No. of Recommendations: 2
I don't think recent valuation levels look very attractive.
But they are lower than they were, so there have been moments lately that writing low-strike cash-backed puts seemed like it could be a useful strategy for some.
e.g., for someone watching the rate they're getting on cash slowly falling, you can add another 4-5%/year to that and (maybe) get an entry that is a good valuation level.
For this purpose, counterintuitively it makes sense to go for slightly longer dated puts. Say January, not September.
That is funny. My June 2025 puts are expiring for a small profit. I didn't buy very many of them, but I was homesick for having some skin in the Berkshire game. And with the price of Berkshire shares falling a little in the last few months, and maybe some worrying about what happens after December 31st, the puts are looking a little juicier, so I sold some 450 June 2026 puts earlier this morning (at $18.50 and some more later at $19.45; 23% implied volatility). Still dabbling, but what's a guy to do, with prices so stubbornly high? I sold my shares at about $425, and if I can buy them back 2 years later at $450 that seems more reasonable. And if the price doesn't get down that low, I will have a (small) consolation prize.
