New options put fear factor into trading (9/11 options trading)

[UpInArms]

http://www.chicagotribune.com/business/chi-0404240327ap...

(free registration or try www.bugmenot.com )

After an exhaustive study, Allen Poteshman, a professor of finance at the University of Illinois, has confirmed news reports shortly after Sept. 11, 2001:

Trading in options on airline stocks AMR and UAL indicates someone profited from advance word of the terrorist attacks.

"There is evidence of unusual option market activity in the days leading up to Sept. 11," Poteshman writes in a paper posted on the Internet that goes deeper than the initial reports.

...more...

the report can be found here:

http://64.233.167.104/search?q=cache:uuplwqWJMHcJ:www.b...

or here in pdf

http://www.business.uiuc.edu/poteshma/WorkingPapers/Unu...

excerpt:

The largest value of the ShortLong statistic during the target period was 0.89 which occurred for AMR on September 10. This value of ShortLong is at the 0.80 quantile of the unconditional daily distribution. Panel A of Table 6 indicates that on September 10 the 0.50 quantile of the conditional daily distribution on ShortLong for AMR was –0.034 and the 0.90 quantile of this distribution was 0.954. Consequently, it appears that in this case there is little
difference between the conditional and the unconditional quantile. The largest daily value of the AbnLongPut variable during the target period, 3.83, also occurred for AMR on September 10.

This value of AbnLongPut was seen to be at the 0.99 quantile of the unconditional distribution.

Panel B of Table 6 indicates that on September 10 the 0.95 quantile of the conditional daily distribution on AbnLongPut for AMR was 1.285 and the 0.99 quantile of this distribution was 4.265. Once again, it seems that there is not much difference between the unconditional and the conditional quantile. Unreported analysis show that the conditional and unconditional results are also very similar for the statistics that measure maximum daily values over four trade date
windows. Hence, it does appear that the AbnLongPut ratio for AMR and UAL was unusually high during the target period even after accounting for variation in its distribution associated with the independent variables in the quantile regression model.21

This finding is consistent with the widespread speculation shortly after September 11 that the terrorists or their associates traded
ahead in the option market based upon foreknowledge of the impending attacks.

[SpiralHawk]

1. Come on Ashcroft and BushCo

Spill the beans. We know you know.

[lindashaw]

2. Why in the world can't Spitzer, or someone, follow this money

trail? Goodness, every single action that occurs on the stock exchanges has pages and pages of backup records. This is just a stonewall. Someone knows.

[brokensymmetry]

5. Exactly.

They have the patriot act. Subpoena everything that moves and a few that don't. Question some brokerage firm execs in front of a grand jury. Grant immunity to some if needed.

Find where the money went, and you find the terrorists. IF one wants to...

[david_vincent]

6. It's not as easy as that

You're talking about major players here. The companies that engaged in this trading are partly owned subsidiaries of other companies in various other countries that are themselves subsidiaries and have complicated partnership agreements with other companies that subsidiaries or jointly owned by the same parent companies, etc. etc. and you'd have to go through layer upon layer of this kind of stuff to follow the money. It would be like disentangling a tangle of fishing line the size of your car. It's possible - at least theoretically - but it would take years. And who's going to underwrite such a project?
Bear in mind also that there are ways to hide completely the ownership of some companies. Costa Rica has a way for this to be done so that *no one* including the Costa Rican authorities knows who controls the company.
My bet is that the money trail would lead to Saudi Arabia.

[mulethree]

10. gee wouldn't it be better

to use 9/11 as a pretext to untangle all this crap than say as pretext for war, forced isolationism, and invasion of more legitimate privacies?

If you applied the same sort of blurring of laws, so that you looked at all these deals and ownerships in the light of rightness instead of strict legality then you would have plenty of reasons to consider corporations and even large private companies as 'public' entities and determine that for the purposes of tax collection, anti-trust enforcement and fair trade it would be necessary to eliminate much of this trash and make the rest transparent.

How can a company fulfill it's fiduciary, regulatory and other responsibilities if it can't figure out the interests represented by a group it's making a deal with?

How can they truely track money laundering if you can insert money at one point of such a birds nest and have it fly around like a pinball game past opaque screens and then fly out again with no trail?

[NMDemDist2]

3. hidden on the business page N/t

[UpInArms]

4. it is almost criminal

the way that news is "buried" in sections that average people do not read -

This way the papers can say they published these stories to cover their arses, but never really devote the ink to the truth.

[specimenfred1984]

7. Saudis Probably Traded the Options

because someone didn't collect about $2 million worth of them. The Saudis also had banking connections with U.S. companies involved.

It'd be terrible publicity for the Saudis to cash in those options and they, unlike the American public, did have prior warning to some sort of attack.

[TruthIsAll]

9. The Saudis don't need the money. Who benefits?

Saying its the Saudis is knee-jerk.

Why doesn't the 9/11 commission follow the money? Why doesn't Bush or Ashcroft?

That should tell you all you need to know.

[davhill]

8. This has been fully covered before

In the final report of the Joint Committie on September 11.

<http://a257.g.akamaitech.net/7/257/2422/24jul20031400/w... >

see pages 396-422

[mulethree]

11. haha

since theres 2 sets of overlapping page numbers, and the first part is mainly about how we couldn't get spies into al'q, I expect you are referring to the pages where they only declassified 2% of the info?

[davhill]

12. One must read between the lines even if they are blank

1. It is standard police procedure to investigate whoever profits from a crime.
2. The FBI follows standard police procedure
3. The report contains the results of the FBI investigation
4. The declassified portion of the report does not mention such an investigation.
5. The classified portion must contain the results of such an investigation
6. If there were no positive results there would be no reason to classify the investigation.
7. The most classified portion of the report is that which deals with the Saudi government and royal family.
8. If an ally of the United States profited from an act of terrorism the release of such information would endanger the alliance.
9. Information which would endanger a important alliance must be classified Top Secret in accord with current rules.
10. We can deduce that the Saudi government and or royal family profited from the events of 9/11.

[Pallas180]

13. they caught Martha Stewart's trade by tracing everyone who

bought and sold Imclone the week to day before the announced news that the FDA was not approving it.

I don't see/understand/comprehend WHY they can't/couldn't do exactly the same thing with those UAL AA options bought in Chicago.

Unless the bank was connected to the CIA, which many banks are, or the word came from on high somewhere , like Wash DC, not to look into
it.

Martha can be traced but those who profited from the 911 hijackings can't?

bushit. - and that family is probably the one involved. Carlyle connected company anyone?

I

[mulethree]

15. well i agree

That we haven't heard where this points because it goes somewhere unpointable. But I don't see why that has to be the Saudi's. There are other unpointable places though they would, probably, result in a hundred or more unprintable pages instead of 30.

Do you think if Abdullah and Omar Bin Laden and WAMY are tied as participant in 9/11, and tied too closely to the Saudi government or Royal Family in this, and Bush or his scapegoat get fingered for blocking the pre-9/11 investigations on them, and ... directly preventing the prevention ...

Anyway do you think this "important alliance" is so important that they will all be allowed to hide behind it, forever?

The senior Democrat ?Bob Graham? on the committee claimed that the classified sections were not hidden for valid security reasons but rather political embarassment reasons. As I recall Rep. Goss seemed to agree that there wasn't a valid security reason, though he avoided calling it political. I'd think involvement leading to the Saudi King might be a security issue but that other Saudi's might be the political embarassment issue?

But still, it could point to some black "Proactive Pre-emptive Operations Group" and Bushite's and Israelis and be limited to 30 pages because it can only describe some stone walls that blocked investigation.

[DeepModem Mom]

14. Thanks for posting this find --

"'There is evidence of unusual option market activity in the days leading up to Sept. 11,' Poteshman writes in a paper posted on the Internet that goes deeper than the initial reports.

Obviously, authorities missed the market signal. The 9/11 commission might want to look into the matter."

I emailed a link to the column to the 9/11 Commission.

[54anickel]

16. Thanks for posting this story and the links to the report UIA. I started

reading the article this morning before heading out the door. Meant to get back to it when I came home, but had completely forgot about it. Pretty interesting stuff, isn't it?