Bought a bunch of options to buy the stock at $250, selling at $286, expiring in 800 days. I’m basically agreeing to lock in the stock at $536/share in 800 days.Given the stock is $509, it’s the equivilent to if I was borrowing at a rate 2.386% a year.How is this not a great deal? Considering 40% of the portfolio is in T-bills yielding 4%
>>61327049That does seem like a good play.
>>61327215Insanely based
>>61327049These options are pretty affordable if you are even mildly bullish on Berkshire over the next couple years.Your number might be a little high though. I have seen numbers saying around 31% of Berkshires holdings are treasuries and cash.You are borrowing for 2.486% to get a yield of 1.24%. (4%x31%).And the only reason buffet is sitting on so much cash is because he expects the market to crash, which means the other 69% of Berkshire is going to fall with the market, devaluing your option.
>>61327329The 1.24% yield just represents the portion in treasuries.Buffett holds the remainder of the portfolio in cash generating businesses that yield 10+% expectedly.And sure Berkshire could drop and I’ve thought of that, but even so it would drop less than that of the overall market, and if that did happen I’d just double down on buying more Berkshire since it’s a bullet proof security
