With mark-to-market accounting, the value of a put will increase in a down quarter, and therefore give the appearance of more earnings. It is a way of making your company look good in a down market. However it's basically just a poor long term investment with short-term goals in mind.
We don't know the strike price on the puts do we? That's rather critical here as the strike speaks directly to risk. Buffett and company would have had to make some assumptions about future inflation, if their estimates are too low they are safe, but woe be unto them if they are too high. For example if there was a deep and lasting deflation in the next 15 years they would be in trouble. That, in my opinion and apparently in Buffett's too, is highly unlikely, though a lasting sluggish economy accompanied by inflation is a real possibility. The mere fact that Buffett went for this suggests to me that he is very confident that we will not have significant deflation in the next 20 years and that we will instead have very significant inflation. The more significant, the safer their position; regardless, the strike is critical. So what is the Strike?
It amazes me that everyone here is praising Buffett's genius and all. BUT I bet this time last year (when these Puts were down more than 100% - a paper loss of $5B or so) on this very same forum the exact same people (myself included) would have been mocking him and saying what a lousy trade! And we traders/investors have VERY SHORT MEMORY!!!
I have always said that it was a good trade... I think there was a thread about it last year or earlier this year.
Buffet has become the victim of style drift. Why a value investor would insure high yield and stock index risk is beyond me.