Posted on 07/26/2004 2:37:35 PM PDT by swilhelm73
i'm glad
Note that NOTHING is this quote is sourced or referenced:
NO name of the "U.S.-based options trading letter"
NO cite that shows they move markets like this in other instances
NO name for the "single U.S.-based institutional investor" that supposedly bought the options.
The fact the investment newsletter isn't named, the issue of that latter cited, nor any quote from that issue given, leads me to believe this is pure coverup. If you believe this, you might also believe a third-tier casino in an obscure corner of California can afford to pay 14 random Syrians to fly here from Lebanon and play a two-night gig.
The message here?
Go to sleeeeeep sheeeeple. Go to sleeeeep.
I agree -- 'go to sleep, do not worry." I know I heard that Osama had invested in the insurance co that insured the WTC -- and I don't believe this report FOR A MINUTE.
WHITEWASH!!! There HAD to be something to this.
Note to Homeland Security...
Watch for large 'put' options in transportation issues
as an early warning of an attack.
And freeze any profits when those alarms go off until the
persons doing the options are cleared.
ping
I disagree with that statement, I know people routinely trading that amount.
It doesn't even matter if there are sources.
With short interest up 40 percent, a trader might reasonably presume "the herd" is getting in over its head. Eventually those short-sellers will have to buy their shares back. Bad news goes only so far. So you go long on the pummled stock.
On the other side of the trade, you do a hedge with (presumably) cheap UAL puts. We don't have the actual and exact numbers here, but it looks like they were September puts and out-of-money (meaning they'll get dramatically cheaper every day if they don't reach the strike).
Cheap insurance on a bear raid.
Makes sense to me.
The simple explanation is foreknowledge; it's up to the creator of a "it was all happenstance" theory to actual cite all of his key evidence. As you say, there are no cites, so there is no proof.
The current position limit on AMR is 75,000 contracts. Individual trades at 4500 contracts probably weren't hitting any position limits back in 2001, though I don't where to find that kind of historical position limit information.
But the recent average volume for AMR is only 4,500,000 shares, or 45,000 options contracts equivalent, so assuming the volumes are roughly the same today, trading 4500 contracts would be equivalent to trading 10% of the daily volume. That's a reasonable chunk, and that would get any broker's attention; you are starting to run into other limits when you are getting into that kind of size, certainly if we are talking about retail customers.
Most I've done was 1000.
They say it wasn't retail but some institution using a "sophisticated" hedge.
But it looks pretty simple: long on a short-pummled AMR, and the UAL puts as a hedge.
It's a plausible story, but so are 1000 other stories.
The problem with the story is lack of facts.
The investment letter isn't named, much less quoted.
The investor isn't named.
The broker isn't named.
All of that smells to high heaven. How can the reporter be sure of these facts and omit to name names?
This is a National Review report which is in turn using the 9/11 Commission report as its source.
If you're arguing that the NR reporter should have gone out and validated every assertion in the Commission report (including the discovery of unnamed sources), that's fine. But so far I've seen many assertions in the 9/11 report where sources are unnamed (presumably for investigatory, intelligence, or even privacy reasons). Should every single unnamed source and assertion in the report be questioned on that basis?
NR is just taking at face value the Commission explanation from the appendix, and fleshing it out with some explanatory reporting. Just as I've done with my own scenario, above.
So we have plausible trading scenarios which are (a) partially explained and (b) make sense. I'd say those stack up pretty well against an insider-trading scenario which is implausible on any number of practical grounds.
If they are a matter of public record and have nothing to do with intelligence-gathering, yes - yes they should be named and quoted in detail.
Do you trust the 9/11 report not to include cover-ups? If not, you should insist on knowing which investment newsletter made this reccomendation.
You should insist on knowing if such reccomendations moved markets that much in the past.
You should insist on knowling who bought the options.
The whole piont is that the episode smells very very bad. It still smells very very bad. Until we know who reccomended and who bought, it will continue to smell very very bad.
To you, obviously.
To someone who's trying to setup a bear raid against weeks of accumulating short selling, it smells like a hedge strategy.
And by the way, it worked, in exactly the way a hedge is supposed to work when options are employed as a hedge.
The company in question went long on a short-beaten sector stock, while putting up short insurance (via puts) simultaneously.
"So we have plausible trading scenarios which are (a) partially explained and (b) make sense. I'd say those stack up pretty well against an insider-trading scenario which is implausible on any number of practical grounds."
Badeye's Rule on Conspiracy Theories:
The more complicated the Conspiracy, the less likely its real.
This is very very complicated.....
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