IMPORTANT POINTS:
- Michael Burry has placed a $1.6 billion bet against the stock market.
- Burry posts a 42% loss on that bet, according to data from Gurgavin on Twitter.
- It is not known if Burry still holds the two positions, no updates as of June 30.
Fifteen years after his famous bet against the mortgage market that netted him significant profits, legendary investor Michael Burry has once again set his sights on a major financial move.
This time, he has “big shorted” the stock market by buying an impressive 40,000 put option contracts linked to the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ). Data released earlier this month revealed a combined face value of $1.6 billion for these contracts.
However, it appears that Burry’s short position is at a considerable loss for the time being. Notably, a widely followed stock trader on Twitter, known as Gurgavin, revealed on August 27 that Burry is down 42% on his short bet, assuming the investor is still holding the positions.
“Michael Burry is now down 42% on his ‘1.6 billion’ short bet on the S&P 500 and Nasdaq if he still holds it.”Gurgavin.
Burry’s real investment
It’s important to note that while the combined face value of the two positions was $1.6 billion, Burry only spent a small portion of that figure to build his big new bet.
According to Gurgavin’s estimates, the fund manager “probably only spent about $26.5 million to build his $1.6 billion short position.”
Specifically, Burry invested $18 million in 20,000 SPY put options and about $8.5 million in 20,000 QQQ puts, Gurgavin said.
On the other hand, there is a possibility that Burry built the two positions as hedges, aiming to cushion the blow to his investment firm Scion Asset Management if the stock market declines and his long positions lose value.
However, the options could also indicate that Burry has bearish sentiment on the two flagship index funds, which are significantly impacted by large-cap stocks like Tesla (TSLA) and Nvidia (NVDA).
In the meantime, it should be noted that it remains unclear whether Burry still holds the two contracts, as there have been no updates on his holdings data since June 30.
