Buffett Has Been Doing This for Decades
Warren Buffett, chairman of Berkshire Hathaway, has a documented record of selling options rather than gambling with them. In 1993, he sold puts on Coca-Cola, collecting premium while he waited for a price he had already decided was attractive. Between 2004 and 2008, Berkshire sold long-dated puts on major stock indexes, detailed in the company's annual letters.
The logic was identical both times. Name a price you'd happily own the asset at, get paid to wait, then either buy at that price or keep the income. Rule #1 unpacks the full record in Does Warren Buffett Trade Options?
The Four Ms Come First, Always
The hub is organized around one sequence that never changes. Before any option is considered, the business has to pass the Four Ms: Meaning, Moat, Management, and Margin of Safety.
That last M does the work most traders hand to a chart. The Margin of Safety price, calculated from the company's own fundamentals, is what sets the strike on a cash-secured put. "Rule #1 is don't lose money, and that starts with respecting risk, options included," says founder Phil Town.
A Learning Path, Not a Tactics List
Rather than dumping strategies on readers, the page sequences them. Beginners start with how contracts work, move to income strategies like cash-secured puts and covered calls, then to protection and defined-risk spreads.
Readers wanting a structured introduction can enroll in the free seven-day Options Trading Mini-Course, delivered by email. The full framework, including introductory options strategies on day three, is taught live at the Rule #1 Virtual Investing Workshop, priced at $97, with upcoming dates of October 16 to 18 and November 13 to 15.
Options involve risk and are not suitable for all investors. Rule #1 Investing provides investment education and training only. We do not provide personalized investment advice, manage client assets, or guarantee investment returns.
About Rule #1 Investing
Rule #1 Investing is an education company dedicated to teaching everyday people how to confidently evaluate and invest in high-quality businesses using straightforward, Warren Buffett-inspired value investing principles. Founded by New York Times bestselling author and hedge fund manager Phil Town, Rule #1 provides workshops, online courses, tools, and community support that empower individuals to take control of their financial future. With a focus on clarity, discipline, and long-term thinking, Rule #1 helps investors develop the skills and confidence to make informed investing decisions.
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