Jeff Kilburg: Shorting AI Stocks Like Nvidia and Palantir is a Bad Idea

Michael Burry's Trade Mechanics and Risks

• 💡 The specifics of Michael Burry's put options are unclear, as filings may not reveal expiration dates or the actual price paid (e.g., 10 cents vs. $50).
• ⚠️ Buying out-of-the-money put options limits potential loss to the premium paid, making it less aggressive than shorting stock directly.
• 📉 Burry's past calls, like being early on the 'Big Short' trade and his 2021 Tesla and 2023 S&P 500 calls, had associated decay and did not yield immediate positive results.

The Aggression of Shorting AI

• 🎯 Shorting companies like Alex Karp (Palantir) and Nvidia is likened to attacking 'AI gods' Zeus and Apollo, given Nvidia's market cap and Palantir's significant valuation.
• 🚀 The speaker views shorting the AI sector as an aggressive and potentially ill-advised strategy.
• 🚫 While hedging is acceptable, actively being short on AI is considered a fundamentally bad idea.

Options vs. Equity Shorting

• 📈 Palantir options are noted as expensive due to high volatility, making them costly to buy outright.
• 🧩 A put spread strategy, where short puts might not be disclosed in filings, could be a less expensive way to express a bearish view compared to shorting the equity directly.
• ⚠️ The speaker personally would not want to be short Palantir and would prefer to use options to hedge rather than short the stock outright.