more high weirdness

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