No. of Recommendations: 3
About three months ago I sold 6/20/2025 $530 covered calls for $21.18 when the share price was around $530.
Two possible outcomes:
Firstly, the price at expiration closes higher than $530 and the shares get called. That was okay to me. I was willing to sell for $551.18 ($530.00 + $21.18 premium).
Secondly, the price at expiration closes below $530 and I pocket $2,118 per contract. Kind of like free money, because I wasn't gonna sell anyway.
Today, with the share price ~$485 and a few days before expiration it's likely I'll be handed the second outcome.
But then I got to thinking.
With the share price at $485 today, wouldn't it have been better to lighten shares at $530 three months ago and buy them back today for $485? Yes, of course. That's making $45 per share vs $21.
The problem is the price might have stayed high and you'd still be waiting to buy back, testing your patience, or the price drops like it did, and you wait for it to drop even more, really getting yourself into a mental pickle.
Oh, and before someone tells me that Charlie said to just hold the stock. I eat from my portfolio. But in the coming years I'll be transitioning to "sell 5% of shares every year" that Buffett recommended.
