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$1 Billion in Risky Stock Market Transactions Similar to Pre-9/11 Activity
Weasel Zippers ^ | 8/30/2007 | W Zip

Posted on 08/31/2007 1:13:19 PM PDT by mojito

In the weeks preceding the 2001 attacks on America, there were very significant financial warning signs that something big – and bad – could be about to happen. Huge surges in purchases of “put options” on stocks of United Airlines and American Airlines, the two airlines used in the attacks, and “put options” on Merrill Lynch & Co., and Morgan Stanley, stocks of two financial services companies hurt by the attack were noted. Put options are essentially “bets” that a stock or stock index will drop on or before a certain date; the larger the drop, the bigger the gain for the purchaser of the option.

Fast forward to the present day, and we have the same type of trading that took place in the days that preceded the 9/11 attacks – but on a larger scale. Nearly $1 billion of “put options” have been purchased, basically betting that Standard and Poor's 500 index will fall significantly by the third Friday in September. A large number of these options have also been purchased calling for 50% decline by September 21, 2007. For example, a 5% drop in the Dow Jones Industrial Average would be the current equivalent of about 670 points. A decline of 11% would equal about 1,470 points in today’s market. Obviously, larger drops, such as a 50% decline, would cause an unprecedented market collapse. Money would be made for the purchaser(s) of the put options – but the same purchaser(s) stand to lose over $1 BILLION in the investment if the market remains relatively static through September 21, 2007.

The questions are: who can stand to lose $1 BILLION, who will gain in the wake of such a devastating collapse, who are the investors, and what do they know that we don’t?


TOPICS: Business/Economy
KEYWORDS: 911; 911conspiracy; prequel; putoptions; stocks; tinfoilarmy; wallstreet
Not sure what to make of this: If true, this is very grim news indeed.
1 posted on 08/31/2007 1:13:23 PM PDT by mojito
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To: mojito

And yet no names of these speculators ever comes to light.... just that it happens, like it happens every day,...


2 posted on 08/31/2007 1:20:08 PM PDT by theDentist (Qwerty ergo typo : I type, therefore I misspelll.)
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To: mojito

The pre-9/11 options traders *bought* shares of airliners and protected the value of those shares with options contracts. Had it just been the options contracts alone (which was what was reported), it would have been a big deal.

The current options move has a single Player buying both puts and calls...a harmless spread trade, but the article is only mentioning one side of that trade in order to be sensational.


3 posted on 08/31/2007 1:22:41 PM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: mojito
TFH Alert!


4 posted on 08/31/2007 1:23:00 PM PDT by xcamel (FDT/2008 -- talk about it >> irc://irc.freenode.net/fredthompson)
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To: mojito

Dispelling the ‘Bin Laden’ Options Trades:
http://www.thestreet.com/newsanalysis/optionsfutures/10377063.html


5 posted on 08/31/2007 1:24:26 PM PDT by Califelephant
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To: theDentist
The rumors are apparently true: some entity or entity has taken a very big position on a dramatic decline in the S&P 500 before Sept. 21, 2007.

http://www.thestreet.com/newsanalysis/optionsfutures/10377063.html

An excerpt of the article, which tries to explain this as part of an investment strategy called a “box-spread trade”:

“As if the mortgage-market meltdown wasn’t enough to spook investors, some market players expressed concerns about unusual options bets that some observers have dubbed “Bin Laden Trades.”

The blogosphere and options trading desks have been rife with speculation about these trades, which are unusually large bets that the market will make a huge move in the next month. Some entity, or entities, has taken a large position on extremely deep in the money S&P 500 options, both puts and calls, that won’t pay off unless the market undergoes an extremely large price move between now and the options’ expiration on Sept. 21.”

Frankly, I don’t buy it. I’m somewhat familiar with this strategy, which is meant to spread risk in a roiled market. Rather, this is a HUGE stake betting on a near-catastrophic melt-down in the financial markets.

6 posted on 08/31/2007 1:28:48 PM PDT by mojito
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To: Califelephant
The article refers to these positions as both “unusual” and “unusually large.” A box-spread is not an especially unusual investment strategy if you expect a market to decline by a certain date. Whoever or whatever made these putoptions is going to lose a very large amount of money if the S&P 500 does not decline dramatically before Sept. 21.
7 posted on 08/31/2007 1:34:52 PM PDT by mojito
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To: mojito

8 posted on 08/31/2007 1:37:31 PM PDT by BJClinton (And then it occured to me: a real rocket scientist posted the Friday silliness thread on Thursday.)
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To: mojito
Huge surges in purchases of “put options” on stocks of United Airlines and American Airlines, the two airlines used in the attacks, and “put options” on Merrill Lynch & Co., and Morgan Stanley, stocks of two financial services companies hurt by the attack were noted.

This conspiracy crap has been totally debunked. The market conditions at the time made those positions "resonable".

9 posted on 08/31/2007 1:49:59 PM PDT by AmericaUnited
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To: BJClinton; xcamel

Those hats are made out of a billion dollars worth of foil.


10 posted on 08/31/2007 1:50:00 PM PDT by mojito
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To: mojito
Is Aluminum Foil in high demand in China?

Photo Sharing and Video Hosting at Photobucket

11 posted on 08/31/2007 1:54:13 PM PDT by rfp1234 (Nothing is better than eternal happiness. A ham sandwich is better than nothing. Therefore...)
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To: mojito
A couple of critical things the article doesn't address (which makes it pretty worthless):

1. What is the *usual* put option volume?

2. What is the volume of *call* options on the mentioned dates?
12 posted on 08/31/2007 5:02:53 PM PDT by billybudd
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To: billybudd

see this article mentioned above for some of your answers:

http://www.thestreet.com/newsanalysis/optionsfutures/10377063.html


13 posted on 08/31/2007 6:22:21 PM PDT by penelopesire
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To: mojito

BMFLR


14 posted on 09/01/2007 8:24:08 AM PDT by Kevmo (We should withdraw from Iraq via Tehran. And Duncan Hunter is just the man to get that job done.)
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To: mojito

Half an hour to closing. Down 260. Look out below!


15 posted on 09/07/2007 12:06:55 PM PDT by RightWhale (It's Brecht's donkey, not mine)
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