151–160 of 352 posts
Earlier quoted context omitted.
Selling puts is not a short at all
It is commonly referred to as a ‘short position’, though it is not ‘shorting the stock’. Equally, purchasing calls* is referred to as a ‘long position’ (as is holding the equity). edit: smallmancontrov below pointed out that I wrote 'purchasing puts' was long, when I meant to write 'purchasing calls'
The market will correct before mid-terms next year. This is almost a certainty. By how much and when exactly - now, that's where the shorting profits are. PS. Burry infamously made several more bets after the "big short", bets that misfired. That is, his record is far from being 100% right.
What makes it an (almost) certainty?
I'm not sure the bet is as big as it seems from the headline. When you buy options, you pay a fixed premium to get the right to buy/sell a very large value of shares, called the notional. But the notional is not what you are losing if it goes wrong, you lose the premium. The premium can be quite a small number compared to the notional.
Earlier quoted context omitted.
Do you think they're overpriced? Or do you just not trust retail investors to understand the effective leverage, spread of outcomes etc.? I'm told that covered-call ETFs generally underperform (in addition to being inefficient) and "generating income" is best accomplished by just selling shares as needed.
> Do you think they're overpriced? Options are always overpriced. They're fundamentally an insurance product. You should expect to lose money when buying insurance. If you're hedging, you should expect to lose on your options leg. Same as with any insurance product. Options are governed by tight mathematical relationships between each other and with their underlyings. These can be atomically arbitraged, i.e. you don'…
The problem with these kinds of bets is the Fed Put. That's the invisible force levitating stocks. I don't really see that changing unless/until the country genuinely enters a debt or currency crisis. The path is unsustainable, but they'll keep it going as long as they possibly can.
The fed signaled they are not cutting much further - almost a green light for these kinds of bets.
Earlier quoted context omitted.
Is there anything more concrete than that? Large wins on their own aren't meaningful if they aren't good risk adjusted trades or repeatable. I've made big wins but I don't consider myself a good trader.
From may 2020 to may 2023 they did 56% annualised. Performance apart from that is unreported, so likely lower or negative.
https://edition.cnn.com/2023/08/15/investing/michael-burry-s...
>Traders following the investments disclosed by Scion’s over the last 3 years (between May of 2020 and May 2023) would have made annualized returns of 56% according to an analysis by Sure Dividend
Seems like Scion Capital could have just disclosed winning trades, that they may or may not have made?
I'm not sure the bet is as big as it seems from the headline. When you buy options, you pay a fixed premium to get the right to buy/sell a very large value of shares, called the notional. But the notional is not what you are losing if it goes wrong, you lose the premium. The premium can be quite a small number compared to the notional.
It's also likely edged in all sort of ways the article doesn't cover.
Earlier quoted context omitted.
I am not saying he won’t make money. But it won’t be commensurate with the risk he took on.
> won’t be commensurate with the risk he took on Former options market maker here. We have insufficient data to conclude that. I also happen to have experience unwinding correlation books after their originators shat the bed. Predicting a crisis is hard. Predicting correlations in a crisis for esoteric assets is almost impossible. Burry wanted to bet on specific overvalued stocks. Not a general market crash. For that…
"Last year's lottery winner picks new numbers for this year. Copy them and you are sure to win as well."
Earlier quoted context omitted.
> Do you think they're overpriced? Options are always overpriced. They're fundamentally an insurance product. You should expect to lose money when buying insurance. If you're hedging, you should expect to lose on your options leg. Same as with any insurance product. Options are governed by tight mathematical relationships between each other and with their underlyings. These can be atomically arbitraged, i.e. you don'…
... And how do you feel about selling CSPs, then?
It works as long as you understand you're selling the options below their expected value (EV). It's closer to EV than an option buyer, on average. But the price you get will always represent less reward for risk than my option pricers running on microwave-linked FPGAs a few feet from servers in New Jersey and Chicago can bid and offer.
If that works for you--if the benefits of income or whatever outweigh that theoretical cost--you can do it sensibly. If you're selling puts to enhance your returns, you're probably going to, at the very least, lose your accumulated gains at some point.