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Legendary investor Michael Burry makes a ‘big short’ bet against stock market

Legendary investor Michael Burry makes a 'big short' bet against stock market

Michael Burry, a name that reverberates with exceptional investment acumen, has firmly established his stature as a distinguished figure in the financial realm. 

As the visionary behind Scion Asset Management, Burry gained prominence by remarkably foreseeing the housing market debacle in 2008, a feat that propelled him into wealth and widespread acclaim.

Renowned for his keen analytical insights and unconventional investment approaches, Burry made waves in 2008 by taking a massive short bet on the impending mortgage crash, a gamble that reaped a fortune for his fund during the tumultuous days of the global financial crisis.

His audacious move not only showcased his astute foresight but also cemented his reputation as an investing legend, captivating the attention of investors and financial aficionados who continue to be intrigued by his strategies in today’s ever-evolving financial landscape.

Fast forward 15 years, Burry made another noteworthy short bet, although this time targeting the stock market.

Namely, the legendary investor shorted US stocks through put options. Specifically, he bought 40,000 put options contracts tied to SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ). The nominal value of these contracts is $1.6 billion, data published on August 14 revealed.

Burry’s put options holdings in SPY and QQQ. Source: Michael Burry Stock Tracker Twitter

These holdings now make up 93% of Burry’s entire portfolio, data shows.

What does this mean?

Simply put, Burry made a huge bet that the two major exchange-traded funds (ETFs), SPY and QQQ, would depreciate in value. In total, the two funds invest in more than 600 largest US companies. 

Put options, or just puts, refer to derivative instruments that allow investors to sell a stock at a specific price by an expiration date.

Basically, it is a contract tied to a stock. Investors pay a premium price for the contract, providing them with the right to offload the stock at the strike price. In addition, investors can execute the contract at any point until its expiration date.

It is important to note that Burry’s holdings data that is available to the public is listed as of June 30. Having said that, it is unknown whether the Big Short investor still holds these positions or has sold them in the previous two weeks. 

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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