Posted on 09/08/2007 6:40:21 AM PDT by jefferson31415
$4.5 billion options bet on catastrophe within four weeks
ANYBODY HAVE A CLUE, AS TO WHAT, THESE "INVESTORS" ARE EXPECTING?
The two sales are being referred to by market traders as "bin Laden trades" because only an event on the scale of 9-11 could make these short-sell options valuable.
There are 65,000 contracts @ $750.00 for the SPX 700 calls for open interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not a single trade. But quite a bit of $$ on a contract that is 700 points away from current value. No one would buy that deep "in the money" calls. No reason to. So if they were sold looks like someone betting on massive dislocation. Lots of very strange option activity that I haven't seen before.
The entity or individual offering these sales can only make money if the market drops 30%-50% within the next four weeks. If the market does not drop, the entity or individual involved stands to lose over $1 billion just for engaging in these contracts! Clearly, someone knows something big is going to happen BEFORE the options expire on Sept. 21.
(Excerpt) Read more at canadafreepress.com ...
One possibility is that it may be part of some complex hedging strategy or some kind of relative value arbitrage.
I would be interested in your thoughts
Of the exchange could simply refuse to close the options and they lose either way.
This is the third or fourth article I’ve read about these trades and I have yet to see one written in English. Can you translate it for those of us not into The Market?
Clearly? that's an awfully big assumption, looks like a bunch of people got together to risk their money on the spin a giant roulette wheel.
If something big happens here this month, something big better happen over there, really big.
Thermonuclear big.
Hey Congress and DC elites: we citizens have had it. One more terrorist attack on innocent Americans like 9/11, you better take care of business, no holds barred.
We don’t intend to live the rest of our lives in fear. And we don’t intend for our children to live in fear.
Seal the borders, deport the illegals, and tell CAIR this is America, not downtown Riyadh.
Someone posted awhile back that there were similar call bets that the market would shoot up over the same time frame. I don’t know how this stuff works.
The basic point of the article is that the buyer of these options in only going to make money if the S&P falls 50% in the next 3 weeks (from 1453 to 700). The question this brings up is why would anyone bet such a thing.
Some terminology...
A ‘Put’ option is the right (but not obligation) to sell a stock/security at a certain price.
Its like a bet...
So if you buy the option to sell something at say 700, the only way that option is going to be valuable is if it is worth less than 700- since then you can buy it on the market for less than 700 (e.g. 600) and then use your option to sell it for 700- making a profit.
Its a HOAX folks. Ive called my broker and theres been no such trading activity
Does anyone know if this paragraph from the full article, referencing airline stock puts before 9/11, is true? This angle of the attacks always intrigued me.-—
“Despite knowing who made these trades, the Securities and Exchange Commission NEVER revealed who made the unusual trades and no one was ever publicly identified as being responsible for the trades which made upwards of $50 million when the attacks happened.”
ping to you, stay safe
“Follow the money”
George Soros smells of this.
Or someone—say Soros—manipulating the market again.
I couldn't agree more. Lines have already been crossed by our so called leaders. Nothing but a bunch of traitors if you ask me.
Thanks. Please pardon my ignorance. So the person doing this loses nothing either way? He’s just put money up for the right to do something and if he chooses not do do it, or the market doesn’t fall, he loses nothing? Unless he loses if this doesn’t happen (market crash), then I don’t see why this is such a big deal.
no, the options cost something to enter into (otherwise everyone would bet on everything)...so if the options expire worthless (i.e. the market does not fall 50%), then according to the article this particular trade will lose about 1 billion dollars
Wow, OK, that makes quite the difference. BIG bet! Thanks!
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