Michael Burry Expands Nvidia Short, Adds Call Hedges
TREE NEWS reports: Renowned investor Michael Burry, famed for his ‘Big Short’ bet against subprime mortgages, has reportedly increased his short position against Nvidia (NASDAQ: NVDA) while simultaneously purchasing December call options as a hedge. According to a BeInCrypto report, Burry’s Scion Asset Management filed a 13F with the SEC revealing this complex options strategy, which comes just ahead of Nvidia’s earnings release.
Strategy Breakdown: Shorting the AI Darling, Hedging with Calls
The filing shows Scion held put options on Nvidia — effectively a bet that the stock will fall — while also acquiring call options expiring in December. This ‘short + long call’ structure is a classic collar-like hedge: the puts profit if Nvidia declines, while the calls cap potential losses if the stock surges. Burry has previously called Nvidia ‘overvalued’ and has been vocal about the speculative nature of AI-driven equity markets.
Nvidia has been the poster child of the AI boom, with its market cap soaring past $3 trillion on the back of explosive demand for its GPUs in data centers. However, Burry’s move signals growing skepticism about whether the AI trade has run too far, too fast. The timing is notable: Nvidia’s Q3 earnings are due soon, and any miss or cautious guidance could trigger a sharp correction.
Industry Analysis: AI Valuation Concerns and Market Implications
Burry’s bet is not isolated. Several prominent investors, including Stanley Druckenmiller, have trimmed their Nvidia positions, citing valuation concerns. The options market is pricing in a potential 10% move post-earnings, reflecting high uncertainty. If Nvidia disappoints, it could drag down the entire tech sector, given its weight in the S&P 500 and Nasdaq. Conversely, a strong beat could force Burry to cover his short, adding fuel to the rally.
The use of call hedges is particularly interesting. It suggests Burry acknowledges the risk of being early — a lesson from his subprime trade, where he was right but suffered significant drawdowns before profiting. By buying calls, he limits his downside if the stock continues to climb, while still benefiting from a decline.
Forward-Looking Perspective
Investors should watch Nvidia’s earnings and guidance closely. Burry’s position is a contrarian signal, but not a guaranteed predictor. The broader AI trade remains robust, with companies like Microsoft and Meta increasing capex on AI infrastructure. However, if Burry is correct and Nvidia’s growth decelerates, the ripple effects could be felt across the crypto market, particularly in AI-related tokens and GPU-backed DePIN projects. For now, the market is in a tug-of-war between AI optimism and valuation discipline.
