“suggests that a trader may have been aware of the coming attack”
If they can only point to one trader being involved, it doesn’t seem like a good case, since you might concievably find one trader taking any unusual position you could think of at any time. However, if they found 100 traders doing some coordinated short-selling, then I think the case that they had some insider knowledge would get a lot stronger.
I agree. A one-off is an outlier; a multitude suggests coordination, perhaps even a conspiracy.
Prior to October 7, Israel was approaching a civil war, with prominent political actors urging violence and military mutiny, with secular tech moguls looking to move money out of Israel. If that’s not a reason to short sell, nothing is.