Reports today indicate that Michael Burry, "The Big Short," deregistered his hedge fund, Scion Asset Management, earlier this week. Before deregistration, the fund's assets under management reached $155 million.
He also clarified what his short positions consisted of: 50,000 contracts of $PLTR 20270115 50.0 PUT$ and 10,000 contracts of $NVDA 20271217 110.0 PUT$ .
In theory, after deregistering a hedge fund, capital is returned to investors, and short positions should be closed. The open interest data seems to confirm this.
Looking at the PLTR open interest leaderboard, the $PLTR 20270115 50.0 PUT$ remains the most held put option, but the open interest is only 25,000 contracts, far fewer than the 50,000 contracts initially reported. This confirms that Burry has indeed closed his position.
However, its #1 ranking in open interest still shows many share Burry's view, expecting a significant plunge in PLTR.
Followers who have kept up with my analysis should recall the frequent appearance of these deep out-of-the-money puts earlier this year, especially in Q1 – it was quite memorable.
During the sell-off in April, these halved-strike puts all became profitable. The price doesn't necessarily need to hit the strike; a deep enough decline can trigger massive panic and cause implied volatility to skyrocket.
Therefore, when deep OTM puts appear in large volumes, it's time to be extra cautious.
Clearly, Michael Burry was strongly hoping for a repeat of April's crash in Q3. In fact, the market was bracing for exactly that in mid-October, with expectations for the SPY to drop to 600.
Later, as both nations showed restraint on negotiation issues, bulls seized the momentum, and the planned sell-off fizzled.
But before one wave settles, another rises. Some disputes have emerged in the market regarding the profit potential of the AI industry chain. Burry likely sensed a shift in sentiment and strongly hoped to capitalize on this opportunity for an attack.
However, he miscalculated one thing: Wall Street just wants to shake out weak hands ("wash the dishes"), not actually trigger a full-blown bubble crisis.
It's crucial to understand that the US government has heavily tied its national fortunes to the AI narrative. For one individual to step up now, claim it's all a bubble, and heavily short the market... the aftermath likely wouldn't be favorable for him.
So, for someone who survived the subprime crisis bubble, surrendering and shutting down his fund this quickly... it's hard not to suspect there's more to the story.
$Palantir Technologies Inc.(PLTR)$
Actually, during the April crash, some bets were even more extreme than Burry's; they just made their money quietly.
He actually has quite a few supporters. PLTR saw many new puts opened on Wednesday with halved strike prices, though all expiring next year. A pullback testing $160 isn't out of the question, but a halving is absolutely unlikely.
NVIDIA reports earnings next week. It's worth noting the massive open interest of 100,000 contracts in the Nov 21st 185 Put $NVDA 20251121 185.0 PUT$ , built up heavily over the last two days with mixed directionality. A pre-earnings drop is possible; the earnings report is expected to lack major catalysts.
Expected to trade in a narrow range between 245 and 280 this week. Selling strangles outside this range: $AMD 20251114 240.0 PUT$ $AMD 20251121 285.0 CALL$
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