Hey traders,
A couple of days ago I showed you why I love selling puts on strong stocks — and how I’d rather get paid up front to take a position I don’t mind owning than sit around hoping a chart goes my way.
Well, it turns out I’m in good company.
People love to put Warren Buffett up on a pedestal. And for good reason — the guy’s built one of the greatest track records in market history.
But here’s what most folks don’t realize…
Even Buffett sells puts.
That’s right. The “Oracle of Omaha” — the man who preaches long-term value investing — uses the same kind of strategy I use to generate income.
How Buffett Does It
Back in the day, he’d sell puts on companies like Coca-Cola (KO), American Express (AXP), even big financial names.
And more recently, when UnitedHealth (UNH) was trading around $39, he sold the 33-strike puts. In other words, he got paid cash up front to agree to buy shares he already wanted at a discount.
Sound familiar? That’s exactly what I do.
Why It Works
- You get paid first. Selling puts puts money in your account the day you place the trade.
- You define your risk. If the stock never dips to your strike, you keep the premium. If it does, you get assigned shares at a cheaper effective price.
- You only do it on stocks you want to own. Buffett wasn’t selling puts on meme stocks. He targeted solid businesses with strong fundamentals.
My Approach
I run it the same way.
When I see a stock I like — whether it’s a steady dividend name, a quality growth stock, or even something pushing new highs — I’d rather get paid to wait than sit on my hands.
I sell puts at levels where I’m happy to own the stock. If I never get assigned, the premium is pure income. If I do, I own shares at a discount and can turn around and sell covered calls.
It’s the same playbook Buffett used, just adapted to today’s market.
The Takeaway
Don’t overcomplicate this game. If Buffett can sell puts to generate income and acquire stocks he likes, so can you.
The market will always have shiny new products and “get rich quick” pitches. But the bread-and-butter methods — the ones even legends like Buffett rely on — are the ones worth sticking to.
Trade well,
Jack Carter
P.S. One of the hottest months in the stock market.. and now I’ve got a list of some of the hottest stocks of August… 10 years running! Get the list here.
