Saturday, September 10, 2011

Put the Options Down Already

In a previous post Pat mentioned the Truther hearings (really a conference) going on in Toronto. I don't have an interest in watching the whole thing, but I saw that Paul Zarembka was giving a presentation on the whole put option thing and decided to watch that. It has always been a particular interest of mine, mostly since I studied finance in college and work at a finance firm, and I have done several posts on the subject already.

And I have to say that I was both surprised and annoyed, to watch Zarembka actually get into the investigation that the FBI and SEC did on this issue, both covered in the 9/11 Commission Report and the ensuing documents released by the Commission, and which we covered over 2 years ago. Now here is the surprising part, he concludes that the volume of put options were unusually high, mostly by referencing the Poteshman study, also covered by us nearly 5 years ago, but then determines that based on the FBI and SEC investigations having found that this was innocent investment activities, caused largely by a public newsletter, that there was no evidence of any wrongdoing.

Hello, then why have you idiots been claiming that there was for the last 6 years?

He does not, however, stop while he is ahead. He then goes on to argue that it would have been too suspicious for conspirators to profit off of the attacks merely by buying airline put options, that they would have bought into the much larger market in index funds. Gee, I wonder why that sounds familiar? Oh yeah, because that is exactly what I said over 5 years ago, only a month after founding this blog.

In actuality, if someone wanted to make money of the attacks, the best way would not be to buy puts in the companies involved, but to short the entire market, or buy oil futures. The Dow dropped over 16% in the weeks after 9/11, and buying puts on the much larger index market could have been done in larger quantities without drawing any attention, but then again the Loose Change boys couldn't put this much more complex theory into an ominous looking graphic in their movie that could be understood by their 20-something audience.

He then goes on to argue that some study I have never heard of points out that put options in the S & P 500 were at an unusually high level. This does not surprise me, as the economy was not doing too terribly well in the fall of 2001. Where Zarembka completely loses it though is he indignantly points out that the FBI and SEC were aware of high options trading in these markets, but did not look into them, for the entirely reasonable fact that there was simply too much too investigate. They can't be expected after all, to question everyone involved in the stock market in the fall of 2001, trying to find some anomalous reason that they were pessimistic. It is no more practical then investigating a murder by going door to door throughout an entire town demanding to know where everyone was on the night of the murder.

So anyway, because of this, despite having admitted that there was nothing to the airline put option theories that the majority of the movement has been pushing for the last decade, Zarembka indignantly demands an investigation into the rest of the put option market! Once again proving that their beliefs are not falsifiable. They do not want an investigation, they want an investigation which gives them the results that they desire.

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18 Comments:

At 10 September, 2011 19:34, Blogger Ian said...

Where Zarembka completely loses it though is he indignantly points out that the FBI and SEC were aware of high options trading in these markets, but did not look into them, for the entirely reasonable fact that there was simply too much too investigate.

And I'm sure there was nothing more important for the FBI and SEC to be investigating in the financial markets in the fall of 2001. I mean, Enron continues as a going concern to this day, right? I think its stock price has more than tripled since the fall of 2001, right?

Once again, the truthers just can't grasp Occam's Razor. If there was an unusually large number of put options out there on airlines in the fall of 2001, it's probably because we were in a recession, and travel is one of the first things people and businesses cut back on in lean times. There's a reason one of my finance professors used Delta Airlines as an example of a high-volatility stock.

 
At 10 September, 2011 19:37, Blogger Ian said...

Also, I expect Brian Good to make an appearance to lend us his expertise in finance. After all, he once emptied the trash cans at Stanford Business School.

 
At 10 September, 2011 20:21, Blogger reframingTokyo said...

http://i.mixcloud.com/CisV6

 
At 10 September, 2011 21:22, Blogger paul w said...

OT:

Five stories from 9/11 - five stories from people the truthers think are sheepies, liars, or were part of the attack.

http://www.slate.com/id/2303405/

 
At 10 September, 2011 22:11, Blogger scharfy said...

Truthers butchered this one. I traded SPX options at the CBOE then, and remember the stories flying around.

Here's the real story:

It is in fact true that an abnormally large number of PUT options were purchased on AMR and UAL. 95% of of both of these trades were linked to two large institutional investors.

From the commision report:

The UAL trading on September 6 is a good example. On that day alone, the UAL put option volume was much higher than any surrounding day and exceeded the call option volume by more than 20 times—highly suspicious numbers on their face.170 The SEC quickly discovered, however, that a single U.S. investment adviser had purchased 95 percent of the UAL put option volume for the day. The investment adviser certainly did not fit the profile of an al Qaeda operative: it was based in the United States, registered with the SEC, and managed several hedge funds with $5.3 billion under management. In interviews by the SEC, both the CEO of the adviser and the trader who executed the trade explained that they—and not any client—made the decision to buy the put as part of a trading strategy based on a bearish view of the airline industry. They held bearish views for a number of reasons, including recently released on-time departure figures, which suggested the airlines were carrying fewer passengers, and recently disclosed news by AMR reflecting poor business fundamentals. In pursuit of this strategy, the adviser sold short a number of airline shares between September 6 and September 10; its transactions included the fortunate purchase of UAL puts. The adviser, however, also bought 115,000 shares of AMR on September 10, believing that their price already reflected the recently released financial information and would not fall any further. Those shares dropped significantly when the markets reopened after the attacks. Looking at the totality of the adviser’s circumstances, as opposed to just the purchase of the puts, convinced the SEC that it had absolutely nothing to do with the attacks or al Qaeda. Still, the SEC referred the trade to the FBI, which also conducted its own investigation and reached the same conclusion.

So this guy covered his postion on Sep 10. Does that sound like a guy reading to profit on Sep 11? FUCKING TRUTHERS ARE RETARDED!!!!

Another example

Another good example concerns a suspicious UAL put trade on September 7, 2001. A single trader bought more than one-third of the total puts purchased that day, establishing a position that proved very profitable after 9/11. Moreover, it turns out that the same trader had a short position in UAL calls—another strategy that would pay off if the price of UAL dropped. Investigation, however, identified the purchaser as a well-established New York hedge fund with $2 billion under management. Setting aside the unlikelihood of al Qaeda having a relationship with a major New York hedge fund, these trades looked facially suspicious. But further examination showed the fund also owned 29,000 shares of UAL stock at the time—all part of a complex, computer-driven trading strategy. As a result of these transactions, the fund actually lost $85,000 in value when the market reopened. Had the hedge fund wanted to profit from the attacks, it would not have retained the UAL shares.


Classic Trutherism. Using examples of people losing money to show that people made money off of 9/11 inside knowledge.

This is all available in Appendix B of the Commission's Terrorist Financing Staff Monograph

Sorry for the length

 
At 10 September, 2011 22:20, Blogger scharfy said...

Here's a link to the report. Appendix B starts around page 145...


http://www.9-11commission.gov/staff_statements/911_TerrFin_Monograph.pdf

 
At 11 September, 2011 15:26, Blogger paul w said...

One of the main newspaper in Oz (based in NSW), The Sydney Morning Herald, had one tribute to 9/11 on Saturday.

Interesting to note that a sidebar to the double page feature was a debunking of truther 'facts'.

That it was even published at all gives some indication that the truther propganda is more widespread that one would like.

The good news is that it effectively debunked the main truther points, although it would do nothing to lessen the mistrust in government - one of the prime factors truthers use to promote their insidious lies.

 
At 12 September, 2011 16:18, Blogger paul w said...

http://www.youtube.com/watch?v=3np0DMxXKzM&feature=player_embedded

 
At 12 September, 2011 21:27, Blogger paul w said...

The founder of the Australian 911oz tells us why he became a truther;

Some gems:

"I encourage the reader to do an internet search on phrases like “false flag”, “strategy of tension”, “operation gladio”, “operation northwoods”, “attack on the Maine”, “Gulf of Tonkin incident”, “reichstag fire”, and “the power of nightmares”, to find historical precedents which have a chilling resemblance to the events and aftermath of 9/11."

"The free fall rate of collapse is strong proof that explosives were used, and there is no alternative to this conclusion that is consistent with the laws of physics."

"This is not just my opinion, it is also the opinion of close to 2,000 qualified architects and engineers. Steel framed buildings do not simply crumble into dust as a result of fire."

"Currently there is one, and only one, peer reviewed scientific paper which addresses the question of whether explosives were used to bring down the towers."

Blah, blah, blah...

http://www.911oz.com/

 
At 12 September, 2011 21:28, Blogger paul w said...

"Ultimately, 9/11 truthers are average people who are willing to stand up and say that two plus two makes four and who will not be bamboozled by the corporate media or intimidated by Big Brother. Evil triumphs because good people do nothing.

We are trying to do something. Future generations will remember us."

Yup, they sure will!

Bwahahahahaha!!!!

 
At 12 September, 2011 21:31, Blogger paul w said...

Oh, here's one of the latest posts:

"I’ve tried to see the value in this forum but looking around I see only the unburied dead.

• An attempt to sell term papers.
• Continuing rubbish on the attack on the pentagon.
• A bloke who thinks you silly enough to download his brain function tester or some such.
• An occasional faux Japanese art piece.
• Much useful and relevant discussion on the assassination of JFK.
• An unhealthy dose of anti-Semitism.
• A reminisce by Hereward on why he became a truther.
• Teary eyed paragraphs on media “hit pieces”.

It’s the 10th anniversary of 9/11 and this is it? Save your money. Close this sad little site now.
Theo"

Oh dear.

 
At 13 September, 2011 15:33, Blogger Ian said...

"Ultimately, 9/11 truthers are average people who are willing to stand up and say that two plus two makes four and who will not be bamboozled by the corporate media or intimidated by Big Brother. Evil triumphs because good people do nothing.

We are trying to do something. Future generations will remember us."



I think the one thing all truthers have in common is that they desperately need to be part of the movement for their own sense of self-worth. It's always about fighting the evil world powers and becoming memorable heroes for eternity.

 
At 13 September, 2011 15:34, Blogger Ian said...

On that note, Brian, feel free to babble about how your "meatball on a fork" model will be published in a journal of engineering someday.

 
At 13 September, 2011 16:09, Blogger paul w said...

ex-truther gets it off his chest:

http://www.youtube.com/watch?v=UULUQfEQFuU&feature=player_embedded#!

 
At 13 September, 2011 23:07, Blogger GuitarBill said...

Ian,

If the goat fucker was given an enema, he could be buried in a matchbox.

 
At 14 September, 2011 13:18, Blogger snug.bug said...

James B. wrote: They do not want an investigation, they want an investigation which gives them the results that they desire.

I want an investigation I can believe. When I first saw the pictures of the squibs I denounced the people who could post such a sick hoax on the internet. I could see the shortcomings in the FEMA report and when the NIST report came out in 2005 I wanted it to put all this controlled demolition nonsense to rest. I was disappointed in its inadequacy and then, when I looked closer and saw its unscientific nature, its omissions, and its dishonesty I became disgusted and angered.

I want reports that can be believed. Democracy demands no less.

 
At 14 September, 2011 19:43, Blogger Ian said...

If the goat fucker was given an enema, he could be buried in a matchbox.

One of Christopher Hitchens' greatest lines. :-)

 
At 14 September, 2011 19:47, Blogger Ian said...

I want an investigation I can believe.

Right, and the only one you'll believe is the one that agrees with your non-falsifiable beliefs about magic thermite elves and meatballs on forks that you have dancing in that diseased mind of yours.

When I first saw the pictures of the squibs I denounced the people who could post such a sick hoax on the internet. I could see the shortcomings in the FEMA report and when the NIST report came out in 2005 I wanted it to put all this controlled demolition nonsense to rest. I was disappointed in its inadequacy and then, when I looked closer and saw its unscientific nature, its omissions, and its dishonesty I became disgusted and angered.

See what I mean?

I want reports that can be believed. Democracy demands no less.

We had reports that can be believed. "Democracy" is not demanding new reports, otherwise Cynthia McKinney, and not Barack Obama, would have been the first black president of the USA.

YOU demand no less, but nobody cares what you demand since you're a deranged glue-sniffing liar who believes in modified attack baboons and invisible widows.

 

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