Stocks are trading at historically high valuations, with the Buffett Indicator at 217% and the S&P 500 price-book ratio at 5.46x. Bank of America flags the market as “statistically expensive,” triggering 60% of bear-market signposts. Michael Burry has significant put option exposure to Nvidia and Palantir, signaling a potential market pullback.

European Central Bank warns of structural risks from U.S. mega-cap tech stocks, particularly AI-related companies. Warren Buffett trims equity exposure while holding a record $381 billion in cash. Ray Dalio warns of an overextended rally vulnerable to a sharp correction, pointing to a potential liquidity melt-up.

Michael Burry’s latest 13F filing reveals significant put option exposure to Nvidia and Palantir, positioning for a potential pullback. The positions total $1.1 billion in notional exposure, suggesting targeted short positioning. The filing lacks details on strike prices, expiration dates, or underlying stock positions, indicating a pure directional bet.

Snowflake presents a potential short opportunity with weak fundamentals and overvalued metrics. Since its IPO, Snowflake has not reported a quarterly profit and trades at high price-sales and price-book ratios. Option prices reflect elevated implied volatility, making it challenging to find favorable risk-reward opportunities in the AI sector.

IBM offers a potential short opportunity with a strong rally but low implied volatility rank. Despite positive fundamentals, IBM’s valuation is high compared to industry peers. The stock has posted positive net income in most quarters but experienced volatile free cash flow. Lower-priced options could be a way to benefit from a downside move in the AI ecosystem.

Read more at Barchart: Michael Burry Warned That the AI Bubble Is About to Burst. If You Agree, Use Options to Bet Against These 2 Stocks.