Best Trading Instrument

Best trading instrument?

  • Commodities

    Votes: 18 40.0%

  • Currencies

    Votes: 7 15.6%

  • Stocks

    Votes: 13 28.9%

  • Bonds

    Votes: 1 2.2%

  • Other

    Votes: 6 13.3%
  • Total voters
    45
lylec305 said:
warren Buffet trades stocks...

Read his annual report, he earns billions trading derivatives
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Invest. The question was about trading.

Let's say if he earns 4 billions on a 30 billion portfolio using option, was it really the best trading instrument? Most of them I think for insurance purposes anyway...

If you watch the video, his put contracts were 3-15 years out, that is either investing or insurance, not trading.

Actually, if you read his annual report at 3:30 it says they book an annual loss of 5.1 billion. That is some trading instrument!!!
 
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Pekelo said:
Invest. The question was about trading.
Let's say if he earns 4 billions on a 30 billion portfolio using option, was it really the best trading instrument? Most of them I think for insurance purposes anyway...
If you watch the video, his put contracts were 3-15 years out, that is either investing or insurance, not trading.
Actually, if you read his annual report at 3:30 it says they book an annual loss of 5.1 billion. That is some trading instrument!!!
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Tell one of the wealthiest person in the world that. And that you have a better trading system. hahaha
 
Pekelo said:
Actually, if you read his annual report at 3:30 it says they book an annual loss of 5.1 billion. That is some trading instrument!!!
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How many traders like talking about their losses, instead of their wins/winners?
With losses like that, I feel reassured with my little 6 fig losses. Must be something to be big enough to be able to afford a 5.1bn loss. How much profits did he book?
 
lylec305 said:
hahaha
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Your point was still moot. Buffett is in the investment and insurance business, not interested in trading. hahaha

Also it does help if you actually watch the video what you link to. Here, I help you out:

http://news.morningstar.com/articlenet/article.aspx?id=285699

"his strategy is twofold. First, he sells overvalued options by writing puts with very long horizons of more than 15 years, which are systematically overpriced. Second, he is making a classic Warren Buffett move, using the "float," or premium, from the options to invest. Because the options he has written are "European," which means they can only be exercised at expiration, he won't need to worry about having to pay out the notional value before expiration. All in all, this is just the type of elegant option-investing strategy to expect from a brilliant investor with a giant pool of capital.

Buffett's strategy has collected a $4.9 billion option premium so far on his $37.1 billion notional index options, but the Black-Scholes model currently estimates a $10 billion liability, so currently he has a $5.1 billion loss on a generally accepted accounting principles basis. However, on a fundamental basis, as he says, "It's only the price on the final day that counts.""
 
Did Buffet traded like that when he started and built his fist billion?

15 years time scale, and 37billion invested. Really impressive.
Never thought that one day in my life, If I could, I'd ask a person - such as Buffet, to trade 1bn capital. Must be something really unique.
 
truetype said:
When the strike is 50, and a stock is 30 at expiry, you'll find yourself less enthusiastic about buying it at 50.
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Show me 1 blue chip that dropped from 50 to 30 within a week or even 2 weeks of ex-dividend date.
 
lylec305 said:
Show me 1 blue chip that dropped from 50 to 30 within a week or even 2 weeks of ex-dividend date.
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TEVA, from $31 to $17
IBM $170 to $160 and then from $160 to $150
BMY $75 to $60
AAPL $113 to $92.....
In the last couple of years but not tied to ex-dividend dates.
 
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