From: SubGenius Spice <SubGeniusSpice@jbeyqarg.ngg.arg>
Newsgroups: alt.slack
Date: Thu, Oct 4, 2001 1:45 PM
http://www.snopes2.com/rumors/putcall.htm
Claim: In the days just prior to the September 11
terrorist attacks,
the stocks of United and American Airlines were shorted
by parties
unknown.
Status: True.
[...]
In the month prior to the 11 September 2001 attacks
on the World Trade
Center and the Pentagon, highly unusual trading activity
involving
American and United Airlines stock was noted by market
analysts who at
the time had no idea what to make of it. Wildly unusual
discrepancies
in the put and call ratio -- 25 to 100 times normal
-- were observed
in stock options of the two airlines. In one case, Bloomberg's
Trade
Book electronic trading system identified option volume
in UAL (parent
of United Airlines) on 16 August 2001 that was 36 times
higher than
usual.
(Options are wagers that the price of a 100-share block
of a
particular stock will rise or fall by a certain date.
"Puts" are
"shorts" -- bets the stock price will fall.
"Calls" are bets the price
will rise. Thus, one who has reason to believe a particular
company is
about to suffer a terrible reversal of fortune would
purchase "puts"
against that entity's stock.)
But it was during the final few trading days (the market
closes on
weekends) that the most unusual variances in activity
occurred.
Bloomberg data show that on 6 September, the Thursday
before that
black Tuesday, put-option volume in UAL stock was nearly
100 times
higher than normal -- 2,000 versus 27 on the previous
day.
On 6 and 7 September, the Chicago Board Options Exchange
handled 4,744
put options for United Airlines' stock, translating
into 474,000
shares, compared with just 396 call options, or 39,600
shares. On a
day that the put-to-call ratio should have been roughly
1:1 (no
negative news stories about United had broken), it was
instead 12:1.
On 10 September, another uneventful news day, American
Airlines'
option volume was 4,516 puts and 748 calls, a ratio
of 6:1 on yet
another day when by rights these options should have
been trading
even.
No other airline stocks were affected -- only United
and American were
shorted in this fashion.
Accelerated investments speculating a downturn in the
value of Morgan
Stanley and Merrill Lynch (two New York investment firms
severely
damaged by the World Trade Center attack) were also
observed.
The Chicago Board Options Exchange is investigating
each of these
trades and at this time is declining to offer comment
on its progress.
The volume traded and the one-sidedness of the trades,
however, make
it clear that those who had knowledge of the details
of the attacks
(which airlines would be involved and that the World
Trade Center was
a target) were behind them and did profit mightily from
them.
Barbara "putting on the blitz" Mikkelson
Last updated: 3 October 2001
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Original file name: more high weirdness - converted on Thursday, 20 December 2001, 03:31
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