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Ray Dalio Weighs In On Report That Bridgewater Bet $1.5B On Market Drop

Ray Dalio Weighs In On Report That Bridgewater Bet $1.5B On Market Drop

Ray Dalio's Bridgewater Associates invested $1.5 billion that would generate a profit if the S&P 500 index and/or the Euro Stoxx 50 fall in the coming months, The Wall Street Journal reported Friday, attributing the information to people familiar with the matter.

What Bridgewater Bet

Bridgewater, the world's largest hedge fund with an estimated $150 billion in assets under management, spent months building a series of put options that expire in March, according to WSJ.

On one hand, some would argue allocating 1% of total assets to bet against the market is a hedge to protect against potential losses.

The hedge fund declined to comment on the specific trade in a statement to WSJ.

The firm did say it has "no positions that are intended to either hedge or bet on any potential political developments in the U.S."

Bridgewater's statement also said it changes positions often and paying too much attention to one single position "would be a mistake."

Why It's Important For The Market

Traders and close market observers are paying close attention to the size of Bridgewater's position and the ripple effect in the options market, the Journal reported.

The number of options betting against the S&P 500 hit a four-year high in September, data from Trade Alert shows.

Put options in March are among the contracts drawing attention.

The choice of March for option expiration could be in part politically motivated. By the end of the first quarter of the calendar year, the Democratic presidential nominee could be determined.

Other billionaires like Leon Cooperman have been vocal about the potential of an Elizabeth Warren presidency. Some traders are saying companies are holding back major spending decisions to see if she will win the Democratic nomination, according to WSJ.

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