Covered Calls on Berkshire Hathaway (BRK.B)
For the last selection, I suggest Berkshire Hathaway (BRK.B) B-class shares. I think this is a classic long-term hold. You want Warren Buffett in your portfolio. However, BRK.B stock has been in a long-term trading range. That’s the perfect time to sell calls against it. Even if it does get called away, there’s a decent chance the stock will fall back to its previous level so you can repurchase it.
BRK.B trades at $123.36. The April 125 Calls go for $1.40. If you sell just one, you hit the $1,000 threshold for covered call income.
And, if your B-class shares get called away, you also pick up another $1.64 in price appreciation, for a total return on the BRKB option trade of about 2.5%.
As of this writing, Lawrence Meyers was long DIS and BRK.B. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at firstname.lastname@example.org and follow his tweets @ichabodscranium.