Bloomberg News reported Tuesday that the Chicago Board Options Exchange is investigating unusual trading volume in the days before the Sept. 11 terrorist attacks that destroyed New York's World Trade Center and damaged the Pentagon.
Specifically, the exchange is looking into trading in put options on companies that were directly harmed by the attacks.
Trading volume surged in September and October for put options on AMR Corp, which owns American Airlines, and on UAL Corp, owner of United Airlines, the two carriers that were hijacked.
Trading also rose for options on Marsh & McLennan Cos, an insurance company that was a large tenant in the World Trade Center, and Morgan Stanley Dean Witter & Co, the largest tenant in the twin-towered complex.
Suspicious trading in puts on other companies, such as Citigroup Inc and Bear Stearns & Cos, also are under investigation.
Japan, Hong Kong, and Germany are conducting similar investigations into suspicious pre-attack trading. German authorities are reported to be investigating unusual trading in the insurance giant Munich Re.
Everyone is wondering the same thing: Did the terrorists or their comrades put on trades designed to enrich themselves from their horrendous crimes of Sept. 11? It would be the icing on the cake, as the saying goes, to find out that whoever is responsible for these dastardly attacks set out to reap a trading fortune in the process.
Paper trail
Now all of this could be speculation. Maybe it was just an innocent coincidence and there is a good explanation. And the financial community is ripe for what could be an understandable bout of paranoia. But these trades sure look queer to me.
Consider that on the day before the attacks, 1,535 put contracts with US$30 October strikes on American Airlines were purchased. Each put gives the holder the right, but not obligation, to sell 100 shares of stock at the strike price. The trading in that particular put on that day was five times the usual volume.
What's more, the volume surge on put options for the above-mentioned companies was for at-the-money puts, meaning the contract was in line with the underlying stock price. AMR closed at US$29.70 the day before the attacks.
The options also were close to expiration, in September and October.
Options close to expiration, and close to the stock price, are the best options to buy if you expect a large movement in a stock price to occur right away.
When the underlying stock price moves down, these put options will pick up value at a breathtaking and accelerating speed.
In the case of the American Airlines puts, the 1,535 contracts that were worth US$337,700 at the end of trading on Sept. 10 were worth US$1.6 million at Tuesday's close.
As I said above, we don't know at this time if this is a horrific case of insider trading, coincidence or our imaginations running wild. But it fits the pattern of behavior of what we know of the hijackers.
They were clever like a fox in the micro level but stupid when it comes to the big picture. How clever to hijack four planes and use them as manned cruise missiles they aimed at the World Trade Center and Pentagon. How stupid to leave a trail of clues that could be traced.
And they may have left another set of clues if all this supposition about the puts turns out to be true.
If these clowns really bought puts on airline stocks and financial companies the day before the attacks, then they left another incriminating paper trail that may help provide proof of who masterminded this evil.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source