- Nvidia's earnings trap heading into Wednesday's report had already unsettled traders, with the stock sliding for seven straight sessions beforehand.
- Michael Burry disclosed on his Substack that he bought December Nvidia call options as a hedge, while adding to his short position.
- He also revealed fresh shorts against Oracle, Palantir, Nebius, and Caterpillar, with total short stock position exceeding 21% of his portfolio.
- After a record-breaking earnings report, Nvidia is up modestly, up more than 12% year to date.
- Whether the earnings validate Burry's short or hand him another loss on the hedge remains an open question.
- Burry set the call strikes in the mid-to-high $200s and paid a single-digit premium per contract.
- He said that cost is fully offset by his existing short and put exposure, which represents 3.5% to 4% of his portfolio.
- "I am not playing for gains here," Burry said, adding he would not have made the trade without such a large bearish position already in place.
- Burry called Nvidia's low price-to-earnings ratio deceptive for a company he believes commands short-lived monopoly power.
- He also argued Nvidia will direct more cash toward capital spending than shareholder returns, investing "into and through the top of the bubble".
- Burry expanded long positions in Birkenstock and Freddie Mac this week, calling the Birkenstock stake a full position.
Michael Burry has strategically acquired December call options on Nvidia as a hedge ahead of its record earnings, while increasing his short positions on Oracle, Palantir, Nebius, and Caterpillar. He emphasized that the call options are a hedge, stating, "I am not playing for gains here."
Burry's total short stock position now exceeds 21% of his portfolio, excluding puts. He set the call strikes in the mid-to-high $200s and paid a single-digit premium per contract, which he claims is offset by his existing short and put exposure, representing 3.5% to 4% of his portfolio.67
Despite Nvidia's stock rising more than 12% year-to-date, Burry remains skeptical, arguing that the company's low price-to-earnings ratio is deceptive and that it will prioritize capital spending over shareholder returns. He believes this could lead to sharp earnings reductions in the future.1011
Burry's approach echoes his broader campaign against the AI trade, which includes a warning of a potential 1987-style crash. He has also expanded his long positions in Birkenstock and Freddie Mac, calling the Birkenstock stake a full position. Whether Nvidia's earnings will validate Burry's short or result in another loss on the hedge remains uncertain.12
“Burry set the call strikes in the mid-to-high $200s and paid a single-digit premium per contract, a cost he says is fully offset by his short and put exposure. He called Nvidia's low price-to-earnings ratio deceptive, arguing the company will invest "into and through the top of the bubble."”
Yahoo Finance
