Bridgewater Bets $1.5 billion on Upcoming Market Drop

Discussion in 'Wall St. News' started by Baron, Nov 22, 2019.

  1. Baron

    Baron ET Founder

    Ray Dalio's Bridgewater Associates LP has bet more than $1 billion that stock markets around the world will fall by March. The wager, assembled over the past few months and executed by a handful of Wall Street firms, would pay off for the world’s biggest hedge fund if either the S&P 500 or the Euro Stoxx 50—or both—declines, some of the people said.

    It is made up of put options, which are contracts that give investors the right to sell stocks at a specific price, known as a strike, by a certain date. They allow investors to shell out a relatively small amount of cash to hedge a larger portfolio or make a directional wager. The options expire in March and currently represent one of the largest bearish bets against the market.

    Bridgewater paid roughly $1.5 billion for the options contracts, or just about 1% of the Westport, Conn., firm’s $150 billion in assets under management, according to people familiar with the matter.

    The options contracts are tied to around $100 billion worth of the indexes, said people familiar with the matter. How much the firm stands to potentially make would depend on many factors, including the magnitude of any market decline and the timing of when the firm cashes in its bet.
  2. There's a story about another similar kind of bet on the VIX.... "65 by April".
  3. S2007S


    Yep I'm thinking they have hundreds of millions of longs on...even if vix doesn't get to 65 it wouldn't matter.
    nooby_mcnoob likes this.
  4. S2007S


    I was very interested in this article until I read it was only a 1% position. Not enough to interest me.
  5. Likely so, though $300MM or $100B sounds like a lot to us pauper retail screen jockeys.
  6. noddyboy


    It is a $100bn position.
    athlonmank8 and RedDuke like this.
  7. Not exactly. He's risking 1% of his AUM as a hedge. It's mostly "insurance".
    comagnum, trader99 and fan27 like this.
  8. S2007S



    $98.5 billion.
  9. trader99


    It's a hedge. Not a directional bet for a crash.
    Arnie and comagnum like this.
  10. %%
    Every 1% helps- next SEPT drop is more likely than MAR. But with a herd of elephants,as he tries to manage, he may have to start early.LOL [I don't know if still trades lean hogs- that stinkin' stuff has real short life]:D:D.:D:D:D:D:D:D
    #10     Nov 22, 2019