Aschenbrenner's Situational Awareness Returns to Options Market, Betting on AI Infrastructure Stocks

Leopold Aschenbrenner's hedge fund Situational Awareness has returned to the options market, according to people familiar with the matter. The fund purchased several hundred million dollars worth of options from late last week through early this week and has established a relationship with broker Clear Street as it rebuilds a portfolio spanning AI infrastructure companies including SK Hynix, SanDisk, AMD, Bloom Energy, and Oracle.

The fund suffered a 67% single-month loss in July as AI-related stocks slumped, a drawdown reported to be among the largest in hedge fund history. Situational Awareness avoided a collapse by selling most of its public market positions to Ken Griffin's Citadel. In a late-July letter to investors, Aschenbrenner said the fund would "fight another day" and pledged to "learn the necessary lessons."

The rebuilding effort appears more conservative than previous approaches. The fund has been using flex options, highly customizable derivatives that require large brokers to execute, and has been operating with fully paid positions, meaning maximum losses are limited to premiums paid rather than margin calls. Aschenbrenner has also emphasized that leverage will be significantly reduced, though embedded optionality still allows exposure to upside moves.

The partnership with Clear Street, a broker known for a technology-focused hedge fund clientele but considerably smaller than Goldman Sachs, JPMorgan, and Citigroup, is seen as a key step in reshaping Aschenbrenner's Wall Street relationships. It remains unclear whether the fund has raised new capital for its public market investments.