. Much to my surprise my profit on the trade was about 16 1/2%. And, I was not even looking for a profit, just to close the position! Pretty good for a weekend.

The sales of the January 420s on Monday was pretty interesting. This is one THIN Market. I sold 15 covered calls - one at a time throughout the day. I know nothing about options pricing - I just placed bids high enough to have them not execute and then lowered my ask by a nickel at a time until I got an immediate hit. For about half of the sales I felt like there was a computer on the other side as my sales were quite a bit above the bid shown - I got the same execution price on 5 sales in a row.

By the end of the day I had finished my job. I sold 15 covered calls and the total number of trades in this contract was 63. I can tell you that my activity is not usually 25% of the market.

Most importantly I was pleased with the result. I pocketed a fair amount of cash for a selling contracts I do not think will be exercised. And if they are, I will have sold 1500 B shares for around $650,000 (execution plus option premium collected). I'm OK with that. Price of the option contract between now and expiration - who cares! I'm going back to sleep now - wake me up next January and let me know what happened.

Berkshire Hathaway FAQ

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