Warren Buffett as a compass: when the giant opens a position, I take note
I’ll admit it: every quarter I go through Berkshire Hathaway’s Form 13F. Buffett has an army of analysts who dissect balance sheets with a scalpel, something few of us retail investors can afford. Copying him to the letter would be reckless, but tracking his purchases offers valuable clues. His steady bet on Occidental Petroleum (OXY) lit up my radar.
Understanding the business: oil, gas and a dance with the barrel
OXY is one of the largest oil companies in the U.S. Its share price moves in step with crude oil futures; just overlay the two charts in ProRealTime to see the near-millimetric correlation. Upcoming crude inventories, gas data and earnings dates are key events I usually jot down before opening a position.
Why options and not shares? Liquidity, leverage and capped risk
Buying 500 shares would have required $25,000. I preferred five ATM calls expiring in one year (strike $50) and laid out only $1,675. The difference leaves me free cash for new opportunities or hedges.
Live execution: ProRealTime + TWS
• TWS (Interactive Brokers) for the options chain and sending the order. • ProRealTime for technical analysis and watching the bid–ask in real time. I set my limit at $3.35 and worked it patiently until it filled. The contrast is clear: $25,000 of notional vs. $1,600 of real capital.
The first two days: red, green and lessons in keeping cool
• Day 1: the stock falls and the premium depreciates → unrealized –$200. • Day 2: a 5% bounce in OXY → unrealized +$400. I’m not thinking about selling yet; this is a medium-term position. If oil eases off, I’ll consider rolling or hedging with covered calls. The whole trade will stay monitored in ProRealTime.
Conclusion: transparency, strategy and discipline
Trading options lets you control a large notional with less capital, but it demands understanding the asset, its catalysts and risk management. I’ll share future updates on this position and other real trades so you can see the full process—wins and stumbles included.
