Mystery Trader Makes A Bet
An interesting note via Market Ticker Forums, reading through the thread is reccomended. The following excerpted from Financial News Online US:
Mystery trader bets market will crash by a third
Renée Schultes
16 Aug 2007
An anonymous investor has placed a bet on an index of Europe's top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.
The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.
WUFYS has an excellent synopsis on this as well.
What does this mean? What is it forknowledge of? Your guess is as good as mine I suppose, but it reminds of the trading "irregularities" prior to 9.11
From an article in Bloomberg Financial News, dated September 18th 2001:
U.S., Germany, Japan Investigate Unusual Trading Before Attack
By Judy Mathewson and Michael Nol, Bloomberg Financial News, 18 September 2001
Washington, Sept. 18 (Bloomberg) -- Trading skyrocketed in options that bet on a drop in UAL Corp. and AMR Corp. stock in the days before terrorists crashed hijacked United and American airlines jets into the World Trade Center and the Pentagon.
Morgan Stanley Dean Witter & Co., which occupied 22 floors of the 110-story 2 World Trade Center, and Merrill Lynch & Co., with headquarters near the destroyed twin towers, also experienced pre- attack trading of 12 times to more than 25 times the usual volume in so-called put options that profit when stock prices fall, according to Bloomberg data.
Now, securities regulators in the U.S., Germany, Japan and Hong Kong say they are investigating whether terrorists raised money from insider trading on their knowledge of attacks that devastated New York's financial district and closed U.S. stock markets for four days.
...
Some airline, insurance, and brokerage stocks had jumps in the days before the Sept. 11 attack in so-called put options, which profit when a company's shares fall.
One day before two American Airlines jets were hijacked and crashed, for example, 1,535 contracts changed hands on options that let investors profit if AMR stock falls below $30 per share before Oct. 20. That was almost five times the total number of those October $30 put options traded before Sept. 10, according to Bloomberg data. AMR shares fell $11.70 today to $18.
...
Those 1,535 contracts were worth $1.6 million at today's closing price compared with $337,700 at the end of trading on Sept. 10, according to Bloomberg data. A contract represents options for 100 shares.
Similarly, October $30 put options for UAL soared, with 2,000 contracts traded on Sept. 6, three trading days before the attack. A total of 27 contracts had traded previously. UAL shares fell $13.32 today to $17.50. The 2,000 contracts were valued at $2.4 million today, compared with $180,000 on Sept. 6.
...
At Morgan Stanley, trading in October $45 put options jumped to 2,157 contracts between Sept. 6 and Sept. 10, almost 27 times a previous daily average of 27 contracts. Options to sell Merrill Lynch shares for $45 apiece before Sept. 22 had 12,215 contracts traded from Sept. 5 to Sept. 10, 12 times the earlier daily average of 252. Morgan Stanley shares fell $6.40 today to $42.50. Merrill Lynch shares fell $5.37 to $41.48.
Other brokerage and insurance companies where options trading surged include:
-- Citigroup Inc., which has estimated that its Travelers insurance unit may pay $500 million in claims from the World Trade Center attack. It had a jump in trading of October options that profit if shares fall below $40 apiece. Almost 14,000 of those options contracts were traded from Sept. 6 to Sept. 10 -- about 45 times the previous daily average. Citigroup shares fell $2.85 today to $39.60.
-- Bear Stearns & Cos., where investors traded 3,979 contracts from Sept. 6 to Sept. 10 on September options that profit if shares fall below $50. The previous average volume for those options was 22 contracts. Bear Stearns shares fell $3.79 today to $46.45.
-- Marsh & McLennan Cos., the biggest insurance brokerage, which had 1,700 employees working in the World Trade Center. Traders on Sept. 10 exchanged 1,209 contracts on options that profit if company shares fall below $90 through the third week of September. Previously, 13 contracts had traded on an average day. Marsh & McLennan shares fell $2.50 today to $84.50.
To help put some of this into perspective, take the time to read this piece called The Economic Rape of America written in 1992 - well worth your time.
My people are destroyed for lack of knowledge.
Hosea 4, verse 6
Mystery trader bets market will crash by a third
Renée Schultes
16 Aug 2007
An anonymous investor has placed a bet on an index of Europe's top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.
The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.
WUFYS has an excellent synopsis on this as well.
What does this mean? What is it forknowledge of? Your guess is as good as mine I suppose, but it reminds of the trading "irregularities" prior to 9.11
From an article in Bloomberg Financial News, dated September 18th 2001:
U.S., Germany, Japan Investigate Unusual Trading Before Attack
By Judy Mathewson and Michael Nol, Bloomberg Financial News, 18 September 2001
Washington, Sept. 18 (Bloomberg) -- Trading skyrocketed in options that bet on a drop in UAL Corp. and AMR Corp. stock in the days before terrorists crashed hijacked United and American airlines jets into the World Trade Center and the Pentagon.
Morgan Stanley Dean Witter & Co., which occupied 22 floors of the 110-story 2 World Trade Center, and Merrill Lynch & Co., with headquarters near the destroyed twin towers, also experienced pre- attack trading of 12 times to more than 25 times the usual volume in so-called put options that profit when stock prices fall, according to Bloomberg data.
Now, securities regulators in the U.S., Germany, Japan and Hong Kong say they are investigating whether terrorists raised money from insider trading on their knowledge of attacks that devastated New York's financial district and closed U.S. stock markets for four days.
...
Some airline, insurance, and brokerage stocks had jumps in the days before the Sept. 11 attack in so-called put options, which profit when a company's shares fall.
One day before two American Airlines jets were hijacked and crashed, for example, 1,535 contracts changed hands on options that let investors profit if AMR stock falls below $30 per share before Oct. 20. That was almost five times the total number of those October $30 put options traded before Sept. 10, according to Bloomberg data. AMR shares fell $11.70 today to $18.
...
Those 1,535 contracts were worth $1.6 million at today's closing price compared with $337,700 at the end of trading on Sept. 10, according to Bloomberg data. A contract represents options for 100 shares.
Similarly, October $30 put options for UAL soared, with 2,000 contracts traded on Sept. 6, three trading days before the attack. A total of 27 contracts had traded previously. UAL shares fell $13.32 today to $17.50. The 2,000 contracts were valued at $2.4 million today, compared with $180,000 on Sept. 6.
...
At Morgan Stanley, trading in October $45 put options jumped to 2,157 contracts between Sept. 6 and Sept. 10, almost 27 times a previous daily average of 27 contracts. Options to sell Merrill Lynch shares for $45 apiece before Sept. 22 had 12,215 contracts traded from Sept. 5 to Sept. 10, 12 times the earlier daily average of 252. Morgan Stanley shares fell $6.40 today to $42.50. Merrill Lynch shares fell $5.37 to $41.48.
Other brokerage and insurance companies where options trading surged include:
-- Citigroup Inc., which has estimated that its Travelers insurance unit may pay $500 million in claims from the World Trade Center attack. It had a jump in trading of October options that profit if shares fall below $40 apiece. Almost 14,000 of those options contracts were traded from Sept. 6 to Sept. 10 -- about 45 times the previous daily average. Citigroup shares fell $2.85 today to $39.60.
-- Bear Stearns & Cos., where investors traded 3,979 contracts from Sept. 6 to Sept. 10 on September options that profit if shares fall below $50. The previous average volume for those options was 22 contracts. Bear Stearns shares fell $3.79 today to $46.45.
-- Marsh & McLennan Cos., the biggest insurance brokerage, which had 1,700 employees working in the World Trade Center. Traders on Sept. 10 exchanged 1,209 contracts on options that profit if company shares fall below $90 through the third week of September. Previously, 13 contracts had traded on an average day. Marsh & McLennan shares fell $2.50 today to $84.50.
To help put some of this into perspective, take the time to read this piece called The Economic Rape of America written in 1992 - well worth your time.
My people are destroyed for lack of knowledge.
Hosea 4, verse 6
posted by Brother John at
11:16 PM |
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