'The Big Short' Take 2: Michael Burry’s $1.6 billion short bet against S&P 500, Nasdaq 100

Famed investor and trader Michael J Burry reportedly took a massive bet on a market crash in the last quarter, by buying put options on S&P 500 and Nasdaq 100 valued at $1.6 billion at the end of June. Michael Burry’s Scion Asset Management held puts with a total contract value of $886 million against SPDR S&P 500 ETF shares, and another $739 million against Invesco QQQ Trust ETF, Reuters reported citing securities filings.

These derivative contracts were held at the end of April-June quarter against 2 million shares each of both ETFs, according to a verified Twitter account by the name of ‘Michael Burry Stock Tracker’. Note that the combined $1.6 billion was the total contract value of the shares against which the put options were bought. The cost of buying the options is likely to be a fraction of the total market value.

No other details were immediately known, such as the strike price/s, expiry date/s, premium paid, or current holding status, with regard to these put options. However the total contract value of $1.6 billion represents about 93% of Michael Burry’s reported portfolio. Put option holders usually gain when the price of underlying security falls.

SPDR S&P 500 ETF Trust (SPY) was trading at $443.28 per share as on 30 June 2023, whereas Invesco QQQ (Nasdaq 100) was at $369.42. SPY has gained just under 1% since then, while QQQ is flat.

Michael J Burry became popular for taking a massive short bet on an impending mortgage crash and making a fortune for his fund during the 2008 Global Financial Crisis. His trade was chronicled in Michael Lewis’ book ‘The Big Short’, followed by a feature film of the same name.