how to do such betting ?
if you're remotely serious about 'trying' this stuff out, do it in paper trades first. The options world is full of the corpses of dead portfolios.
Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
51–60 of 352 posts
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#52Earlier quoted context omitted.
You're betting against a middle-east Marshall Plan and AIPAC lobbyists vs. a company that just set up its AI industrial Hub in Europe and has some serious compute-engine hosting cost sticker-shock incoming. As far as I can see, shorting Thiel is shorting Israel at the moment. Don't do it while Trump is in Cabinet and pressuring Tel Aviv to pardon Bibi.
I will never understand what it is about Israel that makes people lose their minds.
Not minds; lives.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#53Just 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…
> Both Palantir and Nvidia have high IVs
The relevant Greeks are delta, gamma and vega.
If your bet pays off, the price of the stock will decrease. Delta predicts how your option will increase in value with that; gamma if that relationship will accelerate or buffer. Vega, meanwhile, informs that the price suddenly crashing is volatility, which increases the value of your options.
Succinctly, if you are betting on a crash, options offer advantages. (And if the market, but not your company, gets bailed out, vega could put you middlingly in the black.)
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#54Just 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…
Can someone explain why puts make sense over shorting? For example, I'm betting against 5 quantum computing companies with short positions. I considered adding puts to the position, but it didn't make sense based on 2 reasons: High bid ask spread, and if it's a fraudulent company/otherwise worth betting against, the volatility will be high, so you option costs too much compared to the upside; the amount it has to dro…
With a put, you can only lose what the put is worth. With shorting, you can in theory have infinite loses.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#55The 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.
Does anyone else remember the conspiracy theories around the "plunge protection team"?
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#56The 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.
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 could possibly see that Palantir is about to be thrown under the bus, but only connected insiders will know who its exact replacement will be? Personally I don't see signs of Palantir being close to the chopping block though.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#57Burry was right about a scam. AI is not a scam. His short positions could simply be a conviction on rate of growth. If he was truly shorting it into collapse, then I'd say he's misguided here.
There are also other factors that affect Nvidia. Any move on Taiwan can collapse Nvidia's price down to zero. Hyperscalers can also shift orders over to AMD, Intel, ARM and Broadcom. This is inevitable, but you can't be too early with this.
Lastly. I don't know how technical Burry is. If you showed him LLM tech in 2017, would he have recognized it? There are things about this tech that he may not even recognize even if you showed it to him. You can literally show some people full generated video and they still wouldn't get how much compute it takes to do that.
Finally, the world is not just a giant Tulip bubble. There's actually trillions of dollars moving around every day and people innovate and consume. It's not just a giant Ponzi scheme waiting to collapse.
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As for Palantir, as many have mentioned, I would not consider shorting Palantir until year three of this administration. Palantir may lose favoritism with the next administration. Maybe. As we witnessed with the MAG7 CEOs, these people are prepared to change their entire value set to win the business of those in power.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#58Earlier quoted context omitted.
You're betting against a middle-east Marshall Plan and AIPAC lobbyists vs. a company that just set up its AI industrial Hub in Europe and has some serious compute-engine hosting cost sticker-shock incoming. As far as I can see, shorting Thiel is shorting Israel at the moment. Don't do it while Trump is in Cabinet and pressuring Tel Aviv to pardon Bibi.
I will never understand what it is about Israel that makes people lose their minds.
> never understand what it is about Israel that makes people lose their minds
Availability heuristic [1].
Flat earthers and folks deep in their small-country national politics do the same thing, overestimating the causal weight of the thing they’re obsessing about to any effect.
The useful takeaway is to recognize when you do it in smaller doses. What’s the first explanation you tend to have a hunch for explaining phenomena which are too diverse to be reasonably explained by a single factor.
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#59Earlier quoted context omitted.
The equivalent of "If you have to ask, you can't afford it" here is "If you have to ask, you shouldn't do it".
Overall for the common person I'd agree, but I assume we're all more or less hackers here and for us, I'd say "If you have to ask, ask and learn, then do it". If everyone followed your advice no one would ever do anything, as we all begin somewhere, something that should OK. Of course, don't do million dollar trades when you begin, but we shouldn't push back on people wanting to learn, feels very backwards compared t…
thank you for being nice
Re: Michael Burry a.k.a. "Big Short",discloses $1.1B bet against Nvidia&Palantir
#60Just 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…
Can someone explain why puts make sense over shorting? For example, I'm betting against 5 quantum computing companies with short positions. I considered adding puts to the position, but it didn't make sense based on 2 reasons: High bid ask spread, and if it's a fraudulent company/otherwise worth betting against, the volatility will be high, so you option costs too much compared to the upside; the amount it has to dro…
Options are just that - an option to transact at a certain price, if you choose not to you're just out the premium you pay. Short selling involves an obligation to return the shares, which has (theoretically) unlimited downside.