They Are Lying To You
StatsEdgeTrading
Michael Burry did not short eighty percent of his portfolio
If you saw the viral posts claiming Michael Burry is “eighty percent short” Palantir, Tesla, and the market, you were fed notional value—not risk. Options let you control shares with a fraction of the capital. Confusing the two turns a hedge into a horror story.
Three fast truths:
Notional is not risk. Buy one put on a ten-dollar stock and you “control” one thousand dollars of stock, but your max loss is the option premium—maybe one hundred dollars. Headlines quoted the one thousand, not the one hundred.
His book was net long. The put notional looked huge, but capital spent on those puts was tiny versus long equity positions. The portfolio construction reads like a hedge on a mostly long book, not an “all-in doomsday bet.”
Filings are late. Thirteen F reports trail by roughly forty five days. He could already be out. Building trades off stale paperwork is how you donate.
Action plan for traders
• When you see “massive short” claims, ask: what is the premium paid versus the notional quoted? What is the max loss?
• Check net exposure: longs minus shorts, plus any calls. A big put headline can still sit on a net long portfolio.
• Respect delays: filings are hindsight. Use them as ideas, not signals.
• Build hedges with intent: size option premiums so a full loss dents, not sinks, your month.
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