[DesertCat]

Buffett wrote puts on KO once when the price got low, but not low enough to buy more. And he's got billions in long dated index puts (ten years or more) that essentially force him to buy the index if the price drops 30% or so. The problem with writing puts like this is tying up capital. In Buffett's case he's got insurance float that might give him some long term flexibility about commitments like this.

But I've never heard of him doing covered calls. I've never done them because my stocks are too small to trade options on. But the essential concept is intriguing. As SuperWhale and StinkyPete point out, it doesn't work on any speculative positions whose value may change dramatically based on news.

Typically covered call writers write very short dated covered calls. This means they have to be written close to the current stock price, to capture any significant premiums. But if you buy KO at $60 thinking it's worth $90, you need to write calls at $90. But even the short dated $75 KO calls are only pennies. So $90 calls even out a year or more would likely be worth only a tiny premium.

So I think it only works if the stock is getting near your IV estimate and then you can write calls every month until the stock is called. Assume you bought KO at $40 thinking it was worth $65. Right now you could make 35-45 cents a month writing $65 calls. Or you could write $62.50 calls for about $1.25.

Either way, it's a rare situation and won't add to your results much.