Is Soros Preparing for a Big Drop?

By Ritesh Anan in Hedge Funds, News, Options
August 15, 2014

When George Soros takes a big position, everyone sits back and takes notice. The man who broke the Bank of England is known for not shying away from placing a big bet when he is convinced about something panning out exactly the way he foresees. One such trade that Soros has put up recently is a massive build up of a short position in SPDR S&P 500 ETF Trust, placed under Put options. Though it can be that Soros is hedging his exposure to the stocks he is long in, but whether that is true or not are just guesses.

“Soros Fund Management, the family office that manages the assets of billionaire George Soros, has just disclosed a huge bearish position on the S&P500, suggesting that Soros may think that the market is in for a big drop.  According to the recent filings Soros’ fund company holds puts in the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P500, totaling 11.29 million at the end of the second quarter, that was the time when many fund managers were fighting nerves about the state of the stock market [...],” Kelly said.

Kelly revealed that Soros Fund Management also has old positions built over the past few years  in the SPDR S&P 500 ETF Trust (SPY)’s Puts, but this recent position was by far the highest. Although it’s still not clear whether Soros still holds these Puts or not, but if he does, then the notional value of his SPDR S&P 500 ETF Trust (SPY)’s Put position comes at around $2.2 billion.

“[...] Still, it’s hard to read too much into the figure given that the SPDR S&P 500 ETF Trust (SPY) Put is a popular hedge and that Soros is long quite a few stocks as well.  Positions that he may be trying to counterbalance, those of course include the Argentine oil company YPF, Teva Pharmaceutical, Tibco Software and a popular stock to talk about for us, which is Herbalife [...],” Kelly added.