Key TakeawaysThe investor famous for “The Big Short” expanded his bearish stance on Nvidia prior to Q2 results while purchasing December call options for downside protectionDespite acknowledging Nvidia appears “wildly undervalued on paper,” Burry maintains the chip giant’s actual theoretical worth sits far below current trading levelsAdditional bearish positions were initiated in Oracle, Palantir, Nebius, and CaterpillarThe semiconductor leader posted adjusted earnings of $2.22 per share, surpassing the $2.09 consensus, alongside 106% revenue growth reaching $96.2 billionShares climbed 7.2% during premarket hours following the earnings announcementMichael Burry, the legendary investor portrayed in “The Big Short,” executed a complex dual strategy on Nvidia shares before the company’s second-quarter financial disclosure. While expanding his bearish position, he simultaneously acquired December-expiry call options, framing them explicitly as protective insurance rather than a optimistic wager.BREAKING: Michael Burry has disclosed new positions.He bought calls on Nvidia $NVDA as a hedge, adding that he still believes Nvidia will "not distribute enough to shareholders"He also shorted more:-Oracle $ORCL-Palantir $PLTR-Nebius $NBIS-Caterpillar $CAT And added to… https://t.co/l6jx8dcQZJ pic.twitter.com/VSWinBREno— TrendSpider (@TrendSpider) August 26, 2026In his Substack publication, Burry acknowledged that Nvidia presents as “wildly undervalued” at first glance, pointing to its modest price-to-earnings multiple relative to its expansion trajectory. However, he emphasized that his calculated fair value for the shares sits “much lower than today’s market value.”The Bear Thesis ExplainedBurry’s skepticism centers on Nvidia’s sustainability. He questions whether the company’s dominant position in artificial intelligence, exceptional profit margins, and near-monopolistic market share can endure as long as Wall Street anticipates. His concerns extend to the pace of AI infrastructure investment and what he characterizes as circular capital flows within the technology sector.The call options he acquired carry strike prices ranging through the mid-to-upper $200s with premiums in the single digits. Burry emphasized these contracts weren’t purchased with profit generation in mind.According to his disclosure, the calls wouldn’t exist in his portfolio without the substantially larger short and put positions backing them. His put option allocation represents approximately 3.5% to 4% of total assets under management, while overall short equity exposure has expanded beyond 21%, excluding put contracts.The investor candidly admitted his historical performance using similar hedging tactics around earnings announcements has produced inconsistent results.Strong Quarterly Performance from NvidiaOn August 26 after market close, Nvidia unveiled impressive second-quarter fiscal 2027 figures. Adjusted profit reached $2.22 per share, exceeding the analyst consensus of $2.09 while jumping 120% compared to the prior year.Top-line performance showed revenue climbing 106% to reach $96.2 billion, significantly outpacing Street expectations of $92.27 billion.NVIDIA Corporation, NVDAPremarket trading saw Nvidia shares advance 7.2% in response to the results. This upward movement likely pressured Burry’s short exposure, though his call options would have delivered partial relief.Looking beyond Nvidia, Burry established fresh bearish bets against Oracle, Palantir, Nebius, and Caterpillar. These positions signal his wider apprehension regarding elevated market valuations and questions about the longevity of today’s artificial intelligence spending boom.According to TipRanks, Nvidia carries a Strong Buy consensus rating supported by 29 unanimous Buy recommendations. Analysts’ average target of $306.75 suggests potential upside of 46.3% from present values. The stock has appreciated 12.6% since the beginning of the year.Burry’s offsetting positions create a scenario where both directional outcomes provide partial insulation, though his fundamental perspective clearly leans pessimistic.The post Michael Burry Takes Dual Stance on Nvidia (NVDA) Stock with Shorts and Calls appeared first on Blockonomi.