'The Big Short'-fame Michael Burry bought bearish options against US markets: All about him
Produced by: Tarun Mishra
Designed by: Manoj Kumar
Michael Burry, the renowned money manager who predicted the 2008 housing market crash, is now once again betting against the stock market. Recent disclosures filed with the SEC revealed that Burry has allocated a staggering 90% of his portfolio to a calculated bet on an impending market downturn by buying put options on the biggest ETFs tracking the S&P 500 and Nasdaq 100.
The Big Short
Michael Burry gained global recognition for his bets against the US housing market before the 2008 financial crisis. His story was immortalised in Michael Lewis' book "The Big Short", followed by a movie adaptation in 2015. Burry’s character in the movie was played by Christian Bale.
Michael Burry's
claim to fame
Michael Burry's fund has strategically acquired put options with a combined notional value of $739 million for the widely recognised Invesco QQQ Trust ETF. Additionally, the fund has also secured distinct put options valued at $886 million against the SPDR S&P 500 ETF.
Michael Burry's options strategy
Put options, part of Michael Burry's strategy, grant the right to sell shares at a predetermined future price. While buying call options makes you money during an uptrend in the market, put options are brought when an individual or a company wants to profit from betting against the uptrend in the market.
What is Put option
Regulatory filings, while offering a glimpse into Burry's moves, lack critical specifics like option strikes, purchase prices, and expiration dates, making a comprehensive analysis challenging.
Disclosure limitations
As markets remain dynamic, the S&P 500 has surged around 17% YTD, while the Nasdaq 100 boasts an impressive nearly 39% rise. Burry's insights come amid considerable market movement.
Current market landscape
Burry's Scion Asset Management has also undertaken significant portfolio changes, liquidating stakes in JD.com, Alibaba Group, PacWest, Western Alliance Bancorp, and First Republic Bank.
Burry's Scion liquidates Alibaba and JD stakes
Scion strategically increased its stake in RealReal Inc. and entered new territories with iHeartMedia, HanesBrands, and Warner Bros. Discovery. A calculated addition of iShares MSCI Japan ETF demonstrates a diversified approach.
Scion's strategic ventures
Scion, based in Saratoga, California, had $233.3 million of assets under management at the end of last year
About Scion
Burry developed a large social media following for his predictions of looming risks. In January, he forecast another inflation spike and said the US was already in a recession.