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Michael Barry raises the stakes on the downfall of Tesla. Stocks are down nearly 20% in May – Markets

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Michael Bury, an investor who made billions of dollars betting against bank mortgages during the major financial crisis, is now investing in plunging shares in Tesla, the Elon Musk electric car company, which has recently skyrocketed in price.

As of March 31 this year, Burry’s fund, Scion Asset Management, has held about $ 534 million in so-called “put options,” the equivalent of 800,100 shares in the company, according to a statement sent to the SEC, the North American regulator. Market.

This “put options” is a “bearish” investment technique, that is, it predicts a drop in the stocks of the security or index you are betting on. Another option for this type of movement is what is called “short selling”. In this case, Burry bought several contracts equal to the amount of shares mentioned above.

Trading via put options is explained as follows: When the investor buys this option, he buys the right to sell the underlying asset at the price that will be announced in the same contract and the option must be exercised within the period specified in the sales agreement.

If the share price falls below the price stipulated in this contract, the value of this “put option” will rise. On the other hand, if the stock remains above the price specified in the contract, the price of that security expires and the broker does not actually need to purchase the asset.

However, for this process to be successful, the prices must actually go down. In Tesla’s case, the company’s share price has fallen in 12 of its last 16 sessions and in May a loss has accumulated about 20%.

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Tesla shares reached an all-time high in January of this year at $ 883.09 a share, after rising by 700%.

Tesla ended the first quarter of this year with a profit of $ 438 million, doubling the 27th of the 16 million reached in the first three months of last year.

(The news was updated at 16:15 with more details about the operation)

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