[FatOtt]

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If the strike=$30 and the strike=$60 options were issued on the same date, Black-Scholes would obviously value the $30 strike option higher (as would all option pricing formulas).

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I thought that was exactly his point. They had the same expiration (I don't see how the date of issue matters, but of course expiration does), but the $60s were higher, which prompted his remark of "insane."

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No, I'm saying that Black-Scholes (the tool that Munger hates) would value the k=30 and k=60 options such that the k=30 option was more valuable. Munger's statement refers to the fact that Costco issued options at k=60 and options at k=30 (separate times). At the issue dates, the k=60 options were worth more (according to Black-Scholes) than the k=30 options. His argument was, "How can the option to buy something at $60 be worth more then the option to buy that very same thing at $30?" He completely ignored that the stock price itself (the perceived value of the firm) had changed between the two issue dates.

I'm not even saying that Black-Scholes is good or bad, but Munger's argument in this case is bad. As edtoast noted, unless the two options are granted on the same date (into the same environment, with the same underlying's expectations), any comparison between the model's prices is faulty.