edifish

Buffett Serving Free Lunch? (Part II)

dlaw,

Noticed you ignored my question, so I'll state it again for you. What proof do you or anyone else have that the risk averse counterparties in this transaction are deciding to close their hedge and roll the dice going long...and on the long-shot that were true.....do you think that it might be a sign that the market had become grossly undervalued ....along with the puts.

Dudelaw....you are no different than the conspiracy theorists that run around wearing aluminum foil on their head. You are so convinced of some complicated master plan out there that you forget to look at the simplistic answer that is staring you right in the face.


On Dec 01 02:50 PM dlaw wrote:

> TomR - I'll leave it to experts to fill in the amounts, but I would
> say:
>
> Sell puts very similar to the ones Berkshire sold but at the much-higher-price
> they would command in the market today, thus netting out the position.
> Their cash profit would be what they take in versus what they paid
> Berkshire.
>
> They could use some of the money to buy calls or go long futures
> as well, thus profiting from the upside as well as the downside.
>
>
> And they could buy CDS to hedge the risk that Berkshire won't be
> able to make good on the promised payment.
>