Burry places a huge leveraged short position on WallSt put options The Big Short Version 2.0

Burry places a huge leveraged short position on WallSt put options The Big Short Version 2.0

So was about to veg out and go to sleep then came across this... not panicking LOL but just looking for clarification cause isn't he basically betting on the market to nose dive

Full-Text headline heard it on the X

twitter.com...

Wall Street Silver

@WallStreetSilv
Michael Burry places a huge leveraged short position on the stock market with put options. The Big Short Version 2.0

So I dug the movie and somebody even got me the book but I haven't got around to reading it yet. So what's the word, all you ATS margin call mavericks? Even the tweets are soft playing it, what gives?

Is this just another wrong Burry vision, like his "SELL" in January?

Wall Street Silver

@WallStreetSilv
Michael Burry places a huge leveraged short position on the stock market with put options.

The Big Short Version 2.0

a reply to: putnam6

Hmm.

A buddy was just telling me about this.

What happens if hes successful?

There is a liquidity crisis afoot according to a few sources.

One thing I can assure you as a person that comes from an incredibly wealthy family (dont worry they saw to it that I had none due to hatred of my mother) is that whatever needs to be done to keep their wealth, it will be done.

It is good to follow their options though. But trust me, they are always ahead of the rest of us. Otherwise they wouldnt be as rich as they are,

originally posted by: greendust
One thing I can assure you as a person that comes from an incredibly wealthy family (dont worry they saw to it that I had none due to hatred of my mother) is that whatever needs to be done to keep their wealth, it will be done.

It is good to follow their options though. But trust me, they are always ahead of the rest of us. Otherwise they wouldnt be as rich as they are,

LOL not exactly the elementary nugget of common wisdom, I was searching for. Apologies for your family life.

Not to mention, follow them LOL with what, Im broke AF ie like the other 98% of the population.

I'm concerned about the economy. We are still recovering from COVID lockdowns, I know I sound paranoid, but for some reason, our branch of the apparel business collapses quicker and stays down longer than other industries

We can't afford a hiccup, much less a crash. Our business is just starting to pick up.

Lots of industries are in the same boat.

a reply to: putnam6

wprth being concerned don't forget the billions Soros and his croneys made from breaking the bank of England, his philanthropy is based on taking down the uk..

we can argue the right or wrong of those actions as the irony for soros is he created brexit for his pains..

the key is the obvious weakness in Britain political class creating the opportunity for soros, it was asking for it. in the same way 2007/8 was obvious to anyone looking on, thus ripe for action, which brings us to where we are now, the second crash point of the 2007/8 crisis.

working in the corporate world as a process engineer i was part of a tiger team looking at the processes in the financial giants, me thinking it good about myself in fixing what was broken but it wasn't it was to mask the issues. disillusioned i got out of the corporate world as it was obvious we would need a second crash to fix what was systemically broken.

what i have noted of late is how close we keep sailing to that crash point the uks pm truss didn't do anything wrong but what she did highlighted 1 of the bigger holes, the void in pension pots the likes og blackrock are masking, they came close to halting trades over night at that which is why truss left without a word, obviously brought off as her policies where the right ones for the most part..

like the 90s its the the hole is pensions that'll take out the zombie corporations that are funding the bloat that keeps the west afloat..

the thing is like soros in the 90s it doesn't take a rocket scientist to see we nearly crash on an ever shorter cycle, at this point it looks like a 6 week cycle as the system gets ever weaker in its response to crisis.

the plus point of a crash is that while it will be shaper than last time it'll also be shorter as the non zombi corps have mountains of cash they have held onto they want to invest, and that investment will be transformative for the west as it was after the first great depression..

the first crash point of first great depression (1872) ended wood and steam power, the second crash point 1893, rise of oil and gas, electricity, cars, buses etc..

originally posted by: putnam6

originally posted by: greendust
One thing I can assure you as a person that comes from an incredibly wealthy family (dont worry they saw to it that I had none due to hatred of my mother) is that whatever needs to be done to keep their wealth, it will be done.

It is good to follow their options though. But trust me, they are always ahead of the rest of us. Otherwise they wouldnt be as rich as they are,

LOL not exactly the elementary nugget of common wisdom, I was searching for. Apologies for your family life.

Not to mention, follow them LOL with what, Im broke AF ie like the other 98% of the population.

I'm concerned about the economy. We are still recovering from COVID lockdowns, I know I sound paranoid, but for some reason, our branch of the apparel business collapses quicker and stays down longer than other industries

We can't afford a hiccup, much less a crash. Our business is just starting to pick up.

Lots of industries are in the same boat.

I posted a long paragraph or two about my family life - I deleted it because it was obviously very off topic. My apologies. I don't normally get all drinky and post on the internet but apparently tonight (this morning as well!) I have. I will take some time tomorrow to reply to this in an intelligent manner. Once again, my apologies.

originally posted by: greendust

originally posted by: putnam6

originally posted by: greendust
One thing I can assure you as a person that comes from an incredibly wealthy family (dont worry they saw to it that I had none due to hatred of my mother) is that whatever needs to be done to keep their wealth, it will be done.

It is good to follow their options though. But trust me, they are always ahead of the rest of us. Otherwise they wouldnt be as rich as they are,

LOL not exactly the elementary nugget of common wisdom, I was searching for. Apologies for your family life.

Not to mention, follow them LOL with what, Im broke AF ie like the other 98% of the population.

I'm concerned about the economy. We are still recovering from COVID lockdowns, I know I sound paranoid, but for some reason, our branch of the apparel business collapses quicker and stays down longer than other industries

We can't afford a hiccup, much less a crash. Our business is just starting to pick up.

Lots of industries are in the same boat.

I posted a long paragraph or two about my family life - I deleted it because it was obviously very off topic. My apologies. I don't normally get all drinky and post on the internet but apparently tonight (this morning as well!) I have. I will take some time tomorrow to reply to this in an intelligent manner. Once again, my apologies.

No worries at all greendust, no apologizes needed

We are just discussing this. It's 2023 I need to learn to be more tolerant

Our family and our environment certainly play a part in all of our thought processes on a lot of subjects this one included.

Not to mention now I want to hear the story


What's the saying ...

They mess you up your Mom and Dad

They don't mean to but they do

They take all their quirks and hangups

and give them right to you.

a reply to: putnam6

From what I can gather you can manipulate the markets only up to a point. At some stage, they will discover the true value. Perhaps when all the big boys have covered their positions it does its thing. Suppressing Gold and Silver as the preferred hedge for big players and Banks seems to be finally reaching its end game. Simply because the physical delivery cant be accomplished. If he has placed a massive short he probably has information that the manipulations are over,

Burry, the permabear
He's been wrong most of the time. Still waiting on his previous market crash predictions from the last decade.

This position was from a few months ago and looking at the markets since then he probably lost money and already is out of this position.

originally posted by: intergalactic fire
Burry, the permabear

He's been wrong most of the time. Still waiting on his previous market crash predictions from the last decade.

This position was from a few months ago and looking at the markets since then he probably lost money and already is out of this position.

I don't know it's why I am asking, however, sure he has been wrong but, did he put up as much as he seems to have put up this time

and secondly, his position in the housing market lost mucho dinero for weeks and months, till it didn't

a reply to: putnam6

Dudes definitely putting his money where his mouth is.

Put options have a expiration date that the buyer picks. He could have picked other ways to short the market that would be more forgiving. If he hits though, options are leveraged and he cakes up.

One of the mechanics of puts though is time decay, or theta. For every day that passes, his position loses money. Every day the market goes up, he loses money. But if it trends down he’ll go up (minus theta).

Curious though he went so big in puts for SPY. There are surely obvious losers he could have shorted, companies with far too inflated stock prices. The S&P 500 is not only semi diversified, if they catch wind of a looming crisis, they may rebalance the fund shedding the troubled assets before his plan materializes.

originally posted by: JinMI
a reply to: putnam6

Hmm.

A buddy was just telling me about this.

What happens if hes successful?

There is a liquidity crisis afoot according to a few sources.

If he's successful, he'll get rich!
The liquidity crisis is the result of the big banks hoarding cash reserves to offset losses from bad loans and debt. It's only going to get worse; auto loan delinquisies are spiraling up, mortgage foreclosures. Then there's a huge problem with commercial loans on office buildings, over a trillion dollars worth. And consumer credit card debt is over the moon.
All part and parcel of the next step in the Great Reset.

a reply to: TonyS

The liquidity crisis is the result of the big banks hoarding cash reserves to offset losses from bad loans and debt.

Actually many governments made these reserves mandatory to stabilize the system. It's to hold the banks accountable so they have to have reserves (more than before) now. It's actually something you want, because the other way would be you and me bailing out the banks again and again.

So I dug into this more because I was thrown off by the headlines, and why he would make this play (if you wanted to go short, there are ways you can do it without the risk).

Some of what through me off was a lot of the headlines implying this was a 1.6b dollar buy… I highly doubt that’s the case.

The filings don’t say what the price of the contracts were, but it looks like the way they got to the amount was using notional value of the shares reserved. That math is incorrect though.

What the filings did reveal is that he got 20,000 put contracts for SPY and QQQ.

1 put contract = 100 shares, but you don’t have the shares, you have a contract for them if you decide to exercise it.

Example (using todays spot price of SPY at 444~)
Let’s say in Q2 he bought contracts saying SPY will be below 425 by June 28th 2024. Each contract would cost 1,673, for a total of 33,460,000.

For that money in this large of a fund, it could simply be a hedge. Let’s say he holds those contracts and it does dip below 425, that position would grow by 2m for every dollar the stock dips below 425 (plus intrinsic value of demand on those contracts).

That’s a smart hedge if you have a lot of other positions that are betting the market does well.

All that said, we don’t know what the strike price or expiry on the options are, so it’s speculative to guess at what he paid, but the most expensive put option for SPY right now (that anyone would buy) is a $444 dec25 which is $3,590 a contract, which would total 71,800,000.


Edit: I read the filing, I’m right it wasn’t 1.6b, but it is 94% of the portfolio… that’s an extra chromosome move for this guy. Put options on an ETF when you could pick out individual stocks that are a far safer bet to tank. SPY options can be more expensive too because it’s one of the most popular ETFs. He could have found a stock or ETF that’s under the radar without paying a premium.

Let's not pretend Burry isn't calling crashes every week. He was right once maybe he'll be right again who knows.

Keep in mind he tweeted "sell" I think in January and markets have done nothing but run up this year.

Bears always singing crash and bulls always to the moon. Tale as old as time. Although I'm more wary of a crash after a run like the first 7 months of this year. I guess we will see.

originally posted by: SuicideKing33
Let's not pretend Burry isn't calling crashes every week. He was right once maybe he'll be right again who knows.

Keep in mind he tweeted "sell" I think in January and markets have done nothing but run up this year.

Bears always singing crash and bulls always to the moon. Tale as old as time. Although I'm more wary of a crash after a run like the first 7 months of this year. I guess we will see.

Again in January how much of Burry's portfolio did he actually sell? was it even close to the same percentage?

People claiming this or that is completely different than betting the farm the stock market is gonna crash.

a reply to: CriticalStinker

Thanks, I wouldn't even know where to begin to look, but figured somebody here would.

So it is still 94% of his portfolio, its just much less risky than it was portrayed on X/Twitter

a reply to: TDDAgain

True,but there's more to it

www.fool.com...

Probably just following the noise.
Google "recession"
It's the medias new butt-buddy. They won't shut up about it.
Wonderful

a reply to: putnam6

He’s still going all in (94%), but like 100m~ all in, not 1.6 billion.

Apparently the SEC requires funds report the notional value instead of the cost for the contracts.

My guess is because at any point you could exercise those options and purchase those shares.

As far as risk, it being such a large portion of the portfolio is still puzzling.

“The Big Short” which he’s famous for was him identifying the looming housing crisis. He discovered that sun prime mortgages were being sold and lumped into financial products, and worse that they were getting rated by a third party as if there wasn’t as much risk as the rating it carried. So he followed the paper trail and shorter the entities holding a lot of these assets.

What I can’t understand is why he wouldn’t do that here.

No one knows what he thinks the catalyst will be for a market crisis, but surely he has one in mind as the longest put option you can purchase right now is December 2025. So you target the entities you think are most vulnerable to said catalyst.

The problem with a semi long term bet against the S&P 500 is it’s an ETF, or collection of many different stocks (500). They rebalance how much holdings they have every quarter, so the mechanism could slow bleeding and his position just fizzles out.

(Percentages below represent the weight of the fund, example. One share of SPY or S&P is 7% apple ect.)
1 Apple Inc AAPL 7.0%
2 Microsoft Corp MSFT 6.4%
3 Amazon.com Inc AMZN 3.34%
4 Nvidia Corp NVDA 2.88%
5 Alphabet Inc Cl A GOOGL 2.07%
6 Meta Platforms Inc Class A META 1.80%
7 Alphabet Inc Cl C GOOG 1.79%
8 Tesla Inc TSLA 1.72%
9 Berkshire Hathaway Inc Cl B BRK.B 1.70%
10 Unitedhealth Group Inc UNH 1.26%

Those are the top ten holdings of the S&P500, but the balance gets adjusted depending on a certain criteria. Let’s say Apple just absolutely tanks. Within a quarter they won’t hold as much weight in the S&P500 and hypothetically the stock be shorted rebounds because it’s not just one stock but a fluid holding of many stocks.

Shorting SPY (ticker for S&P) is great if you want to hedge your portfolio against a meltdown, but shorting it long term with 94% of your portfolio just has too many risks IMO.

Now, I’m not him. But as I laid out earlier this still doesn’t fit his M O.