I always wait a few days after posting an article before making any transactions. Waiting a few days after posting the Covered Call Corner spreadsheet last week, I got started executing those bond replacement investments yesterday. Out of the office most of the day, I was only able to fill one order, on Berkshire Hathaway (BRK.B).
The account in which I executed the order already held 200 shares of Berkshire (B-shares…), and I wrote a covered call on the full position. A trusting soul, I assumed that Berkshire’s CEO, some guy down in Omaha, was a skillful allocator of capital, so didn’t mind accepting downside risk on a 2% position.
I originally placed an order for the call options expiring in September, 2018, struck at $200 / share at an ask price of $8.25 / share — which had been the price of an earlier transaction, but was closer to the ask price than the bid price by the time I placed the order. The market moved away from me, so within 5 minutes, I pulled my asking price down to $8.15 / share and placed a good-till-close limit order at that price.
The transaction remained unexecuted until the close, at which time, the market maker must have decided to fill my order.
The period return — if the option expires ITM — is 6.2%, which, over the 135-day tenor of the implies an annualized return of 17.7%.
I’m traveling today, so will not get a chance to transact many (or any) more of these names right away, but will continue the update when I continue.