Bridgewater Bets $1.5 billion on Upcoming Market Drop

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

  1. RedDuke

    RedDuke

    Did anyone here even traded option? THEY PAID 1.5 BULLION PREMIUM. THIS IS HUGE If there is a sharp market drop it could turn in 10-20 ... billions fast
     
    #11     Nov 22, 2019
  2. It is not everyday ET’s founder starts a thread.

    The probability of a disruptive political and or geopolitical event causing risk aversion seems high. Whatever Trump does with China - Hong Kong will have repercussions with US - China relations and domestic politics, or maybe both. Has not a lot of the market’s recent rise been on improved trade hopes?

    There seems to be market confidence risk in the background if we get some negative economic reports. The Fed will probably be quick with increased liquidity on negative economic reports, however.

    Risk seems high and reward potential seems low right now in equities.

    Worth at least a hedge, I’d think.
     
    #12     Nov 22, 2019
    lovethetrade and athlonmank8 like this.
  3. Pekelo

    Pekelo

    But it is only 1% of their capital. So it is a hedge, like in hedgefund.

    News alert!: Hedgefund actually hedges!!!
     
    #13     Nov 22, 2019
  4. zdreg

    zdreg

    Are the Puts out of the money?
     
    #14     Nov 22, 2019
  5. zdreg

    zdreg

    Statement is true only if puts are way out of money minus the drop of his stock portfolio.
     
    #15     Nov 22, 2019
  6. guru

    guru


    It says it’s a “wager, assembled over the past few months”.
    So he might've asked several of his teams to assemble different wagers, which could include some put option combos. Not sure if wide OTM butterflies (including.broken wing) would make sense here.
    March open interest may hold some clues.
     
    #16     Nov 22, 2019
  7. bone

    bone

    Yeah, reading Bridgewater's press release carefully - the distinct impression is that they are skiddish and wanted some downside insurance on their portfolio. I doubt that they would only bet 1 percent of their capital on a naked bet if they were absolutely convinced...
     
    #17     Nov 22, 2019
    trader99 likes this.
  8. Specterx

    Specterx

    Not a bad play IMO if you are long and worried about air pockets.

    I think the secular bull has a ways to go yet, but internals on this rally are weak and it seems like folks have been front-running year-end seasonality. Seems like more of the same pattern from the past couple years: VIX positioning creates a pattern of vertical upside rallies and subsequent drops, but moves lower likewise get V-reversed as passive flows, short squeezes and the Fed come into play.

    2020 is going to see concern about a Warren presidency among the stock-owning class, and with that in mind it's not clear if/when the indices can manage a sustained breakout.
     
    #18     Nov 22, 2019
  9. Daal

    Daal

    #19     Nov 22, 2019
    lovethetrade and bone like this.
  10. Trade idea crowded already?
     
    #20     Nov 22, 2019