Warren Buffett is worth over $100 billion and considered one of the world’s greatest investors.
As one of the wealthiest people on the planet, many traders and investors model their strategies after Buffett.
The real reason for the Oracle of Omaha’s success may surprise you, though.
Warren Buffett often relies on selling option premium, a strategy taught by David Jaffee of BestStockStrategy.com.
Instead of taking major risks, traders can sell option premium and act like an insurance company.
While selling option premium is not as glamorous or hyped as other trading strategies, it is the best option trading strategy to earn a consistent profit.
Keep reading to learn why Warren Buffett sells option premium and why you should too.
Is Warren Buffett an options seller?
Warren Buffett has earned more than $5 billion selling put options.
You cannot expect those kinds of returns right out of the gate, but you likely will experience considerable success when selling option premium.
Option trading is very similar to the insurance business: people pay money for insurance coverage that lasts a set period of time at a specific rate.
Similarly, options can be purchased for premium, providing rights to the buyer for a specific amount of time.
Unlike other trading strategies, you can be wrong about the direction of the market and win your trades anyway by selling options.
Option sellers can also find success with both long-term and short-term investing strategies.
Warren Buffett oftentimes lowers the cost basis for purchasing stock by using naked, short OTM puts. He also implements this strategy when targeting companies for acquisition.
If volatility is high, Buffett often chooses to sell short index put options.
When a stock is overvalued, Buffett will sell options and collect option premium from option buyers.
Selling Options for Income
So, how do you enjoy the same success as Warren Buffett?
While Warren Buffett uses a lot of investing strategies and tools, selling option premium for income is one of the easiest to copy.
David Jaffee teaches his students how to sell option premium to earn consistent profits.
In fact, you can win up to 98% of your trades and be successful as a beginner options trader.
Selling options allows you to execute trades with the press of a button and collect premium.
Options traders can enjoy a flexible source of income that works with their busy schedule while earning a profit without requiring a lot of time.
By selling option premium, you can greatly reduce your risk while maximizing your potential for profit.
David Jaffee shows his students how to structure transactions to be capital efficient while having probabilities in their favor.
All experience levels can learn how to sell options for income and start trading profitability.
Do you have to be rich to sell options?
Thankfully, you do not need Warren Buffett’s net worth to successfully sell options.
While larger accounts can experience larger returns, smaller accounts can still grow by selling options.
David Jaffee’s students have found considerable success with smaller accounts, ranging from $5,000 to $15,000.
If your account has at least $2,000, you can start selling options to grow your account.
Like Warren Buffett, David Jaffee relies on the right trading strategy to be successful.
By selling option premium and being patient and disciplined with his trades, David Jaffee is able to win up to 98% of his trades.
Warren Buffett did not earn his fortune by trading recklessly, and you won’t either.
To sell option premium and earn a profit, you have to be strategic about your trades.
David Jaffee typically completes three to four trades per week, instead of aggressively trading and getting into trouble.
Learn How to Trade Options Like Warren Buffett
Are you the next Warren Buffett?
If you want to enjoy a portion of his success, it is time to learn the best options trading strategy.
David Jaffee’s online options trading course features 12 comprehensive lessons.
You will learn how to sell option premium, strategically structure your trades to reduce risk and increase profit potential.
Instead of taking unnecessary risks or relying on less-than-successful strategies, you can implement an options trading strategy that optimizes your probability of success.
When you start acting like an insurance company, you will quickly learn why Warren Buffett sells option premium.
Frequently Asked Questions (FAQs)
Does Warren Buffett trade options?
Yes, he oftentimes sells put options. You'd think that someone like Buffett who seems devoted to blue-chip stocks would steer clear of complicated derivatives, but you'd be wrong. Throughout his investing career, Buffett has capitalized on the advanced options-trading technique of selling naked put options to acquire shares of companies at a reduced price.
Warren Buffett option selling strategy?
Warren Buffett likes to sell put options on stocks that he wants to own. He allegedly sold 50,000 contracts of Coke stock, collecting $1.50 per contract, to bring in an immediate $7.5 million dollars.