Maybe you are scared and stay on the sidelines, but Warren Buffett is buying in his personal accounts; and 56% of GuruFocus users are buying along with him. Buffett is again selling puts on Burlington Northern Santa Fe (BNI, Financial).
This is the third chunk of puts he sold on Burlington Northern Santa Fe (BNI). On Oct. 10 Buffett sold 1.2 million shares of BNI puts at $7.09 a share, with strike price of $75, exercisable until Dec. 12, 2008. Previously he sold 1.95 million shares of put options on Oct. 8, and 1.3 million shares on Oct. 6, as the latest filings of Berkshire Hathaway shows.
The transactions on Oct. 8 include two types of contracts. One is 1.19 million shares of contracts at the premium of $7.03 a share. The put option is exercisable until Dec. 9, 2008 at the strike prices of $80 a share. The other is 761,111 shares of put options at $5.78 a share. It is exercisable until the same date at the strike price of $77. The contract on Oct. 8 was sold at $7.02 a share with strike price of $80.
Why is he buying stocks now? “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors,” he wrote in a New York Times article published today.
Warren Buffett has been using put options to buy the stocks he likes to own it at a lower cost. In his personal account he might be buying something totally different. What could that be?
This is the third chunk of puts he sold on Burlington Northern Santa Fe (BNI). On Oct. 10 Buffett sold 1.2 million shares of BNI puts at $7.09 a share, with strike price of $75, exercisable until Dec. 12, 2008. Previously he sold 1.95 million shares of put options on Oct. 8, and 1.3 million shares on Oct. 6, as the latest filings of Berkshire Hathaway shows.
The transactions on Oct. 8 include two types of contracts. One is 1.19 million shares of contracts at the premium of $7.03 a share. The put option is exercisable until Dec. 9, 2008 at the strike prices of $80 a share. The other is 761,111 shares of put options at $5.78 a share. It is exercisable until the same date at the strike price of $77. The contract on Oct. 8 was sold at $7.02 a share with strike price of $80.
Why is he buying stocks now? “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors,” he wrote in a New York Times article published today.
Warren Buffett has been using put options to buy the stocks he likes to own it at a lower cost. In his personal account he might be buying something totally different. What could that be?
