Guess we will see if we are all paranoid or not...
http://www.freemarketnews.com/Feedback.asp?nid=10192#1019225. 10/5/2006 - 11:41:12AM
BY: broker
I'm a stock broker from Europe and the funny thing is that i stumbled onto this too when looking at open interest and volumes of puts vs. calls. I was using Bloomberg to make an analysis and the odd thing is that when i looked at the S&P 500 Index put options, to be exact an 1170 october put (which is very much out of the money, it would take a 14% fall of the index for this put to be in the money), i noticed a sudden spike in the open interest over a 5 day period. The normal open interest up until sept. 15 2006 was approximately 20,000. Then starting sept 15 it rose to 182,428 over a 5 day period which is an extreme rise as far as I'm concerned. Also when looking at the volumes, from aug 22 to oct 2 there was barely any trading volume on this put option, except between sept 15 and 19 with volumes anywhere between 50,000 and 100,000 contracts.
Strangely, i noticed the same things for United Airlines and American Airlines. Not so many open contracts as on the S&P, but still a disproportionate amount when compared to the open interest on calls.
Furthermore, when looking at the DAX and AEX indices here in Europe i also found some disturbing things, an unusual amount of open put options on these indices. And when looking at the open interest chart, the open interest on DAX put options rose steadily over the period of one month.
BUT, the most striking thing i found was when looking at AEX index options, to be exact the Put 400 (out of the money, the index is at 486 now). I have a chart with a timeframe of 1 year, so from oct 2005 - oct 2006. The whole year, the open interest has been around 20,000 or lower. Then suddenly around sept 22 2006, there is a spike to 40,488. This is very unusual, looking at the 1 year trend. And also when looking at the volumes, for the past year the volumes have been quite low, less than 4000. Then from sept 22nd, for a few days the volumes spike out between 5000 - 10,000, which is in line with the rising open interest. I also looked at the trade book, which shows the trades with a time stamp, the price traded at and how many contracts trade. There were a few transactions of 1,000 puts and i saw one transaction of 4,608 puts. And they were 'Open Buy' orders and not 'Open Sell'. So, bought instead of written.
This is highly unusual. It could mean nothing, but then again, it could mean everything and that there is something coming up, something huge.
Just my two cents...
:tinfoilhat:
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