SPDR S&P 500 ETF Trust (SPY): Is Soros Aiming For a Big Correction?

Billionaire investor George Soros boosted his position in SPDR S&P 500 ETF Trust (NYSEARCA:SPY)’s Puts by around a sixfold during the second quarter of 2014. With the markets not correcting significantly, Soros’ huge bearish position, which accounts to $2.21 billion or 17% of his portfolio,  is raising many eyebrows on the Street. Brian Wesbury, Chief Economist and First Trust Advisors and John Spallanzani, Director of Sales and Trading at GFI Group discussed Soros’ huge bearish position in SPDR S&P 500 ETF Trust (NYSEARCA:SPY) on Fox Business.

“I think he just sees a low volatility right, So, that’s a perfect opportunity to hedge your portfolio, I think Jana Partners took out $4 billion worth of protection just recently. I think, why not hedge a little bit of your portfolio when volatility is trading in a 11-12 range. So, I think, they hedged before volatility spiked and what was going on in Ukraine and Russia and obviously I don’t think they covered those bets [...],” Spallanzani said.

hedge fund research

Spallanzani remarked that people like George Soros are traders and if they get an environment where volatility is low such that buying SPDR S&P 500 ETF Trust (NYSEARCA:SPY) Puts is cheap, they are going to buy it just to hedge their portfolios. He feels  positions like the one Soros has taken on SPDR S&P 500 ETF Trust (NYSEARCA:SPY) are not necessarily a good indicator of where people like George Soros think the market will move. Wesbury bought what Spallanzani said, agreeing that it might just be a low cost insurance, though he revealed that he is taking the other side of the trade i.e. he is bullish on the market. Wesbury thinks that even though S&P is trading at highs, the market is still relatively cheap and is almost 12% to 15% undervalued.

“[...] Earnings in the second quarter for the S&P 500 are going to be up 11% over a year ago, expectations were only for 4% growth. So, the market is beating in earnings, it’s beating in revenues, the economy is coming in stronger. I think this is the time to be long stocks not short,” Wesbury said.


Disclosure: None

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!