"Big Short" Michael Burry Buys Nvidia Call Options as a Hedge While Increasing Short Positions

On the eve of Nvidia's earnings report, long-term bear Michael Burry made a rare move to buy call options on the stock. However, he made it clear that this is merely a "hedge" and his bearish stance remains unchanged.

According to StockTwits on the 27th, Burry disclosed on social platform Substack that he has purchased Nvidia call options expiring in December, with strike prices in the mid-to-high $200 range, and characterized this position as a hedge against his substantial short exposure.

At the same time, he further increased his short positions on Nvidia, Oracle, Palantir, Nebius, and Caterpillar. His current short equity exposure (excluding put options) has now exceeded 21% of his overall portfolio.

This seemingly contradictory action reflects Burry's core view of Nvidia: short-term price movements are unpredictable, but its long-term valuation is much lower than the current market price. He has previously stated publicly that Nvidia's monopoly advantage is waning, capital expenditure expansion will squeeze shareholder returns, and compared the company's current AI expansion to the Enron accounting scandal in 2001, warning that its potential harm to the economy and investors is "orders of magnitude higher."

Burry stated that the premium paid for Nvidia's December options was "completely offset by his short positions," and emphasized, "I'm not here to make a profit." If not for holding such large short and put positions, he would not have made this trade. This call option position accounts for about 3.5% to 4% of his investment portfolio.

He admitted that historically he has used such strategies around earnings reports on his short positions, but conceded that his "track record isn't great." He also pointed out that Nvidia's stock has more often declined than risen after recent earnings releases, and that the upcoming results are "nothing more than a coin toss." "The market doesn't believe it," he wrote, "Maybe today confidence will be temporarily restored, but it will only be temporary."

Although Burry acknowledges that Nvidia's surface-level price-to-earnings ratio appears low, and that it enjoys monopoly pricing power, seemingly "obviously undervalued," he considers this appearance to be misleading.

His core argument is that: Nvidia's monopoly position will last less time than the market expects, and profit margins will decline as a result; the company "won't return enough to shareholders," with capital increasingly flowing into capital expenditures and diversified investments; and its continuous investments "near and over the top of a bubble" could lead to a "stunning decline" in earnings "in the not-too-distant future."

He compares Nvidia's AI expansion to Enron's financing structure, and previously wrote on Substack that in the current AI infrastructure investment frenzy, much capital expenditure does not correspond to real end-user demand but rather self-cycles through opaque financing structures, creating systemic overvaluation risks.

While increasing his Nvidia shorts, Burry also scaled up his short positions on Oracle, Palantir, Nebius, and Caterpillar this week. His short equity holdings (excluding puts) now account for over 21% of his overall portfolio.

Meanwhile, he is also accumulating long positions. He added to Birkenstock (BIRK) at mid-$30s, claiming to have built a full position; he also increased holdings of Freddie Mac (FMCC) at mid-$5s and stated he has a significant position in Fannie Mae.

Over a longer time frame, Burry's long-short strategy has faced notable market pressure this year. So far, his shorted Nvidia has rallied over 12% year-to-date, Nebius has soared over 150%; while on the long side, Palantir has fallen nearly 5% and Oracle has dropped more than 23%.

Amid continued trading pressures, his paid Substack newsletter "Cassandra Unchained" has surpassed 300,000 subscribers over 231 days since launch. Assuming an annual fee of $379, theoretical annual revenue would be about $113.7 million, representing another notable line of income for him.