Due to the way options are reported, this is a common misconception.
Calculated portfolio weighting for options is incorrect because nominal value is reported.
Nominal value is calculated as "the number of option contracts" × 100 × "the value of the underlying security."
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— The Kobeissi Letter (@KobeissiLetter) August 14, 2023
However, in reality, Michael Burry spent much less than $1.6 billion to buy these 40,000 contracts.
He didn't report the price paid per contract but say we take the November 17th, 2023 puts for $QQQ and $SPY.
The expiration date on puts are 95 days out from today.
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— The Kobeissi Letter (@KobeissiLetter) August 14, 2023
While Michael Burry did buy shorts on $QQQ and $SPY, the value is MUCH lower than $1.6 billion.
When you see headlines about options on a 13F, remember nominal value is reported.
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— The Kobeissi Letter (@KobeissiLetter) August 14, 2023