Has it occured to you that he has the premium he collected in hand and is able to use that money for investing in some of his sweetheart deals that are paying him in double digit yields? He will likely make more money On the money he collected and put to work, than if he had to pay out a portion 10 to 20 years from now. In short, he is compounding.
Buffy has lost 10 Billion as of yesterday Oct 23 not factoring todays -312 drop. History repeats itself for the ignorant. Funny thing about all this is how when markets tumble there are always those schmucks that say step in and BUY, stocks are cheap, there are great bargains out there, buying opportunity of a life time, You'll never see these bargains again!!!! Then the market goes down and down and down....and then down some more. Same BS was spread during the tech bubble pop. As markets went down 30-40% all you heard was, "We are close to the bottom" "There are great buys out there." >>>>LOL Many were stepping in and snatching up all those great tech companies when the Nasdaq was down 30-40% Oracle, Cisco, etc....then the Nasdaq went down to support at 3700, then 3400, then 2800. The nasdaq bottomed at 1200ish down another 30%+ from the 40% levels where all the knife catchers where pounding the table and stepped in. All those GREAT BUYS of a lifetime in solid TECH co's Cisco's Oracles etc were cut to ribbons even further. Nasdaq from 5000 to 1000, where is it now? We didn't have half the shit going on economically and all the toxic crap we have going on now, not even close. ......Buyer Beware..... Dow 7000 (or worse)can happen. Keep your powder(long$$$) dry. Buy on the way up...not down. And enjoy the outstanding trading environment. HAPPY TRADES!
lol. buffett doesn't hedge, BRKA is a gigantic bet in the US. he buys every US dip because he believes on it
Has it occured to you that you need to think a bit more about writing options before your smartass reply? Does anyone know when these were written -- what market level and vol level? Even though these are European and very long dated, still given the vol explosion, these vols also have to be marked up by some fraction and anyone who has managed long dated options knows the size of vega in them. And not to mention the dramatic price drop on the SP500 to add to the mix. He can't just sit and wait holding the premium collected. Whoever owns these will want to post collateral (no bank will say Warren is good for it ha ha)- I would want him to post additional collateral as the value of my puts keep increasing -- wouldn't you? I'm surprised that the article says the losses as much as 4.7 Billion -- I think potentially losses could be much higher unless he is hedged somewhat. I'm sure he has a trading desk trying to manage these positions and given the volatility, they must be getting a beating trying to hedge this shit. OP is right -- it would be the ultimate signal to go long.
my first thought on this was: there's a very good chance that buffet (age 78) will be dead by the time the payout is to be made. clever strategy. I'm willing to write 10 billion in european style puts on the S&P 500 at a strike price of 2500. Any takers? oh yeah, one thing - they can only be exercised 80 years from now.
Yes that would be nice. But these sure are written by the company Berkshire -- not the person Buffett.
he might be using his/brk holding as collateral for the naked puts. also, i dont believe he has a trading desk managing the position. he is not a trader and dont believes in trading.