Burry bought December 2028 LEAP call options on Microsoft at a strike price of $700, betting shares will nearly double from $360 in their current range.
The size of Burry’s actual position is unknown since Scion Asset Management stopped filing 13F reports, so the bet could be small or large.
LEAP options can lose 100% of their value, making direct ownership of Microsoft stock a safe way for retail investors to share Burry’s bullish thesis.
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Artificial intelligence has turned the stock market into a competition for who will own the infrastructure that will power the next decade of computing. Investors have poured hundreds of billions of dollars into AI leaders, pushing many tech stocks to higher valuations. But even after Microsoft‘s ( NASDAQ:MSFT ) stock has risen over the past few years, falling sharply in the past eight months, down about 33%.
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One of Wall Street’s most controversial investors believes the market is missing the big picture. Michael Burry, whose successful bet against the housing bubble is documented The Big Shortrevealed a new long-term bet that suggests he sees Microsoft’s AI opportunity extending beyond today’s expectations.
Burry’s Sponsored Bet on Microsoft’s Future
Instead of buying Microsoft shares outright, Burry disclosed that he bought December 2028 LEAP call options with strike prices around $700.
LEAPs — Long-Term Equity Awaiting Securities — are long-term options. In this case, they gave Burry the right to buy 100 Microsoft shares per contract for $700 any time before the options expire in December 2028. The strike price stands well above Microsoft’s recent trading range of $350 to $373, making the options deeply in the money today.
Here’s what the bet tells investors:
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Trading Details
What It Says
Expiration
December 2028
The strike price
About $700
Current price of MSFT
About $350-$373
Investment thesis
Microsoft could rise above $700 before expiration
A great loss
Limited to amount paid
Potentially higher
It’s great if Microsoft brings another multi-year conference
Options are not worth the profit because Microsoft is up to $700. Burry also has to recoup the premium he paid, meaning his break-even price is probably the strike plus that premium. If Microsoft finishes below that level, the options could expire worthless.
To put that in perspective, if Microsoft were trading at $900 in late 2028, each option would carry about $200 per share in intrinsic value before calculating the contract price.
Why Options Rather Than Stock?
Burry said he already views Microsoft at around $350 as an attractive entry point. Instead of paying the money needed to buy the shares, he believes these old calls were cheap compared to his idea.
Instead of committing tens of thousands of dollars to buy stock, LEAPs provide leveraged exposure while limiting the down payment. Granted, power cuts both ways. If Microsoft shares fail to appreciate enough before expiration, time decay — known as theta — will slightly reduce the value of the options.
Trading is also similar to Burry’s way of investing. He has built a reputation for making focused, aggressive investments when he believes the markets have lost an opportunity. Although often associated with bearish calls, this position is the opposite — a multi-year bullish bet on one of the world’s largest technology companies.
His vision is likely based on Microsoft’s leadership across several fast-growing businesses, including Azure cloud computing, enterprise software, AI infrastructure, and its partnership with OpenAI.
This May Not Be The Position For Everyone
There is one important detail that remains unknown: the size of Burry’s investment. Although he publicly disclosed the purchase of December 2028 LEAPs, he did not reveal how many contracts he has or how much money he has made. Because Scion Asset Management no longer files regular Form 13F reports with the Securities and Exchange Commission, investors have no independent way to determine position size.
Trading can actually represent a small speculative position or a large portfolio share. Without further disclosure, no one outside of Burry’s firm knows.
This isn’t the first time Burry has expressed his displeasure with Microsoft. Earlier this year, he revealed that he has been in custody for a long time, although he did not reveal details about his trade. Shares traded at the same price then as they do today.
Key Takeaway
In short, Burry’s Microsoft trade sends a clear message even if the dollar value remains a mystery. He believes Microsoft is so undervalued that shares could rise above $700 in the next two and a half years, making classic phone options an attractive way to express that belief.
That said, most retail investors should resist copying trades directly. LEAP options can generate huge returns, but they can also lose 100% of their value if the underlying stock falls short of expectations. Investors who share Burry’s optimism — but prefer a wider margin of error — may find owning Microsoft shares offers a forgiving way to capitalize on the expansion of the company’s AI software, cloud, and business over time.
Take action now: the analyst who called NVIDIA in 2010 recently named his top 10 AI stocks — and Microsoft didn’t make the cut. Pick up FREE words today.
