Market Volatility & Hedging Strategy - The market exhibits complacency with the VIX around 17%, presenting an opportunity for investors to hedge downside risk relatively inexpensively using out-of-the-money options [2][3] - Buying a 610 put on SPY or 6100 on SPX expiring in August would cost approximately 1% of the portfolio's value, offering significant downside protection [3][6] - Investors can offset the cost of downside protection by selling covered calls, potentially collecting close to 05% of the portfolio's value in the next 30 days [6][7] Trade War Scenarios & Options Plays - In a scenario where the EU and India don't make a deal and retaliate with tariffs, buying out-of-the-money put options is a simple way to hedge against this worst-case scenario [4][5] - If the trade deal deadline is extended, investors can roll out their options to September, continuously harvesting premium by selling upside calls and using the proceeds to buy downside put protection [8][9][10] - If countries capitulate and make a deal, the market is likely to react positively, and investors could consider selling downside puts and using the proceeds to fund buying upside calls for upside participation [11][12][13]

Core Insights - Michael Burry, known for his successful bet against the housing market during the Great Recession, has sold nearly all stocks in his fund Scion Asset Management and purchased put options, indicating a potential bearish outlook [2][6][10] Group 1: Burry's Investment Strategy - Burry typically maintains a small portfolio, holding around a dozen stocks, and has recently sold large positions in Chinese companies like Alibaba and JD.Com while also buying put options on these stocks [3][9] - The decision to sell coincided with rising trade tensions between the U.S. and China, suggesting Burry anticipated a market downturn due to tariffs [6][11] - Burry's remaining long position is in Estée Lauder, which has seen a significant decline, and he doubled his investment in the company during the first quarter [9][10] Group 2: Market Context and Reactions - The market experienced a sharp decline in early April, falling nearly 20% from February highs, which aligns with Burry's timing of selling stocks [6][10] - Nvidia, a company heavily impacted by trade tensions and export restrictions, saw its stock price drop significantly but has since recovered following a pause in tariff increases [7][8] - Burry's past behavior indicates he may be short-term bearish while potentially preparing to buy back into the market after a dip, as seen in previous trading patterns [10][11]