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With options, the market has nearly always priced in the obvious risk. But not the non-obvious risk. Burry is not just saying, “I think these companies are over
by drob518 1y ago
With options, the market has nearly always priced in the obvious risk. But not the non-obvious risk. Burry is not just saying, “I think these companies are overvalued.” Rather, he’s saying, “I think the bubble is about ready to pop.” While many people see the bubble, Burry is making a bet on the timing of the pop.
- geoka9 1y agoYeah, my (limited) understanding is that the GP's argument would be valid for an options trader who looks for pricing inefficiencies to take advantage of (regardless of bullish/bearish outlook) but not _that_ important for someone betting on a black swan event?
- ferrouswheel 1y agoYup, and the further out the expiry date for puts, the higher the price you pay. I looked into it and it's not that cheap - and feels like the market is already pricing in risk of a large correction. But you can still make a lot of money if you time it right.