Sal Rahman explains Taleb's barbell strategy: deep out-of-the-money puts yielding 3x returns

Summary

Sal Rahman discusses Nassim Nicholas Taleb's barbell investment strategy, as implemented by Universa Investments. The strategy involves keeping 85-90% of capital in cash and short-term bonds, while allocating 10-15% to deep out-of-the-money put options (30% below strike price) on broad markets. Rahman notes that even modest market drawdowns cause these options to explode in value, and shares that his own out-of-the-money options are yielding 3x returns despite still being out-of-the-money.