The Warren Buffett derivative trading mystery grows, as Bloomberg’s Matt Levine takes aim at FT Alphaville series written by Dan McCrum and raises questions. Readers will recall that in Wednesday’s ValueWalk we reported on Warren Buffett utilizing exotic derivatives in his portfolio management. In particular, he sold a long-dated put option on three stock indices in what was known as “Worst of Basket Put Option.” This is an exotic option that pays only on one of three stock indices, the one that has the best payout structure. Levine points out in his article, “this is some pretty racy stuff for…
Bloomberg's Levine Weighs In On Buffett's OTC Derivative Trades
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.