Subject: Re: Buying Long Dated Calls
As for the general idea of long dated calls, it's the main way I make my living. But as with any stock buying, it works when you are entering the position when the price is attractive (preferably more attractive than usual) and you have solid reasons to believe it will be higher at a later date. And the implied interest rate in the option price is not prohibitive. I have some Berkshire calls that I've owned for ages, rolling them from time to time, which I sold today. Great firm, but the price seems a little bit ahead of itself at the moment.

Thanks, Jim and others. Very good information from all.
Long dated calls seem to make more sense to me than short dated ones. Things should be more predictable over the long term.

FYI, (and I still have no real plan to do this), here is what I was thinking for this particular underlying.

Current Price: $30 (down 90% from high).
Buy January 26 calls with a suitable $ amount at several strike prices, say:
$40 strike - 25% of value
$80 strike - 30%
$120 strike - 25%
$160 strike - 15%
$200 strike - 5%

This is based on some levels of future underlying price.
It is easy for me to imagine it recovering back to $150 in the next 17 months or so, and so losing the value in the higher strikes is not a killer.
Pretty surprised if it gets above $200. Not very surprised if it goes belly up in which case the whole experiment would be a write-off.


Mark