Warren Buffet's option strategy

Discussion in 'Options' started by lylec305, Feb 10, 2019.

  1. lylec305

    lylec305

    Selling otm cash covered put is great way to accumulate stock at discount.
    buffetOptionStra.jpg
     
    fkienast likes this.
  2. destriero

    destriero

    God, you are an idiot. Buffett sold those index puts with the SPX above 1500. Took 800 points in heat in a year’s time and he ignored/lied to shareholders about an $8B MTM loss.
     
    Aged Learner and Windlesham1 like this.
  3. RRY16

    RRY16

    Are you snowed in? I heard Tahoe was getting dumped on.
     
  4. lylec305

    lylec305

    When I want to accumulate a stock i sell put approximately 4 ticks otm. Doesn't fill by expiry I collect premium. It's like being paid to wait.
     
  5. Please tell us more about this. I had a friend who used to sell OTM calls on AAPL in order to lower his cost basis and used to tell me "I'm going to have free AAPL shares!" and then they went ITM and he got assigned. I don't know why people get greedy when things go near ITM and near expiry, just close your position and avoid assignment unless you really want it.
     
  6. lylec305

    lylec305

    I want to buy the stock but not at current price. For example MSFT is currently at 105 but I would like to buy it pull back to 103. I can sell a put option with 103 strike price and be paid approximately 1 buck to wait. If msft drops below 103 I need to pay the strike price for the stock. But really pay 102 because $1 put premium received. The risk is; stock price dropping below 102. Works well on strong blue chips and momentum stocks. Sure beats buying stock at 105.
     

  7. You have a point but I don't think it was the volatility. I think it was the market timing...stocks comove. You get the idea from it right? Price don't necessarily follow fundamentals. These investors seek liquidity compensations, which is also called liquidity premimum
     
  8. lylec305

    lylec305

    I can't time the market, can you? I just pick a price I'm willing to pay for the stock and get some put premium while i wait for the stock price to drop. If it doesn't drop i collect put premium. It's like being paid to wait. Works great if i get assigned just before ex-dividend date. ;)
     
    victorycountry likes this.
  9. destriero

    destriero

    2007 Buffett scam.png
     
    Last edited: Feb 10, 2019
  10. destriero

    destriero

    We got two feet overnight. We got about the same last weekend as well. We're not at record levels but at least 2x last year's precip. Truckee CA got seven feet overnight.

    This drift is 7' tall. Plow guy won't answer calls. Honda 1332 was not visible while plowing the driveway. I've been going since 6:20 am and not done yet.

    2019-02-10_1023.png
     
    #10     Feb 10, 2019
    RRY16 and sle like this.