So that means, IF I do a DITM leverage on my BRK I am simultaneously (implicitly) borrowing at 5.21% while saving at 4%, which is a dead loss of 1.21% per year on the cash I have done that with. I would be 1.21% to the good if I simply got rid of my BRK leverage and held the shares, plus slightly less cash.


This is all true. No doubt.

But for that cost, you do get some benefit.

The only reason to do that losing habit (which I have done frequently) is that the cash has some optionality. When some really fat pitch appears, you have the cash on hand to do something about it. Cash has a very high return in one way...if you count the things you can do if it's deployed at an opportune moment. Sometimes it's worth 1-2%/year over time just to have that ability when the moment comes.

Also, a very small potential side benefit: when the market crashes and your chosen stock crashes with it, call options don't crash nearly as much (in terms of dollars per share controlled) as the stock price does. It's like the air column under an elevator with its cables cut: as the air below the car compresses, the fall rate of the car slows, with the lowest descent speed when the car gets down to just above the strike price. Sorry for the mangled metaphor, but the point is that in-the-money call options don't fall as much during a crash. (High in percentage terms, but much less in dollars-per-share terms). If nothing else, you can make a nice few spare bucks simply by switching from calls to stock with that spare cash during the moments of the crash.

More generally, holding calls all the time for a given position size means that you can do all kinds of things with the rest. Sometimes it might be cash, sometimes it might be an investment in some irresistible trade. Sometimes you might even want to buy some put options against something, who knows?

Jim