What Almost Every Article Gets Wrong About Michael Burry’s Latest “Big Short”
Let’s wade through the doom and gloom
Doom and gloom from the infamous investor played by Christian Bale! The Big Short Round 2 is upon us!
Let’s take a deep breath and a few steps back.
Much has been reported in the past couple weeks about Michael Burry’s latest $1.6 billion big short against the S&P 500 and the NASDAQ.
Sensational, doom and gloom headlines abound. Few of the articles about Burry’s recent activity include the appropriate financial context, let alone accurate information.
In my past life, I worked on a trading floor as a compliance officer, covering a foreign exchange trading business, which included an option’s desk.
So let’s try to clear a few things up.
$1.6 billion in put options does not equal $1.6 billion invested
The product Burry recently used to short the stock market was a put option. Without being too technical, think of buying a put option as obtaining the right to sell something should it reach a specific price within a specific period of time.
