Filings Reveal That George Soros Has Made A Giant Options Trade - Mike Swanson (08/17/2016)
Every quarter the SEC demands that large hedge funds give them a filing that lists all of their holdings in it.
George Soros just gave a filing this week that shows he has made some huge moves with his money.
It also shows that he made several hundred million dollars in the last quarter.
Yes even though he is one of the hated men in the United States thanks to his donations to liberal causes, he is also one of the most successful investors of all time and no one can deny that.
Age does not stop the 86 year old George Soros from making big moves and if anything experience has made him even more on top of the game.
Now in the first quarter the filings showed that Soros bought around one million call options in GLD.
They made up close to 3% of his entire portfolio and he put 5.82% of his portfolio in big cap gold stock miner ABX.
And he put over 9% of his portfolio into put options on SPY and a close to 4% put position in IWM.
At the time headlines where all over the internet saying that Soros was a giant stock market bear and betting on a crash.
But that wasn't really true at all.
He wasn't really trying to go net short and bet against the stock market.
Instead he was simply hedging his positions in his portfolio by buying puts to protect what he had from a bear attack.
He was using puts as insurance.
I know this is hard for most Americans who simply watch CNBC to understand, because they have been trained to only buy and hold and convince themselves that the stock market will go up forever no matter what earnings do, what the valuations are, or what they even see with their own eyes in the world around them. All they do is watch TV and obey what the TV tells them to do.
So the idea of hedging is something that most of them do not understand, because they have never thought about it.
Even the experience of 2008 is something that they pushed out of their minds instead of learned from.
But hedging is what Soros was doing.
Now today's filing shows that Soros sold his GLD call options and rolled that money into buying even more puts.
George Soros now has 17.9% of his money into puts as of the end of the second quarter and you can see the entire filing with the holdings if you want here:
He also trimmed his stake in Barrick down to less than 1%, which is the standard holding size of most of his stock positions.
Now his put position is indeed now MASSIVE and it does indeed now make him net short the stock market.
So today it is accurate to say that George Soros is very bearish on the stock market and is now positioned to profit from a stock market dump.
In the last quarter he was merely protecting himself from stock market losses by hedging, but now he is setup to make a net profit from a drop.
However, some are mistakenly saying he is now a gold bear, because of his sells in GLD and ABX.
I do not see that at all.
All options eventually will expire and it looks to me like Soros made a big trade and took profits with his GLD calls and is now rolling those gains into the put calls.
As for Barrick it was a BIG bet he made on one stock and he has trimmed it so it is now a normal sized position for him.
If he was bearish on Barrick he would be selling the whole position instead of keeping some of it.
This looks like a money management move to me.
Gold has had a tremendous run this year and is in the first year of a bull market cycle.
The first year often bring the biggest gains, but there is often a pause after the first big rally runs its course.
I doubt it's here yet, but that pause could start today or next week or at the start of next year.
I will talk much more in detail about gold and managing your money in a gold position in this weekend's Power Investor PDF update.
But perhaps Soros just wanted to play the start of the big rally with a big position and get out of GLD before it ended. We do not know when the calls were going to expire.
Or perhaps he got more worried about the stock market falling than what he could make more of on GLD calls so he sold the GLD to buy more SPY.
What is more important is to ask yourself what are you doing?
Right now stock market volatility has shrunk to nothing and that means a big move is going to come this Fall.
If it is a down move will you do ok or are you betting your financial well being that CNBC style predictions are going to come true for you by doing nothing but holding and hoping?
Well Paul Tudor Jones, who runs his $35 billion fortune, also did a filing that shows that he now has 37% of his money in SPY puts!
He also has 6.37% in SPY calls.
I would guess the puts are further out in time than the calls are, but he now has a massive net 30%+ put position!
There are various options strategies you can use to get control of things.
Something big is coming this Fall.
When market volatility shrinks to nothing it is only a matter of time that it expands.
I know one trader who is using a timely system to bet simply on market volatility without needing to be right about what direction the stock market will go.
He created this system to trade around the release of The Fed Minutes, because they often create crazy short-term swings in gold and the stock market.
Today the Fed Minutes will be out this afternoon and next week the system can also be used with the Jackson Hole Fed meeting.
Check it out by going here: Matt Morris Releases The Fed Minutes System.
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