Someone is betting $4.5 billion on a catastrophe within four weeks.

[ElsewheresDaughter]

Here's something that is snowballing through the industry getting a lot of people spooked. Someone bet billions that the markets will crash 30% - 50% before September 21st:

http://www.financialnews-us.com/?page=ushome&contentid=2448565379

http://www.smartmoney.com/news/on/index.cfm?story=ON-20070816-000531-0927

http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=1

Either we have the stupidest person on earth, or you should stock up on can goods. Conspiracy theories are running wild on Wall St. I'm sure it's nothing, like they say maybe just a panicked hedge fund or the Chinese, but these things almost never happen... except once, 2 weeks before September 11th 2001.

[Ian David]

1. It was bet on the European Market, not the American Market.

I don't know if that makes much of a difference.


Financial News: Mystery Trader Bets Market Will Crash By Third
|Published: August 16, 2007 9:27 AM
By Renee Schultes
Of FINANCIAL NEWS

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 EUR6.9 billion, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.

The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.

The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg.

<snip>

An analyst at Goldman Sachs JB Were in Australia wrote: "I think I shall remember this day as the day that I saw the market go to hell, look into the abyss - didn't like what it looked like and then came screaming back up as far away from there as it could get...It was a truly spooky day and I've seen a lot over the last 20 years but today will be one that anyone who saw it will never forget. But this is what market bottoms are made out of."

More:
http://www.smartmoney.com/news/on/index.cfm?story=ON-20070816-000531-0927

[HeeBGBz]

3. I don't know anything about the stock market

But what I'm reading is creeping me out. That is one hell of a lot of money to fritter away on a whim.

[fed-up]

6. why didn't it make the news when puts were put on AA and United before 9/11/01?never did ID them nt

[soothsayer]

9. they did ID them, they just said it wasn't anyone bad or foreign or something

(in other words, Babs, poppy,someone like that)

[leftofthedial]

28. IDing them would give away the whole MIHOP

underpinnings of 9-11

[TheWraith]

32. One was a random investor with no possible AQ connections, Another resulted from a newsletter tip

The newsletter advised strong put options on one of the airlines, and it got wider circulation than usual.

There was another one, I believe, that was never sourced, but the person never picked up the money, either. Probably some daytrader or hedge fund type who didn't find the $2 million dollars or so they'd made to be worth the knowledge of having profited off thousands of deaths.

[C4talyst]

16. wrong...

Similar bets were placed in both the US and Euro markets...

[AZBlue]

29. Welcome to DU!

:hi:

Do you mean similar bets were placed in the US and Euro before 9/11 or recently?

[HeeBGBz]

35. Recently

And in Japan too. That's 3.

[AZBlue]

41. That's scary.

[nadinbrzezinski]

30. At this point it does not

if anything the volatily has proven how closely tied they are by now

[beberocks]

2. I suspect it's another 9/11 to justify an attack on Iran

After all, * and co. are running out of time and they still have so much to do. I suspected that they were planning a blitzkrieg (attack on Iran and Syria) after the initial occupation of Iraq, but things went bad there pretty quickly. Then those pesky elections here at home kept them from their mission. IMO, they think it is now or never, and are letting their rich friends know so they can profit.

[Zynx]

4. Even 9/11 only knocked the market down about 15%.

Then it rebounded substantially in just the next three weeks, largely erasing those losses and completely got rid of the losses by November of '01.

My guess is that it was some big time options trader being too cute by half. The big money sometimes does make big mistakes.

[gorekerrydreamticket]

12. "The big money sometimes does make big mistakes."

Yes, as an example, just Google on the Hunt brothers cornering the silver market...

[Greyhound]

27. The Hunts almost pulled it off, and the 9/11 15% was after a 6 month

free-fall. The so-called dot-com bust gave back about $7.5 trillion, there just wasn't that much left after 9/11.

The bottom line is that the market has been propped up by the constant devaluation of the U.S. dollar for over 6 years and there just isn't much value left to dilute. You don't think Greenspan left because he wants to spend his last days on the links, do you?

It is coming, it is inevitable, the only question is when. Obviously, somebody that controls billions thinks it is coming very soon.

[gorekerrydreamticket]

39. that "almost" cost them several billion, bankruptcy, conviction...

I venture they wish they hadn't done that...

[Greyhound]

43. Also true. Bet big, lose big, bet huge, lose huge, that's why they cal it a gamble.

This next month or two may expose the fundamental instability of the markets and those that are recently retired may pay a heavy price.

I hope this all turns out to be nothing, for all of our sakes.

[MonkeyFunk]

5. Where does the 4.5 billion

number come from? I don't see it in the article.

[Zynx]

7. Update: This isn't a $4.5 billion bet at all.

To be that big he would have had to pay close to $20,000 per option. Not a chance. He probably only paid a few bucks per option. This was at most a few million dollar trade.

[pa28]

24. I can't seem to find the ticker symbol for this option to do the math.

But you are right. No matter how you slice it the investor did not risk more than a few million

Could be a conspiracy or more likely somebody who was trying to cover something else or make a piece of some exotic play or a million other things. You have to go with the more down to earth explanation I think.

[KurtNYC]

8. Looks like a glitch, some kind of mistake

they bought 10,000 contracts on every strike?! Doesn't make sense strategically even if they knew something.

Plus this from Aug 16th which is now 12 days ago. That's forever for a short player in this market.

[ElsewheresDaughter]

10. The anonymous trader only stands to make money if the market crashes by a third....

....to a half before September 21st, which is when the put options expire. A put option is a financial contract between two parties, the buyer and the writer (seller) of the option, in which the buyer stands to benefit only if the price of the asset falls.

"The 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," reports financial blogger Marc Parent. Online Financial News first reported on the story.

The trader stands to make around $2 billion from their investment should an event trigger a market crash before the third week in September.

Such a cataclysmic jolt could only happen as a result of two factors, China dumping its vast dollar reserves in reaction to the sub-prime mortgage collapse, which it has threatened to do, or a massive terror attack on the same scale or larger than 9/11.




9/11 itself was foreshadowed by unprecedented put options that were placed on United and American Airlines. Though the Securities and Exchange Commission refused to reveal who placed the options, private researchers traced the investments back to the Deutsche Bank owned Banker’s Trust, which was formerly headed by then Executive Director of the CIA, Buzzy Krongard.

[BadgerLaw2010]

11. Somewhere, someone is laughing about printing money in his office.

Selling naked options works great if the event doesn't occur; you make the commission, the other guy holds worthless "Kentucky beats Wisconsin for the 2006 NCAA title" bets.

Every transaction has a buyer and a seller, which means there's some big money options trader who thinks this big money options trader is a fool and is writing him these things. The writer certainly doesn't want them to be worth anything. He makes money if the event doesn't hapen.

It's also nowhere near $4.5 billion to buy these options. I don't even know where that number came from. Anyone know where I can sell people $20,000 comission options? :wtf:

[Truth2Tell]

34. Buyer could be

market maker(s).

[RFKJrNews]

13. Regardless of what you think of this market catastrophe prediction stuff...

ElsewheresDaughter brings up a very good point or two here:

<<9/11 itself was foreshadowed by unprecedented put options that were placed on United and American Airlines. Though the Securities and Exchange Commission refused to reveal who placed the options...>>>

This in itself should give us pause. WHY would the SEC withhold information directly related to the investigation of the biggest terrorist attack in America's history? What would they stand to gain or lose by doing so?

<<<private researchers traced the investments back to the Deutsche Bank owned Banker’s Trust, which was formerly headed by then Executive Director of the CIA, Buzzy Krongard.>>>

And it *is* rather interesting that the Deutsche Bank building, which stood right next to the Twin Towers and was badly damaged in the collapse, just happened to torch up last week, killing two NYC firefighters in the blaze, after sitting vacant and abandoned for the past 6 years...I'm not drawing any conclusions yet, but something about this just doesn't sit well with me.

[TheWraith]

33. The SEC did identify the traders, or at least most of them.

Revealing their identities publicly would be rather questionable, particularly in that some yahoo redneck might not bother reading the fact that the trades were determined to have no 9/11 foreknowledge, and try to seek "revenge" on these guys.

[Zynx]

14. The market hasn't collapsed by a third or more that quickly in many years.

Even a catastrophic event is unlikely to drop it that far that fast.

[formercia]

21. Krongard is SMOM

which just adds to the conspiracy theory that they were behind 9/11.

[nashville_brook]

26. what's SMOM?

[formercia]

36. Supreme Military Order of Malta

The Military wing of the Knights of Malta

One of the boys.

The same Reich-wing reactionary group that created the GLADIO network.

[nashville_brook]

40. whoa.

thanks.

[formercia]

42. I'd bet he's a good friend of Dewey Clarridge too.

another SMOM.

[HeeBGBz]

15. Here's the Yahoo stock info

http://finance.yahoo.com/q/op?s=SPY

Like I said upthread, I am clueless about the stock market. Maybe someone else can decipher it. I believe the ones in 10,000 increments are the ones being discussed. The expiration date is 9/21/07.

[Capn Sunshine]

17. That could be one awesome hedge

to cover derivative trades all over the globe.
Cheap insurance against a market meltdown. You could sell 1000 pieces of it it for a billion dollars each if you were right. Nice leverage.

There's a very good argument to be made for a 25% crash here.
VERY good.

Of course, that has been the case since 2005.

[sleipnir]

18. Desperate times call for desperate measures.

Someone is stretching hard to make a big payoff happen.

[illinoisprogressive]

19. Oh, you forget: October 1929

[HeeBGBz]

20. Now on the Nikkei225 index option

According to a post from Japan on the bottom of page 15 of http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=15
expiring 9/14/07

http://www.nippo.ose.or.jp/20070827/html/p_10_03.htm
http://www.panrolling.com/option/op070827.html

[Peggy Day]

22. Remember, many people confess to crimes and murders they didn't commit nt

Meaning, don't believe everything you hear

[mikelgb]

23. me no like

the company I work for is already devastated by the sub-prime mortgage whatever the fuck... ugh

I have to find a new job now for sure

[ryanus]

25. To clarify: there are multiple bets

Someone sold calls way in the money on the SPX, someone else bought a bunch of puts on the eurostocks, and someone did something bearish in Japan, too. All of them are billion dollars bets that the markets will crash big time.

[calteacherguy]

31. That reminds me, I need to put in that buy order. nt

[saltpoint]

37. I hope with all my heart this person loses this bet.

[JNelson6563]

38. Remember someone did similar with

airline stock before 9/11.

Julie

[BornagainDUer]

44. The stock market is largely irrelevant in today's economy. I remember the "crash"

of 1987 had no perceptible effect on the economy.