Michael Burry Concentrates Bearish Exposure in Nasdaq-100 and SMH Puts

what happened

Michael Burry, the investor known for anticipating the 2008 financial crisis by highlighting weaknesses in the U.S. subprime mortgage market, has transferred most of his bearish exposure into put options tied to the Nasdaq-100 and the VanEck Semiconductor ETF (SMH). Stocktwits reports that, in his latest Substack post published Sunday, Burry said the two positions now represent almost all of his short exposure. A put gives its holder the right to sell a stock or index at a preset price by a specified date, potentially gaining value when the underlying asset declines.

His Nasdaq-100 puts expire in April 2027. Burry called the trade relatively inexpensive in a low-volatility environment and consistent with his investment horizon. He wrote that the market could be zero to nine months from a significant top, while the final phase of the bull market may prove volatile after major indices reached new highs. Burry described SMH as a concentrated way to bet against some of the most extended semiconductor shares. Nvidia represents 19.6% of the ETF, Taiwan Semiconductor Manufacturing Co. 9.3% and Advanced Micro Devices 5.6%; Broadcom, Micron Technology, Marvell Technology and Applied Materials each represent about 5%.

The SMH puts expire in June 2027 and are approximately 20% out of the money. Burry also retains long-dated puts on Oracle and PLTR, while closing his other short positions and replacing them with NDX and SMH puts. He said Palantir had recently closed at [value not provided in the source] and could rise further. According to his blog post, the shares have doubled since June, when he covered half of his short, before later exiting the remainder and switching to puts. He also said he bought several series of preferred securities and sold common shares of Fannie Mae and Freddie Mac to realize the full tax loss in the mortgage “Twins.”

why it matters

Stocktwits recorded bearish retail sentiment for SMH and Oracle, bullish sentiment for QQQ and extremely bullish sentiment for PLTR. Year to date, SMH is up more than 67%, PLTR is up 17.6% and ORCL is down 26.5%, highlighting the contrast between Burry’s positioning and retail sentiment.

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