No. of Recommendations: 5
Even if you look at total open interest, it still doesn't approach numbers that could move the needle at Berkshire.
That has always been my assumption, but it would be interesting to find out. For example, Berkshire built quite a large part of the BNSF position by buying $40 call options for $40 each, enough to purchase a meaningful fraction of the firm. I was surprised they could do that.
We have to remember that liquidity in a market where arbitrage or efficient hedging is possible is not a function of volume, but of bid/ask gaps. There are ETFs with almost no volume that are extremely easy to trade in a cost effective way, as even a penny move in price is enough to pull the interest of the traders. I trade options all the time which have essentially zero volume or outstanding interest other than mine.
Jim
