The 9/11 "Puts"

In the world of financial investments, you can purchase what is called a "put option" against a myriad things, from specific corporate stocks, to various indexes, to virtually anything upon which a value can be placed. A "put" is basically a bet that the value of said security will decline by a certain amount and by a certain date. It is a gamble, but with a known and limited downside. If the value doesn't decline, you loose whatever it cost you to purchase the "put", but no more. However, if it does decline, well, the money you gambled on the "put" is multiplied many times over and you can really score big. (Of course, your big score comes at the expense of those you sold you the "put", who figured you were crazy and wanted to bet against you.)

So, it turns out, someone or some group purchased a ton of "puts" against American and United airlines, as well as several of the largest financial firms, before 9/11/2001. It doesn't take much of a conspiracy theorist to think that someone knew that some event would occur to make those companies loose value, and that that someone decided to take advantage of their inside knowledge. Homeland Security says there were "huge surges" in the purchases of put options on these stocks, and whoever bought those puts made massive amounts of money.

DHS goes on to say:

Fast forward to the present day, and we have the same type of trading that took place in the days that preceded the 9/11 attacks – but on a larger scale. Nearly $1 billion of “put options” have been purchased, basically betting that Standard and Poor's 500 index will fall significantly by the third Friday in September. A large number of these options have also been purchased calling for 50% decline by September 21, 2007. For example, a 5% drop in the Dow Jones Industrial Average would be the current equivalent of about 670 points. A decline of 11% would equal about 1,470 points in today’s market. Obviously, larger drops, such as a 50% decline, would cause an unprecedented market collapse. Money would be made for the purchaser(s) of the put options – but the same purchaser(s) stand to lose over $1 BILLION in the investment if the market remains relatively static through September 21, 2007. (Emphasis all theirs)

Now, markets are pretty topsy-turvey right now (topsy-turvey is a pretty specific financial term that I learned in grad school), and so it doesn't suprise me that some bets are being made against the indexes. Still, there are some things that make me go, "Hmm..."



Thanks to PW for the link...