Michael Burry, famously known for predicting the 2008 US housing market collapse, seems to be indicating that two major stock markets are headed for a tumble in value. The hedge fund manager, featured in “The Big Short,” reportedly held negative options on both the S&P 500 and Nasdaq 100 at the end of the second quarter, according to securities filings.
Burry’s negative options on the S&P 500 have a notional value of $886 million, and he holds $738.8 million in options against the Invesco QQQ Trust ETF, which includes prominent tech firms like Apple, Microsoft, and Tesla.
Interestingly, Burry’s bearish bet on a market downturn represents over 90% of his firm’s portfolio. However, the reasons for these negative positions remain unclear, especially considering that the S&P 500 has seen an approximately 17% increase for the year, and the Nasdaq 100 has surged nearly 39% over the same period.
While Burry’s intentions are not immediately apparent, it’s important to note that “put options,” which he seems to have bought, give the holder the right to sell shares at a predetermined price in the future. These options are commonly used to express a bearish or defensive market view.
Burry’s expectation of a market collapse appears to have persisted throughout the year. In January, he tweeted “Sell,” but by March, he had retracted that sentiment, admitting he was “wrong to say sell.”
Burry’s notable prediction of the 2008 housing market crash was documented in both a bestselling book and a movie adaptation called “The Big Short,” in which he was portrayed by Christian Bale. The movie delved into the stories of individuals who foresaw the bursting of the housing bubble, including Burry, who reportedly made around $100 million from the crash. The film also starred Steve Carell, Ryan Gosling, and Brad Pitt.
