July 10, 2018

Buffett Cashes-Out Equity Index Puts He Wrote Nearly A Decade Ago

Warren Buffett - the man who has literally bet it all on Keynesian theory (who in late 2017 speculated that the Dow could be on its way to 1 million) - is unwinding a huge put option position in equity indices that he wrote during the worst of the financial crisis in 2008, about a decade ago. According to Bloomberg, the puts that he wrote have netted Berkshire Hathaway $2.4 billion in profit over the course of the last decade.

But hey, when you know you have the Federal Reserve on your side to bail you and the entire global economic system out, why wouldn’t you write several billion dollars in equity index puts?

At the height of the financial crisis turmoil, Buffett was known to have made a couple of large transactions, including his massive stake that he took in Bank of America. This put option position in equity indices was one of the lesser known positions he took and hadn’t really been discussed too much at length over the last decade. Bloomberg noted the last of these options will expire in 2026:

Read more at https://www.zerohedge.com/news/2018-07-09/buffett-cashes-out-equity-index-puts-he-wrote-nearly-decade-ago

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