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George Soros Bought $1.3 Billion Worth of Put Options on the S&P 500

We are not in a recovery. What we are witnessing right now is the creation of a speculative bubble of epic proportions and that bubble is going to burst. We've been saying this for some time now, but when a major player like George Soros, a billionaire investor known for positioning himself on the right side of a risky trade starts actively betting against the U.S. stock market trouble is brewing.

Soros has recently purchased 1.3 billion dollars worth of put options on the S&P 500. Some have tried to down play this as merely hedging, but putting everything on one single position (the decline of the S&P) looks more like a calculated gamble than a conservative hedging strategy.

Continue Reading: http://stormcloudsgathering.com/george-soros-is-now-betting-...

More info: http://blogs.marketwatch.com/thetell/2014/02/17/soros-double...

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I don't really keep up with

I don't really keep up with financial market news lately. Here's a question that I believe is important: What is "everyone" talking about in the financial world? By everyone I mean most people. Are they all talking about how the S&P 500 is taking off and that we are in a boom? If so, that probably means Soros is right.

It's just like the dot com boom days when NY cabbies were giving Internet stock tips. That was probably the beginning of the end of dot com boom #1.

...

How much does he have long?

He may have billions more long in the market and the puts are just an insurance policy, in the event of a crash. Caveat Emptor.

Cyril's picture

What was Soros up to w/gold in 5/2013? Was he buying or selling?

Let's take, just a random example, gold. What was Soros up to, with gold, in May 2013? Was he buying or selling?

Well, depends how we look at it / what noun "gold" we're talking about; according to Paul Craig Roberts, at the time of the news:

(refresher: gold was dwelling in the ~ $1,380/oz in May 2013, before plunging to ~ $1,200/oz the month after)

http://www.paulcraigroberts.org/2013/05/20/no-bear-market-in...

[...] The misinformation that Soros had sold his gold holdings came from misinterpreting the reason Soros’ holdings in the GLD gold trust declined. Soros did not sell the shares; he redeemed the paper claims for physical gold. Watching the gold ETFs, such as GLD, being looted by banksters, Soros cashed in some of his own paper gold for the real stuff.

The giveaway that Soros is extremely bullish on gold comes not only from his extensive holdings, but also from his $25.2 million call option on junior gold stocks. This is a highly leveraged bet on the weakest gold mines. With high production costs and falling gold price from constant short selling in the paper market, Soros’ bet makes no sense unless he thinks gold is heading up as the short raids concentrate gold in elite possession [...]

Ah...

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Not just bought, bought before December 31

My reading is that in fourth quarter 2013 Soros bought these positions. There was a 5% drop around Jan 20-Feb.1 but then a recovery. Maybe because of the weather. http://www.reuters.com/article/2014/01/31/us-markets-stocks-...
So maybe he is still in or maybe he is out. How long does he usually hold positions? Can Soros predict the weather a month in advance?

I heard about this in early Dec. '13

He bought LEAPS (Long Expiration Puts). A LEAP is a position that is expected to last more than a year (normal options cover up to one year). My understanding is that he bought them against the S&P500, probably playing the SPY.

When you hedge with a put, you normally own the underlying asset, and hope your put gains in value should your asset decline. Though he might own some various S&P500 stocks, or funds, I heard this news in a stock trading training, and we discussed the underlyning, undeniable truths about what this position "means".

Stock market has clear cyclical patterns. There are yearly patterns, multi year patters, presidential election patterns, and the long term upswings and declines. The long term cycle is 14
years from peak to peak... last peak was 2008... its been climbing
for 6 years.

No one knows when it will turn for the downside, but history suggests it will happen. That turn will come in the coming year or so... hence LEAPS, that can expire 2 or more years in the future.

IT IS UNDENIABLE that at some time in the future, the market will fall. If the market behaves according to its traditional patterns up to the present, it will be a year or so to the top. Since no one knows when or where the "top" will be, Soros booked his bet early, before the action begins.

If he waited until the market turned it would be too late. In a
declining market, particularly if it declines quickly, volatility
rises and the placement of puts is much less profitable. The time to place these kinds of speculative bets on the table is when volatility is low. With the markets rising almost all year, volatility was at the low end of its normal range.

Anyone can take this same position (though not in size). You will have to be patient and wait. What goes up, must come down. If there is one thing that is predictable in the markets is that price always, eventually, seeks it mean. Soros is just positioning himself, very publicly, for the inevitable.

The markets don't seem to be in bubble territory yet, but given that the public seems to finally be waking up to the tremendous bull market that has been here since 2011, I'm sure the stupid money is starting to enter the market now. Then "pop goes the
weasel!"

Good points...

...and they got me thinking about the potential investment opportunities weather modification could present!

P.S. Thanks to the mods for making my title more accurate by removing "Just"! I did remove the word "HAS" though. It reads better without it!

I'm a serial entrepreneur and liberty activist from Texas!

www.RevolutionCarBadges.com
www.NonNetwork.com

Let me get this right.

Soros shorts the market, the other big players follow suit. The market dives. Ma and pa low info investors sell on the way down as their pockets are picked. When the market hits bottom Soros and his ilk buy then manipulate the market and start all over again. It is just a racket designed for insiders.

The 'Ol Dump and Pump! :D

...

Sincerely,
Ray Powell
Founder, Hacking For Change
Head Geek, Startbutton.com

Cyril's picture

But hey, Ma and Pa be reassured:

But hey, Ma and Pa be reassured:

no biggie, because they'll get their free stuff to retire...

... since dear government promised it!

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Cyril's picture

Of course. It used to be about gambling. Now it's all about rape

Of course.

It used to be about gambling. Long ago.

Now, it's all about rape.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Buffett just bet the farm on

Buffett just bet the farm on Exxon to boot!

Southern Agrarian

Oh No Soros...Woo

Guess what? If you know about what Soros is doing, he wants you to know so he can digest you and your money. If Soros was really going short - big - you would not have a clue until you were rolling on the floor near financial death.

Yep, I think so too.

That's what I was thinking.

http://www.dailypaul.com/313259/george-soros-just-bought-13-...

I'm a serial entrepreneur and liberty activist from Texas!

www.RevolutionCarBadges.com
www.NonNetwork.com

Interesting

And JPM / Chase just announced it is cutting 8,000 jobs today, mostly from its residential real estate department.

http://www.dailypaul.com/313262/jpmorgan-chase-announced-it-...

Don't know if this is related to the suicides, or just a sign that the market is slowing down and ready to collapse, like Soros thinks.

Thanks for posting.

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

If you want to attract investors

just announce that you're cutting significant costs.

Watch the stock go up.

Cyril's picture

Looks to me like he is putting his money where his mouth is.

Looks to me like he is putting his money where his mouth is.

Is he not?

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Cyril's picture

Soros' Quote

Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend and step off before it is discredited.

-- George Soros

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

You know...

I was thinking that clearly he knows that people will find out about and perhaps react to the dramatic increase in puts. I wondered if this was part of some larger plan.

I'm a serial entrepreneur and liberty activist from Texas!

www.RevolutionCarBadges.com
www.NonNetwork.com