AlexR

Berkshire's Puts: Not Such a Great Idea

The yield on that Put seems awfully small for a 20-year out expiration. You can write much shorter options for a better premium. For example as of today, you could write the JUN 09 $85 PUT on SPY for $11.65. That's a 20% better yield than what Buffet got, in only 7 months as opposed to 20 years. Puts were cheaper a few months ago, but not by that much (especially not the ones further out). Was Buffet asleep on this one?

Buffett's Gamble: $40 Billion Bet on Volatility

What I'd like to know is, who is the idiot/genius who took the other side of those options trades, and why? By a simple back-of-the-envelope calculation, the $4.85 billion Puts are now worth $18.5 billion!