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.
Labels: Paul Zarembka