Last week I wrote a covered call to liquidate 100 Berkshire Hathaway (BRK.B) shares to move the capital to my wife’s retirement account. BRK.B has lagged most other positions in our portfolio and therefore will incur a smaller tax burden upon liquidation. Today, after another sharp broad market decline, BRK.B has fallen below our strike price ($250) with just one more full trading day until expiration (5MAR2021), and I purchased the position to close for $45.69 to net $68.61.
To roll out and up the covered-call position I sold another call option contract (strike: $252.50; expiration: 12MAR2021). Netting less than $70 in six days on the first covered-call contract is not too impressive but if our shares are called away by the new contract, as opposed to the newly closed contract, our redemption value is worth an extra $250.