Michael Burry’s Bearish Bets: The Trader behind ‘The Big Short’ Makes a Move

Legendary trader Michael Burry, known for his successful bets during the subprime crisis that were later immortalized in the book and movie “The Big Short,” has recently made some interesting moves. According to a 13-F filing with the Securities and Exchange Commission, Burry’s firm, Scion Asset Management, loaded up on put options during the second quarter, signaling a bearish outlook on the market.

Betting Against the Market Giants

The regulatory filing revealed that Scion held 2 million put options on the SPDR S&P 500 ETF Trust (SPY) and an equal number of puts on the Invesco QQQ Trust Series (QQQ) as of June 30. These put options give the holder the right to sell the underlying assets (S&P 500 and Nasdaq-100) at a predetermined price within a specific timeframe. Put options are commonly used to speculate on downturns, hedge positions, or as part of a broader investment strategy.

Significant Holdings in Puts

According to Whalewisdom.com, Scion’s SPY puts accounted for more than 51% of its reported holdings, while the QQQ puts made up over 42% as of the end of June. However, it’s important to note that these filings only disclose long positions at the quarter’s end, and essential details such as purchase price, strike price, and expiration date are not included.

A Snapshot in Time

While the filing generated buzz on social media, it’s worth noting that this information is somewhat dated and provides an incomplete view of an investor’s portfolio. Nevertheless, given Burry’s previous success as a contrarian investor, his move towards bearish bets should not be dismissed lightly.

Scion Asset Management’s Perspective

Despite the attention surrounding the filing, Scion Asset Management has not provided any comment or additional insight into its strategy. Investors and market watchers will be eager to hear from Burry regarding the rationale behind his latest moves.

The Regulatory Requirement

Investment managers with over $100 million in certain types of assets are required to file a quarterly 13-F form with the Securities and Exchange Commission. These filings must be submitted within 45 days after the quarter’s end and list the firm’s securities holdings. While the deadline for second-quarter filings was on Monday, it’s important to remember that these documents do not disclose certain critical details.

Mixed Market Signals

Since the end of July, both the S&P 500 and Nasdaq-100 have experienced a pullback. The S&P 500 is down over 2%, while the Nasdaq-100 has retreated more than 3%. However, it’s worth noting that both indices have posted strong gains this year, rising nearly 17% and nearly 40%, respectively. The second quarter has seen mixed performance, with the S&P 500 up around 0.9% and the Nasdaq-100 slightly lower.