'Big Short' Michael Burry Buys Nvidia Calls as 'Hedge' While Adding to Shorts

Burry disclosed on Substack that before Nvidia's earnings he bought December calls with a strike in the mid-to-high $200 range (3.5%-4% of his portfolio), but stressed this was only to "hedge his short exposure" rather than a bullish bet. He believes Nvidia's monopoly advantage won't last and AI capex will squeeze returns; his short positions in Nvidia, Oracle, and other stocks now exceed 21% of his portfolio.

Ahead of Nvidia's earnings, long-time bear Michael Burry made a rare move by buying call options on the stock, but he made clear it was merely a "hedge" and his bearish stance remains unchanged.

According to a StockTwits report on Aug. 27, Burry disclosed on Substack that he bought Nvidia call options expiring in December with a strike price in the mid-to-high $200 range, characterizing the position as a tool to hedge his large short exposure.

At the same time, he further added to short positions in Nvidia, Oracle, Palantir, Nebius, and Caterpillar, with his short equity positions (excluding put options) now exceeding 21% of his overall portfolio.

This contradictory move reflects Burry's core view on Nvidia: short-term moves are hard to predict, but he believes the stock is overvalued. He has previously said publicly that Nvidia's monopoly advantage is fading, capital expenditure expansion will squeeze shareholder returns, and compared the company's current AI expansion to the 2001 Enron financial scandal, warning that its potential harm to the economy and investors is "orders of magnitude higher."

Call Options: Hedge, Not a Bullish Bet

Burry said the premium he paid for the December Nvidia options was "completely offset by his short positions," and stressed "I'm not here to make a profit," adding that he would not have made the trade if he didn't hold such large short and put option positions. The call position accounts for about 3.5% to 4% of his portfolio.

He admitted that historically he has used such strategies around earnings with short positions, but conceded that "the track record is not great." He also noted that Nvidia's stock has "fallen more often than risen" after recent earnings, and the upcoming results are "just a coin toss." "The market doesn't believe," he wrote. "Today might temporarily rebuild confidence, but only temporarily."

Valuation Logic: Monopoly Advantage Ending, Earnings Under Pressure

Although Burry acknowledged that Nvidia appears to have a low price-to-earnings ratio and monopoly pricing power, seemingly "obviously undervalued," he believes this perception is misleading.

His core argument: Nvidia's monopoly position will last shorter than the market expects, and profit margins will decline accordingly; the company "will not distribute enough returns to shareholders," with capital flowing more toward capital expenditure and diversification; and its continued investment "near and through the top of the bubble" could lead to "stunning declines" in earnings in the "not-too-distant future."

He compared Nvidia's AI expansion to Enron's financing structure, and previously wrote on Substack that in the current AI infrastructure investment boom, much of the capex does not correspond to real end demand but circulates through opaque financing structures, posing a systemic overvaluation risk.

Short Positions Expand Across the Board, Exceeding 21% of Portfolio

While expanding his Nvidia short, Burry also added to shorts in Oracle, Palantir, Nebius, and Caterpillar this week. His short equity positions (excluding put options) now exceed 21% of his overall portfolio.

Meanwhile, he is also building long positions. He increased his position in Birkenstock (BIRK) at a mid-$30s price, saying he has established a full position; increased his position in Freddie Mac (FMCC) at a mid-$5s price, and said he holds a large position in Fannie Mae.

Over a longer horizon, Burry's long-short strategy has faced significant market pressure this year. So far, Nvidia, which he is short, has risen more than 12% year-to-date, while Nebius has surged more than 150%; Palantir, which he is long, is down nearly 5% year-to-date, and Oracle is down more than 23%.

Amid ongoing trading pressure, his paid Substack newsletter "Cassandra Unchained" has surpassed 300,000 subscribers in 231 days since launch. At an annual fee of $379, that translates to theoretical annual revenue of about $113.7 million, making it another notable income stream.