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- Michael Burry had long put against Tesla stocks by the end of Q1 2021
- A US SEC filing revealed that Burry had made bearish bets against 8,00,100 shares of the electric car manufacturing firm
- Following the investment type of Burry, many deemed that the calls were probably a short bet
- Turbulent faced by Tesla and its CEO’s stance have also affected the prices in the crypto market
Michael Burry is one of the famed investors who was the first to call and profit from the subprime mortgage crisis. According to a document filed with the United States Securities and Exchange Commission (SEC), it is revealed that Burry has bearish bets against 8,00,100 shares of Tesla by the end of the first quarter. The filings also revealed that since the end of Q1 2021, Burry owned 8,001 put contracts with unknown value, strike price, or expiry.
Michael Burry making bearish bets on Tesla shares
With a value of $534 million, Michael Burry had made bearish bets against 8,00,100 Tesla shares. The put-call was revealed after following SEC filings with Scion Asset Management. However, the filings did not consist of details on the strike of the puts.
Indeed, the actual value of the options position was unknown; the SEC rules stated that the positions were under 10k shares and less than $200k in total market value are not required to be disclosed. According to options analysts, there are possibilities that the puts disclosed in the documents are a part of a more extensive trade that would curb losses.
Michael’s bet is probably a short bet
Following the bearish bet, Henry Schwartz, the head of product intelligence at Cboe, highlighted that the bet could be the long leg of a put spread. The statement refers to a strategy involving a combination of purchase and sale of put options. As there are no reports of long shares and Burry is a pure value investor, it probably is a short bet.
Tesla facing turbulent amid slumping sales in China
This year Tesla shares have experienced heavy sell-off amid slumping sales in China. Elon Musk’s electric vehicle venture is facing regulatory scrutiny in China and the United States. High-profile vehicle crashes in the region have led to negative publicity and investigations in terms of vehicle safety authorities.
Although Tesla stocks gained tremendously last year, the price has dropped by almost 20% this year. Many considered that the price of Tesla shares remained volatile in recent days. Following the scenario, many were observed believing that the volatility arose following the CEO’s tweet on Bitcoin and Dogecoin. However, the stance of the CEO has badly affected the prices in the crypto market recently. Like the price of Tesla stocks, several cryptocurrencies also had faced corrections.
