Friday - September 21, 2007

rumors and conspiracy theories … are they funny when they don’t come true?

So I’m working at my PC, trying to figure out how fast a 45 caliber lead bullet with an .035” thick annealed pure copper jacket can spin before it self-destructs - you know, doing important stuff , and my brother sends me a link:

Hmmm ... seems somebody with an awful lot of money has put some markers into play in the stock market, betting on an enormous drop in share prices with 4 weeks of 9/4. We’re talking 50% or more, or that somebody is going to be out a whole huge lotta money - about 700 MILLION DOLLARS (damn, we need a Dr. Evil emoticon for moments like this!)


Now, this has happened before. Once. Just before 9/11. Yep, the terrorists went short, and made a fortune when the market tumbled.

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.

THEORIES:
The following theories are being discussed widely within the stock and options markets today regarding the enormous and very unusual activity reported above and two stories below. Those theories are:

1) A massive terrorist attack is going to take place before Sept. 21 to tank the markets, OR;

2) China, reeling over losing $10 Billion in bad loans to the sub-prime mortgage collapse presently taking place, is going to dump US currency and tank all of Capitalism with a Communist financial revolution. Either scenario is bad and the clock is ticking. The drop-dead date of these contracts is September 21. Whatever is going to happen MUST take place between now and then or the folks involved in these contracts will lose over $1 billion for having engaged in this activity.

Well, September 21 has come and gone, and the market seems to be doing just fine. Guess somebody lost a fortune. Sure would be nice to know who made these massive Puts. Hmm, what date was that IAF airstrike again? That was September 6th, right? Cuz it would take a calamity the size of popping a nuke on Tel Aviv to trash the market bad enough for this gamble to pay off. And now, that ain’t gonna happen.

So, should we open a yummy tub of Schadenfreude and enjoy this “misfortune”? Cuz it’s pretty much a no-brainer figuring out where the money came from.

Posted by Drew458     on 09/21/2007 at 09:32 PM   
Filed Under: • Miscellaneous •  
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