Warren Buffet Trading Put Options!
Buffet may be old-fashioned when it comes to technology and the companies he invests in, but he is very shrewd when it comes to the financial markets. Take a look at page 17 of BRK's 2007 annual report: http://www.berkshirehathaway.com/2007ar/2007ar.pdf
Buffet explains that he has sold $4.5 billion worth of long-term puts on 4 different major stock indices (S&P 500 as well as 3 foreign exchanges). The strike price on the contracts is current market values, and they do not expire until around 2019-2027 (they are also European style meaning they cannot be exercised before expiration). This means that Buffet collects $4.5 billion which he gets to invest for the next 15 years. The only way he loses money is if the S&P and these other indices are lower 15 years from now... then he will be obliged to "buy" them back at today's prices. Despite the near-term turmoil that lies ahead, inflation alone should push these markets higher over the next 15 years. This seems like a great deal to me.
You invest $4.5 billion for 15 years and earn an average of 10% (which Buffet can probably do), then you end up with roughly $16.65 billion after taxes!! I am not an options pricing expert, but I imagine the monetary obligations of these contracts could be figured out through reverse-engineering. Also, since these are put options, the potential losses are capped by the worst-case scenario of the markets going to 0. If I could sell put options for 15 years in the future, I certainly would be doing that