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Baidu Options Mini-Class 01 | Do the pros really all use options? The real strategies of Buffett, Pelosi, and the Big Shorts

【📢 Every Wednesday, 'Bai Dao’s Mini-Class' starts right on time! Starting from scratch, each episode dives deep into just one concept—simple, progressive, and easy to follow. Learn step by step, and you’ll find options aren’t as hard as you think!】

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These big names are actually all using options?

Fellow investors, have you ever wondered this:

Isn’t Buffett the poster child for 'value investing'? Isn’t Pelosi a political figure? And isn’t the Big Short guy a hedge fund manager? Their backgrounds, styles, and goals couldn’t be more different—yet there’s one thing they all use:Options。

Now that’s interesting. What exactly is it about options that makes them indispensable—from the 'Oracle of Omaha' to the 'Capitol Hill Stock Guru' to the 'Short-Selling Maverick'?

In today’s episode, we’ll unpack exactly how these three celebrities use options, which strategies they employ, and what results they’ve achieved. By the end, you’ll realize:Options are not gambling tools—they’re a multi-functional Swiss Army knife; it all depends on how you use them.

Warren Buffett: Selling puts to collect premium—the art of 'buying at a discount'

Many people assume Buffett only invests in stocks, but he actually started using options very early on. However, his approach is quintessentially 'Buffett-style'—not buying options to speculate on direction, but ratherSelling put options。

What does this mean? Let’s illustrate it with one of his most classic trades.

Coca-Cola’s 'premium-collecting position-building strategy'

In 1993, Buffett had long wanted to buy$Coca-Cola (KO.US)$ , but felt the price could go even lower. So he did something:He sold approximately 50,000 put options on Coca-Cola, collecting about $7.5 million in premiums.

The logic behind this trade was as follows:

If Coca-Coladoesn't fall to the strike price,the option expires worthless, and the $7.5 million premium is safely pocketed—essentially 'waiting to buy while someone pays you';

If Coca-Colafalls to the strike price,he buys the stock at his desired price, with the cost further reduced by the premium already received.

He is comfortable with either outcome. This is the essence of selling puts: collecting cash while placing a limit order to buy.

There are even bolder moves:

In the 2000s, Berkshire also sold very long-dated (15–20 year) index put options, with underlying indices including $S&P 500 Index (.SPX.US)$ , FTSE 100, $Nikkei 225 (.N225.JP)$ , EURO STOXX 50, and collected approximatelyUSD 4.9 billionin option premiums.

He invested that money. Because the options had very long maturities, short-term market volatility didn’t affect him at all. When the 2008 financial crisis hit and markets panicked temporarily, he held firm—and ultimately, when those options expired, he kept the premiums without suffering any losses.

Buffett’s use of options is an extension of value investing—selling puts to either 'buy stocks at a discount' or 'collect rent while waiting for opportunities.' It’s not speculation, let alone high-frequency trading.

The Pelosi Family: Using leveraged call options to amplify small capital into big tech bets

Next up is someone nicknamed the 'Oracle of Capitol Hill'—former U.S. House Speaker Nancy Pelosi.

Strictly speaking, most publicly disclosed trades were executed by her husband, Paul Pelosi, but because these transactions must be reported, outsiders closely track them.

Their options strategy is the complete opposite of Buffett’s:Buying call options (Long Call), with a particular focus on large-cap tech stocks.

Typical strategy: In-the-money long-term equity anticipation securities (LEAPS)

According to congressional trading disclosures, the Pelosi family has purchased call options on tech stocks such as $NVIDIA (NVDA.US)$ 、 $Alphabet-A (GOOGL.US)$ 、 $Amazon (AMZN.US)$ , exhibiting several distinctive characteristics:

Long expiration dates: Typically ranging from several months to over a year, qualifying them as long-term equity anticipation securities (LEAPS);

In-the-money strike prices: Meaning the stock price was already above the strike price at the time of purchase—these options are more expensive but offer higher certainty;

Exercising the options upon expiration to acquire the underlying sharesIt's not about short-term trading for quick profits, but rather using options as a tool to 'buy stocks with leverage.'

For example: Suppose NVIDIA is currently trading at $200. She buys a call option with a strike price of $150 expiring in one year. Because it’s already deep in-the-money, this option might cost over $50 (i.e., more than $5,000 per contract), which is far more capital-efficient than spending $20,000 to buy 100 shares outright.

If the stock price rises to $250 by expiration, she exercises the option to buy the stock at $150, immediately realizing an unrealized gain of $100 per share—this illustrates the logic ofusing less capital to amplify potential returns.

Public disclosures also show that in May 2026, her family purchased call options on Intel (INTC) and Uber Technologies (UBER) with a $50 strike price expiring in March 2027.

The Pelosi family uses options for 'leveraged bullish bets'—deploying calls on tech stocks requires less capital than buying the stocks directly, while magnifying returns if prices rise.

(Note: All information above comes from publicly disclosed congressional trading reports. We are presenting it objectively without any implication or evaluation.)

Michael Burry: Buying puts to short the market, betting on a bubble burst

The final figure is Michael Burry, who rose to fame during the 2008 financial crisis for 'shorting subprime mortgages' and served as the real-life inspiration for the movie The Big Short.

Burry's signature move is:Buying put options (Long Put)betting that stocks or sectors he considers overvalued will plummet.

The advantage of buying puts is: you only pay a premium to gain the right to profit when the underlying asset falls. Your maximum loss is limited to the premium paid, but if a crash really happens, the return could be several times—or even dozens of times—your initial outlay.

His signature move is:Buying put options (Long Put)betting that stocks or sectors he considers overvalued will plummet.

The rationale behind buying puts

This is completely different from short selling via margin borrowing—short selling requires borrowing shares, paying interest, and facing 'short squeeze' risk (losses increase as the stock price rises, theoretically with unlimited downside). But buying puts?In the worst-case scenario, the premium goes to zero, and losses are capped.

Latest move: Publicly shorting semiconductors

Burry has long been known for his willingness to place contrarian bets. Recently, he has again spoken out publicly, expressing concerns about the semiconductor sector—this time, his latest target is $Micron Technology (MU.US)$ and $iShares Semiconductor ETF (SOXX.US)$ 。

His reasoning is that the semiconductor industry is highly cyclical, and current valuations already fully reflect the optimistic expectations driven by the AI boom. If demand falls short of expectations or inventory cycles reverse, the downside could be significant.

Using put options to short the market is exactly his signature style:He wagers a limited premium on the possibility of a sharp decline.

Burry uses options for 'leveraged shorting'—buying puts to target what he sees as overvalued assets. His losses are limited (at most, the premium paid), but if his call is right, the returns can be extraordinary.

After reviewing these three investors, let’s summarize briefly:

Buffett uses 'selling puts': collects premiums while waiting for an opportunity—if the price drops to his desired level, he buys the stock. It’s an extension of value investing.

The Pelosi family uses 'buying call options': Using a small amount of capital with leverage to bet on big tech stocks rising, amplifying upside returns

Burry uses 'buying put options': Paying a limited cost to bet on a market decline and target bubbles

Both are using options, but their strategies are completely different. This precisely illustrates the appeal of options:Options aren’t a single tool—they’re like a set of 'LEGO bricks.' You can express bullish or bearish views, collect premium income, hedge positions, and more—building entirely different strategies based on your market outlook, risk tolerance, and capital size.

In this episode, we’re discussing 'how celebrities use options,' aiming to help fellow investors first grasp a key concept:There are many ways to use options—flexible for any budget or strategy.Of course, each approach comes not only with its own advantages but also corresponding risks, which we’ll unpack in detail over future episodes.

In the next few episodes, we’ll break it down step by step: what calls and puts are, how to read an options chain, how to place orders, and more...

Right now, you can do one thing: open Futubull, pick any stock you're familiar with (like Apple or Tesla), tap into it, find the 'Options' section, and open the options chain to take a look. Just get acquainted—know what it looks like.

Don’t want to jump in with real money right away? No problem—Futubull also offers an 'Options Paper Trading' feature. Use virtual funds to practice first, get comfortable with placing orders, exercising options, and handling expirations. Once you’ve practiced enough, you can move to live trading.

Options involve risk, but only by understanding them can you truly master them. See you in the next episode!

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Disclaimer

This content does not constitute an offer, solicitation, recommendation, advice, opinion, or any form of guarantee regarding any securities, financial products, or instruments. Trading options carries substantial risk of loss. In certain scenarios, your losses may exceed the initial margin deposit. Even if you set contingency instructions such as 'stop-loss' or 'limit orders,' these may not necessarily prevent losses, as market conditions could render such instructions unexecutable. You may be required to deposit additional margin on short notice. If you fail to meet the margin call within the specified timeframe, your open positions may be liquidated. Nevertheless, you remain fully liable for any resulting deficit in your account. Therefore, prior to trading options, you should thoroughly study and understand options trading and carefully consider whether such trading aligns with your financial situation and investment objectives. If you do trade options, you must become familiar with the procedures, rights, and obligations associated with exercising options and their expiration.

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