Michael Burry, the hedge fund manager known for his prescient market calls, has recently made headlines with his strategic purchase of deep out-of-the-money puts on Nvidia. Specifically, Burry acquired January 2027 strike 115 puts at a price of 3.30. This transaction is viewed not as a casual investment but rather as a calculated, high-conviction bet against Nvidia’s stock, which was trading at approximately $188.63 at the time of the purchase.
Burry’s investment strategy reflects a bearish stance toward Nvidia, a position he has maintained since fall 2025. The strike price of $115 represents a significant target, approximately 40% below the current trading level, indicating his belief that the stock will see a substantial decline. Importantly, the options Burry has purchased will not expire for over nine months, allowing him to mitigate concerns about time decay; his maximum loss is restricted to the premium paid for these options.
The overarching market dynamics surrounding Nvidia add further nuance to Burry’s bold move. Nvidia’s stock witnessed staggering trading activity, with a turnover of $30.18 billion on 160.5 million shares, placing it among the top-traded US equities. Such high volume is typically indicative of a major news catalyst or a shift in institutional decisions, highlighting the focus investors have placed on Nvidia.
In the last five days alone, shares of Nvidia have increased by 6.3%, recovering from a prior pullback but still standing 40% lower than their 52-week high of $212.19. This mixed momentum suggests ongoing contention between buyers and sellers, enveloping Burry’s trade in a climate of volatility, exemplified by a 3.3% intraday price variation.
For Burry, this context of increased trading activity is crucial. His decision to invest in deep out-of-the-money puts serves as a specific, leveraged defense against a sharp decline in Nvidia’s price amidst an already intense market interest in the stock. His bearish outlook stands in stark contrast to the prevailing bullish sentiment, framing his move as a contrarian play against the stock’s current upward momentum.
The risk-reward profile for Burry’s options trade is straightforward: a defined-risk venture with potential for substantial profit should Nvidia’s stock fall sharply to the $115 level. The most immediate catalyst impacting Nvidia’s price will be its forthcoming earnings report. This event represents a critical test of the company’s fundamentals against its high valuation, with strong results likely propelling the stock higher and undermining Burry’s bearish projection. In contrast, any signs of weakening growth or margin pressures could validate his perspective.
As Nvidia continues to dominate the AI chip market, its consistent performance will be pivotal in determining the outcome of Burry’s trade. If the company maintains its execution and exceeds market expectations, there’s a risk that the stock could continue its upward trajectory, reducing the value of Burry’s put options and potentially leading them to expire worthless.
With Nvidia’s trading volume at record levels, any new developments are likely to have an outsized impact on its share price. This heightened volatility means that the stakes for Burry’s bearish bet are significant, as it creates the potential for rapid price shifts, reinforcing the notion that this tactical wager is not for the faint of heart.
