Burry, who made a name for himself after predicting the 2008 housing crash, is holding bearish options against both the S&P 500 and Nasdaq 100 indexes according to securities filings released on Monday.

The investor, a central protagonist in the book and film The Big Short, has bought put options worth $739 million against the Invesco QQQ Trust ETF—a fund made up of popular Nasdaq 100 companies.

On top of that, he has also hedged $886 million against the S&P 500—also in put options.

Put options are an agreement to sell assets at a fixed price on or before a certain date—usually indicating the seller has a defensive or pessimistic outlook on the market.

The filing does not reveal what Burry’s company—California-based Scion Asset Management—paid for the options or when they will have to sell them.

As a result, although it may appear that Burry’s team has made a billion-dollar bet against the major indexes, the figure paid for the options could be lower than the filing reveals—and may be part of a wider scheme with a longer-term goal.

Both the Nasdaq 100 and the S&P 500 have enjoyed a good year so far. At the time of writing the Nasdaq is up approximately 40% year to date—buoyed by gains for Nvidia, Meta, and Amazon—while the S&P 500 is up 17.4%.

Waiting for a downturn

Burry isn’t the only one hinting the market might be headed for a correction.

Morgan Stanley’s Mike Wilson has been warning shares are increasingly overpriced—saying in February that prices were now in the “death zone…where they know they shouldn’t go and cannot live very long.”

Although admitting his outlook had been too bearish, the company’s chief U.S. equity strategist, who was ranked No. 1 in last year’s Institutional Investor survey after correctly predicting the selloff in stocks—said last week he stands by his boom-bust call.

“Think about it this way: They’re doing 8% budget deficit spending when you have 3.5% unemployment—that’s really unprecedented,” he told Bloomberg. “So, what’s going to happen if we do have a slowdown next year? [That’s why] I just think this boom-bust thesis is so correct.”

It turns out ”Bond King” Bill Gross agrees. The billionaire investor told Bloomberg last week: “A thriving, finance-based economy can’t do well if low-risk investments yield more than high-risk investments. That’s just a perverted yield curve, and it won’t do well for the economy going forward.”

Gross, who cofounded Pimco and managed its flagship bond fund before retiring in 2019, added that a slowing of fiscal stimuli from the government in future will further slow the economy: “Once that’s used up, we’re going to start to see the effect of a 2% real rate on consumers and consumption going forward, therefore lower real GDP and therefore inflation around 3%.”

Backing out of China

The documents also reveal that Burry—known for how quickly he turns over his portfolio—has already pulled out of interests in China.

The Monday filing stated Burry has backpedaled on investments in the nation currently grappling with a property crisis—despite Burry doubling down on Chinese stocks in May.

At the end of the first quarter, 20% of Scion’s portfolio consisted of bullish bets on e-commerce giants JD.com and Alibaba Group, but by Q2 2023 Burry had liquidated the holdings.

It comes amid fears of contagion within the Chinese economy, which may be facing a property sector crash after the country’s largest private real estate developer—Country Garden—sought to delay payment on a private bond.

Scion—which according to Bloomberg had $233.3 million of assets under management at the end of last year—also offloaded 150,000 shares of JPMorgan-owned First Republic Bank, but did not specify whether this was before or after the collapse and subsequent takeover of the lender.