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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

#251

Post by blitzar »

lordnacho wrote: post #111
lvl155 wrote: post #28

Just because something is expensive doesn’t mean you should short it via puts as Burry had done. Both Palantir and Nvidia have high IVs. You’re paying for that. You’re much better off looking for cheaper puts on securities with enough correlation. Since Volmageddon and pandemic craze, deep OTM options have been scalped to death. Rarely good value. Nvidia also didn’t report earnings yet which means you’re paying for t…

Much simpler: I sat on an option desk for years, and whenever someone had a directional thought, the quip was "why don't you just buy/sell it then?"

I would ask the options desk to price it up, decide it was too expensive, and just go short.

Of course they did have a cheaper double no touch broken wing structure that would pay for their next mclaren.

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

#252

Post by SilverElfin »

What does Palantir actually do? I feel like every earnings discussion is vague and goes on about things like “Ontology” without sharing trustworthy details. As far as I can tell they are more like a consulting firm. Why are they not viewed like another IBM?

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

#253

Post by chrsw »

nodesocket wrote: post #239

His track record since “the big short” has been horrific. That’s the problem with being a perma-bear, eventually the market dips but you missed out on extraordinary gains vastly out weighing your negative thesis. It’s a hellva lot easier to be bullish American companies then try and time draw downs. Doesn’t make any sense.

Yes, but I haven't seen anything from AI technology to suggest it's going to live up to the hype in the short term. I'm not saying Burry is completely accurate in this case, but the draw down could be quite big.

GPT-4 was released in early 2023. Back then AI maximalists were saying AGI is near. We're approaching early 2026 and we obviously aren't anywhere close to anything any reasonable person would consider AGI. But what do we have? "Agents" that are mostly useless. Image and video clip content generators that are pretty much only good for social media memes and spam. We do have better software development tools, but that's not a life changing advancement.

It seems like in order for all this speculation and all these massive build-outs to pay off we're going to need AI to redefine how we work and live within the next 3-5 years. Even if we AI development doubles or triples what it's been able to do in the last 3-5 years, I don't see this happening.

So, when this does not happen, when the AI hype does not live up to the promises, by a longshot, what will happen to the markets?

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

#254

Post by jb1991 »

vasco wrote: post #247
mapt wrote: post #241

You don't just need to decide that Nvidia is overvalued by the market and will crash in price to make money on a short position. You need to time the crash. If you're off, it could still crash and you could spend more money sustaining the position than you'd make. Or you could end up getting margin called, not just by semi-impotent private investors as Michael Burry was, but by the platform you're trading on itself.…

There's no way he gets margin called, these surely are puts, not pure stock shorting. This isn't some random guy.

yeah the article is clear they are puts

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

#255

Post by MikeNotThePope »

vasco wrote: post #247
mapt wrote: post #241

You don't just need to decide that Nvidia is overvalued by the market and will crash in price to make money on a short position. You need to time the crash. If you're off, it could still crash and you could spend more money sustaining the position than you'd make. Or you could end up getting margin called, not just by semi-impotent private investors as Michael Burry was, but by the platform you're trading on itself.…

There's no way he gets margin called, these surely are puts, not pure stock shorting. This isn't some random guy.

Investors can & do make mistakes.

“Markets can remain irrational longer than you can remain solvent.” ― John Maynard Keynes

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

#256

Post by chollida1 »

One thing to remember with 13F filings is that funds are required to report the full value of their option positions as if they were delta 1.

Some outlets then took this and wrote the story that Burry has a short bet of billions on NVIDA and Palentir.

His put's are most likely well out of the money so their delta is no where near 1 so his bet is far smaller than places are reporting just due to how the SEC requries funds to report their holdings on 13F filings.

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

#257

Post by slashdev »

mapt wrote: post #241

You don't just need to decide that Nvidia is overvalued by the market and will crash in price to make money on a short position. You need to time the crash. If you're off, it could still crash and you could spend more money sustaining the position than you'd make. Or you could end up getting margin called, not just by semi-impotent private investors as Michael Burry was, but by the platform you're trading on itself.…

These are puts, you buy them, they have a fixed expiration date at which point they will be worthless if the price is above the strike price.

Fixed down side, upside is $100 per contract per dollar the stock is below the strike at expiry. You can also sell them before then, and price depends on time to expiry, volatility, and distance to the strike price. See Black-Scholes model for more info.

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

#258

Post by chollida1 »

nodesocket wrote: post #239

His track record since “the big short” has been horrific. That’s the problem with being a perma-bear, eventually the market dips but you missed out on extraordinary gains vastly out weighing your negative thesis. It’s a hellva lot easier to be bullish American companies then try and time draw downs. Doesn’t make any sense.

> His track record since “the big short” has been horrific.

Has it? I couldn't find the returns for his fund. Since you have them can you post them and highlight what about them are horrific?

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

#259

Post by empath75 »

mapt wrote: post #241

You don't just need to decide that Nvidia is overvalued by the market and will crash in price to make money on a short position. You need to time the crash. If you're off, it could still crash and you could spend more money sustaining the position than you'd make. Or you could end up getting margin called, not just by semi-impotent private investors as Michael Burry was, but by the platform you're trading on itself.…

You can make a lot of money on options even if the price doesn't collapse completely. Options dramatically amplify movements of the underlying price. Even if the market swoons a little bit, he can cash out for a big profit, as long as it happens before his positions expire, even if it doesn't hit his strike price.

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

#260

Post by empath75 »

nodesocket wrote: post #239

His track record since “the big short” has been horrific. That’s the problem with being a perma-bear, eventually the market dips but you missed out on extraordinary gains vastly out weighing your negative thesis. It’s a hellva lot easier to be bullish American companies then try and time draw downs. Doesn’t make any sense.

> His track record since “the big short” has been horrific.

You would expect that with low probability, highly leveraged bets, which shorts largely are. You are wrong most of the time and then make a giant pile of money when you are right. People definitely should understand that strategy though and not just follow him blindly into investments without the expectation that you will probably lose your money almost every time.

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