Michael Burry bought bearish options against S&P 500, Nasdaq 100: Report
Money manager Michael Burry — made famous in the book and film “The Big Short” — held his bearish options against the broad S&P 500 and Nasdaq 100 Index at the end of the second quarter, reported Reuters on 14 August.
During the quarter, Burry’s Scion Asset Management bought put options with a notional value of $739 million against the popular Invesco QQQ Trust ETF. Also, it put options with a notional value of $886 million against the SPDR S&P 500 ETF, the report added.
The options convey the right to sell shares at a fixed price in the future and are typically bought to express a bearish or defensive view.
Though it was not clear what the fund paid to buy the puts or the contracts’ present value, given that regulatory filings do not require the disclosure of options strikes, purchase prices, and expiration dates. As per details, the put is an amount that may be a small fraction of their notional value.
Apart from this, it was not clear if the puts were held outright or as part of a more extensive trade involving other contracts that might have been sold short.
It is to be known that Burry rose to fame with his bets against the U.S. housing market before the 2008 financial crisis. His nonfiction book ‘The Big Short’ was released in 2010 and the movie version came out in 2015.
The S&P 500 is up roughly 17% for the year to date while the Nasdaq 100 is up nearly 39% over the same period. Outsized gains in a handful of mega-cap companies such as Nvidia and Meta Platforms have fueled much of the year’s rally.
As per the securities filings released on Monday, the fund liquidated its stakes in Chinese e-commerce company JD.com and Alibaba Group Holdings, as well as regional banks including PacWest and Western Alliance Bancorp that it had bet on in the first quarter.
Burry’s Scion Asset Management noted it had sold its 150,000 shares of First Republic Bank as well, however, it did not indicate whether that came before the company’s 1 May collapse.
The filing showed the fund — among its long positions — more than doubled its stake in online luxury goods market RealReal Inc, which is up nearly 100% for the year to date and added new stakes in iHeartMedia, HanesBrands, and Warner Bros. Discovery, among others.
Shares of iHeartMedia and HanesBrands are each down 16% or more for the year to date, while shares of Warner Brothers Discovery are up nearly 43%.
The firm also added 10,000 shares of the iShares MSCI Japan ETF, up 13.5% for the year.
With agency inputs.
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Updated: 15 Aug 2023, 03:15 PM IST
