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Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

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Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#201

Post by john-h-k »

fennecbutt wrote: post #199

Parasite. Overly complex stock markets that produce nothing of value should be abolished. Real people have no need for high level financial concepts like that. The stock market should be for real trade, not incestuous exchanges between egregious executives.

> Overly complex stock markets that produce nothing of value should be abolished. Real people have no need for high level financial concepts like that

This is a pretty huge assumption with no real reasoning. Some substance regarding _why_ “high level financial concepts” produce nothing of value would be useful

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#202

Post by quickthrowman »

ericmcer wrote: post #69
lordnacho wrote: post #9

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.

Yeah I feel like 200m of PLTR put options would distort the market so much the contracts would struggle to overcome their own premium. They must be referring the the value of the shares the contracts represent?

It’s $200M notional.

To make the math easy, let’s assume it’s a PLTR 200 strike put expiring in February 2026. Each put is $20,000 notional so 10,000 puts would be $200M notional.

Feb PLTR 200Ps are trading for $3k or so each, so it would be $30M in premium for $200M notional with an in-the-money put.

If a market maker sells one 200P (52 delta) they are functionally long 52 shares, so they hedge by selling short 52 shares (or selling a call with 52 delta). If he has 10k contracts then the MM that sold the puts would be functionally long 520,000 shares and would need to short that many deltas to hedge.

Avg recent trading volume for PLTR is ~50M shares a day; 10,000 (50 delta) puts is roughly equal to 500,000 shares and be about 1% of a day’s trading volume.

Tl;dr: He’s holding 10k to 50k put contracts, depending on the moneyness and expiration date.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#203

Post by UltraSane »

pphysch wrote: post #198
UltraSane wrote: post #192

Earlier quoted context omitted.

Thank you for proving my point

People are opposed to Israel due to its ongoing mass murder (and rape) campaign. Normal people are opposed to those violent acts and may even get angry about them.

"People are opposed to Israel due to its ongoing mass murder (and rape) campaign."

But the same people tend to completely ignore or outright support Hamas doing the exact same thing.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#204

Post by quickthrowman »

heisgone wrote: post #137
lordnacho wrote: post #9

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.

He would have to report the hedge for the PLTR trade in the same disclosure form, so no he isn’t.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#205

Post by ferrouswheel »

drob518 wrote: post #116
roadside_picnic wrote: post #81

Earlier quoted context omitted.

> high IVs. You’re paying for that. Glad to see someone say it. A lot of people have a hypothesis about the market, but fail to do the follow through to see if the market has already priced that in . The real aim should be to see when your model (mental or mathematical) prices things differently than the market. In this case, it's actually quite reasonable to believe that the market has over priced the risk no matter…

With options, the market has nearly always priced in the obvious risk. But not the non-obvious risk. Burry is not just saying, “I think these companies are overvalued.” Rather, he’s saying, “I think the bubble is about ready to pop.” While many people see the bubble, Burry is making a bet on the timing of the pop.

Yup, and the further out the expiry date for puts, the higher the price you pay.

I looked into it and it's not that cheap - and feels like the market is already pricing in risk of a large correction.

But you can still make a lot of money if you time it right.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#206

Post by willis936 »

UltraSane wrote: post #203
pphysch wrote: post #198

Earlier quoted context omitted.

People are opposed to Israel due to its ongoing mass murder (and rape) campaign. Normal people are opposed to those violent acts and may even get angry about them.

"People are opposed to Israel due to its ongoing mass murder (and rape) campaign." But the same people tend to completely ignore or outright support Hamas doing the exact same thing.

Because one is actively sponsored by their own nation while the other is not. Their tax dollars are being spent for those atrocities. Or is that not something people should quibble about?

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#207

Post by mindslight »

WheatMillington wrote: post #186
mindslight wrote: post #56

Earlier quoted context omitted.

It's even worse than that, as Palantir is a Party business. Betting against that is like betting whether specific people were going to be airbrushed out of photos in Stalin's Russia. And if you have that kind of insider insight, why short instead of making a positive bet on whomever the new Party darlings are going to be? Maybe it makes sense based on the dynamic of the Party needing to run through scapegoats? One co…

[flagged]

Do you have any specific criticisms?

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#208

Post by stevefan1999 »

JumpCrisscross wrote: post #166
ericmcer wrote: post #69

Earlier quoted context omitted.

Yeah I feel like 200m of PLTR put options would distort the market so much the contracts would struggle to overcome their own premium. They must be referring the the value of the shares the contracts represent?

> PLTR put options would distort the market Puts are calls and calls are puts [1]. On a certain level, all options of a given expiry and underlying are shadows of the same object. [1] https://en.wikipedia.org/wiki/Put%E2%80%93call_parity

Only applies to European Options

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#209

Post by JumpCrisscross »

stevefan1999 wrote: post #208
JumpCrisscross wrote: post #166

Earlier quoted context omitted.

> PLTR put options would distort the market Puts are calls and calls are puts [1]. On a certain level, all options of a given expiry and underlying are shadows of the same object. [1] https://en.wikipedia.org/wiki/Put%E2%80%93call_parity

Only applies to European Options

> Only applies to European Options

Absolutely false.

Options theory typically starts with European non-dividend paying options for simplicity. PCP applies to American-style options on dividend-paying stocks, you just get a solution with pairs of inequalities defining bounds. That leads to similar arbitrage and conversion mechanics with similar implications for market participants.

Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir

#210

Post by bdangubic »

abcd_f wrote: post #5

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.

is this post from 2018? or 2022? I keep reading exactly the same “predictions” here year after year after year… maybe 2026 is the year :)
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