Tuesday morning saw a dust-up on financial Twitter — aka FinTwit — as two investing heavyweights squared off in the media.
In one corner, we have the “Diva of Disruptive Innovation” herself — the reigning CEO of Ark Investment Management LLC, Cathie “Money Tree” Wood!
And her challenger, the man who landed one of the biggest downside bets in history, Michael “The Big Short” Burry.
In Monday’s latest 13F filings, news outlets reported that the Burry-owned Scion Asset Management bought 2,355 puts in the second quarter against Wood’s Ark Innovation ETF (NYSEArca: ARKK).
Those puts against ARKK come in addition to Scion’s already substantial short position of ARKK’s biggest holding — Tesla Inc. (Nasdaq: TSLA)
Dr. Burry famously was one of the few who won big after predicting the subprime housing crisis. Since then, when he makes a move, traders take notice.
But even with a track record as impressive as his, is this a warning of another growth stock crash in the making, or is this just noise from someone using the same move again and again, hoping lightning will strike twice?
Let’s dive into the options flow and find out!
Is the Market Headed for Another Growth Stock Crash?
When we start digging through the options flow for signs of a potential growth stock crash, we can see several multi-thousand-lot ARKK put buys trading hands for big money. This includes $4.95 million and $1.7 million bets in the September monthly put options.
Those are big bets, but in short-term trades targeting at most a 5% drop in the stock… Hardly growth stock crash territory.
ARKK is also a heavily traded fund, so as far as volume goes these bets aren’t out of the ordinary.
But that doesn’t mean we’re out of the woods just yet…
Check out the video below and we’ll drill down into the charts and see what it would take for ARKK to fall to pieces in a growth stock crash. Don’t forget you can follow me @LanceIppolito on Twitter, Instagram and our YouTube channel for more trading insights and tips. And as always, you can find me right here talking stocks and options trading — and printing money — on WealthPress.com!
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