9/11 Theory Published in Journal
With all the bluster by Fetzer, Jones et al as to their academic prowess, it is ironic that the first paper which even remotely supports the conspiracy theorist view on 9/11 is not published by anyone even remotely connected to their group, but rather by University of Illinois at Urbana-Champaign finance professor Allen Poteshman, in a paper titled "Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001" published in the Journal of Business by the University of Chicago (also available here).
It would be inaccurate to term Professor Poteshman a conspiracy theorist though, and it is doubtful that his findings will be used to support conspiracy theories, except in their usual quote mining manner, since the entire foundation of his paper is based off the presumption that the attacks were carried out by Al Qaeda or some similar terrorist group, and the paper does not make the normal broad characterizations typical of conspiracy theorists. In fact in many cases it points out arguments contrary to the main thesis, such as the fact that many of the put options were not the short term high payoff options that you would expect in such a conspiracy.
Poteshman does conclude the probablility of insider trading though, from his conclusion:
A measure of abnormal long put volume was also examined and seen to be at abnormally high levels in the days leading up to the attacks. Consequently, the paper concludes that there is evidence of unusual option market activity in the days leading up to September 11 that is consistent with investors trading on advance knowledge of the attacks.
This of course is only a probability, which in this case he puts at 96%, meaning that the option activity was at the 96th percentile level. If his measurement were at the 50% level, for example, it would mean that the activity was completely average. A high percentile would indicate unusually high activity, although whether that was just random luck, or a nefarious reason, is a different question. Back when this paper was a draft, I e-mailed professor Poteshman with some questions regarding his methodology, and although I do not doubt his ability or honesty, I still have some concerns as to the relevence of his findings.
Put simply, all you can do through an analysis such as his is determine how far from the norm the activity is. He comes up with 3 measurements of put-call option activity, essentially throws one out, because it doesn't show him anything meaningful, and then uses the other two to come up with his 96% measurement. This is statisticallly dangerous though, because how do you know that those 2 measurements are any more meaningful than the 3rd which he is not using? Also he bases his measurements off of the highest volume of the 5 day time period (for put options on UAL and AMR) he is investigating. In my e-mail I asked why he didn't use the average for that 5 day period, he replied that it didn't show him as much. Well, this may be true, but once again, you are then looking for data which fits your results. In fact, if you included different measurements from a more diverse data set, you could come up with probablilities at a much lower level.
On the whole an interesting intellectual exercise, and it is nice to see things like this being discussed in a legitimate academic environment, but not one that tells us anything about a conspiracy, or a lack thereof.
posted by James B. @ 7:09 PM
37 comments
37 Comments:
I wonder if that sounded plausible to the Professor??? Does he go into this ?
Why don't you try reading the paper? He discusses issues such as these.
Without more evidence is it hard to address the subject of whether the options would have warned anyone. As I mentioned, the options were at the 96th percentile. This means that 4% of the time the level of put options were above this level. Based off of this logic you would have to put the entire airline industry on alert on average every month.
This only stengthens their case, i.e. independant confirmation.
Not really, since it shows that they lack the academic rigor to get any of their papers legitimately published, and this paper does not support the conspiracy theorists in any significant way.
None of the conspiracy theorists, the ST911 group to be specific, has managed to get any of their papers published in any legitimate academic journals.
This paper by Poteshman does not lend any significant support to the general argument of the 9/11 conspiracy theorists. All Poteshman argues is there is a probability (not proof) that Al Qaeda purchased put options in AMR and UAL. This was contradicted by the 9/11 commission report anyway.
NO WHERE in the article does the fine professor state that Al Qaeda placed the put options. He does state that terrorists and their associates may have done so.
Please do not mislead your readers by placing words into the mouth of the professor when he made no such statement. By doing so you try to implicate Al Qaeda in the trading scandal when there is no evidence they carried the trades out. Tisk tisk James, a bit of propaganda on your part wouldn't you say?
As I said, it is a probability, not proof. The premise of his paper is that Al Qaeda (or some other related terrorist organization) not an international Jewish banking cartel, might have had prior knowledge of the attack.
The paper's second set of results uses the historical distribution of option market activity to assess the option market trading in the days leading up to September 11. I will refer to the four trade dates beginning September 5 and ending September 10 as the target period. I investigate this period for two reasons. First, these are the days that most commentators seemed to be focused on. Second, Osama bin Laden claimed that he learned on September 5 that the attacks would occur on September 11.
If it were the bankers\illuminati\PNAC etc. his methodology would be irrelevent. They would not have shorted just two airline stocks for a couple of million dollars. Much better to short the entire market, they could have made much more money without raising any flags at all.
"...since the entire foundation of his paper is based off the presumption that the attacks were carried out by Al Qaeda or some similar terrorist group,..."
I'm pointing out that
Al Qaeda is not his premise as you state that he does. He doesn't state that because there is not proof of what terrorist group placed the bets. If there was definitive proof, he would have stated that This ____ terrorist group placed the bets. Just state the facts, brother! No need to insert your own conspiracy theories into the arguement.
Also I think the terrorist group that did place the 'bet' had wonderful knowledge that the hijackers, whoever they may be, would have a 100% success rate on passing through airport security. If they don't pass through, the put options fall through with a loss of huge sums of money. Wouldn't you agree that's a very risky bet unless you knew for certain they were going to have a 100% mission success rate? Hey do you think the cave dwellers had access to Ameritrade or what? How do you place put options on a company from a cave anyway? Wireless access thanks to the Pakistanis?
"If it were the bankers\illuminati\PNAC etc. his methodology would be irrelevent. They would not have shorted just two airline stocks for a couple of million dollars. Much better to short the entire market, they could have made much more money without raising any flags at all."
HUH? If it were those groups, how can you claim to know their methods or speak for them or their actions? You don't think shorting an entire market would throw up red flags? Seems to me that would leave a clear paper trail to the criminals. How many millions are still unclaimed by the placer of the puts. POP! Hehe placer of the puts. You will have to add that to the lexicon on the front page!
"Second, Osama bin Laden claimed that he learned on September 5 that the attacks would occur on September 11."
I'm by no means defending a former CIA assest and current Bush Adminstration boggeyman, but claiming something doesn't make it true. That is also not an indication, fact, or evidence that OBL was the placer of the puts. However, that statement does detract from all of the other people that were aware something was going to happen.
Hell the entire National Security structure was aware the attacks were coming.
Well I am going out on a limb here, but I am assuming the international banking cartels have someone on staff who knows at least as much about finance as I do...
Shorting the market would draw much less attention. The puts on UAL and AMR did not draw attention because of their large size, they were only a few million dollars, tiny by Wall Street standards, but because the normal trading level for those options was relatively low. Options on index funds are traded at much higher levels, you could make dozens of times more purchases without anyone noticing.
And there aren't any unclaimed options, that is a report from October 2001, get with the times. You can't buy options anonysmously anyway, what would be the point of buying them only not to claim them?
I'm by no means defending a former CIA assest and current Bush Adminstration boggeyman, but claiming something doesn't make it true.
Within the context of this paper I am not claiming it is true either, I am merely pointing out that this is the premise of the paper, which is why it doesn't really help the conspiracy theorists. You can't have it both ways.
"You can't buy options anonysmously anyway, what would be the point of buying them only not to claim them?"
To avoid an investigation into foreknowledge of the attacks.
As far as the OBL comment that was in reference to the Professors statements in his report.
Forgive me for not knowing, but when was the money claimed? I didn't realize it had been. Also can you give me some links so I can update my databank?
James I stand corrected regarding the anonysmous put options. I guess someone or some people do know who including nationalities and identity made the put options. Now don't you think they would release the names and identities of these folks if they pointed back to Al-Qaeda and OBL? That would add even more evidence that group of terrorists would be responsible, but that doesn't seem to be the case.
And I will stand corrected if these investors names and nationalities have been released to the public.
From http://www.projectcensored.org/newsflash/unanswered_questions_911.html#put
Christian Berthelsen and Scott Winokur of The San Francisco Chronicle wrote on September 29, 2001 that as of that date investors had yet to collect more than $2.5 million in profits made in these put stock options of United Airlines, and “the uncollected money raises suspicions that the investors—whose identities and nationalities have not been made public—had advanced knowledge of the strikes.”
Does anyone know if this institution has been identified? Great trading strategy if you ask me.
From Project Censored:
"The New York Times, on September 28, 2001, reported that the “short positions and volume of put options rose sharply across the travel industry— which has been cited repeatedly in news reports as possible evidence of illegal trading.” The London Telegraph quoted Ernst Weltek, president of Bundesbank, on September 23, 2001 as saying that “there are ever clearer signs that there were activities on international financial markets that must have been carried out with the necessary expert knowledge.”10 Dylan Ratigan of Bloomberg Business News said that “this could very well be insider trading at the worst, more horrific, most evil use you’ve ever seen in your entire life. This would be one of the most extraordinary coincidences in the history of mankind if it was a coincidence.”11 CBSNews.com quoted McLucas, former Securities and Exchange Commission Enforcement Director, as saying that “the options trading in particular suggests to me that somebody, somewhere, may have had an inkling that something bad was going to happen to certainly those airlines stocks.”12
The 9/11 Commission report scantly covers the stock options issue. On page 499, footnote #130, the 9/11 Commission reports that, "some unusual trading did in fact occur, but such trade proved to have an innocuous explanation….A single U.S. based institutional investor with no conceivable ties to al Qaeda purchased 95% of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10." This explanation only addresses the UAL and American put-options, ignores trades in other companies, and fails to identify the purchaser, thereby leaving even more unanswered questions."
"'...A single U.S. based institutional investor with no conceivable ties to al Qaeda purchased 95% of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10.'This explanation only addresses the UAL and American put-options, ignores trades in other companies, and fails to identify the purchaser, thereby leaving even more unanswered questions."
The 9/11 commission fails to identify the purchaser because they determined he had no connections to AQ - or any terrorist organization - and therefore he had no connection to the attacks. In other words, the 9/11 commission did investigate this individual and found no evidence he was involved in insider trading. He had no way of knowing about the attacks.
The 9/11 commission isn't going to implicate someone in the attacks when there isn't a shred of evidence they were involved (thank God).
I think the proprieter of this fine blog said that put-options can't be purchased anonymously. If "projectcensored.com" is that concerned about insider trading maybe they should investigate it themselves, instead of making lazy arguments for lazy CT's to cut and paste.
This is really simple if you think it through for yourself instead of mindlessly accepting whatever you read on the internet
"The 9/11 commission fails to identify the purchaser because they determined he had no connections to AQ - or any terrorist organization - and therefore he had no connection to the attacks."
Burke, I'm flabergasted! I didn't realize you sat on the Commission. Oh wait, you didn't. Therefore how can you state you know why they didn't publish the person and the institution's name? How do you know the motives for not publishing the investor and the names?? Oh wait, you don't. So stop trying to speak for the 9/11 Commission. That will open up a whole new can of worms because with your logic, WE ALL can speak for the Commission.
"A single U.S. based institutional investor with no conceivable ties to al Qaeda purchased 95% of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10.'"
Burke do you understand what conceivable means? The 9/11 Commission can't imagine this person having ties to Al-Qaeda! Imagine!! No mention of investigation of facts or evidence, etc. or anything, they just can't 'imagine' this person and institution having ties. All in a footnote! Imagine that!
I guess that discredits your rebuttal.
Coming from someone who thinks Al Qaeda operated out of caves pre 9/11 and Bush had ADA set up on the roof of his hotel before 9/11.
Richard what exactly is your contribution to the discussion?
Burke, I'm flabergasted! I didn't realize you sat on the Commission. Oh wait, you didn't. Therefore how can you state you know why they didn't publish the person and the institution's name?
Because they explicitly said why they didn't publish his name. He had nothing to do with the attacks.
Burke do you understand what conceivable means? The 9/11 Commission can't imagine this person having ties to Al-Qaeda! Imagine!! No mention of investigation of facts or evidence, etc. or anything, they just can't 'imagine' this person and institution having ties. All in a footnote! Imagine that!
I guess that discredits your rebuttal.
Semantics. You're twisting their words beyond recognition. You see the word "conceivable" and that somehow proves to you there was some coverup.
What constitutes evidence that he/she didn't have any ties to terrorist organizations? Do you expect the 9/11 commission report to publish his/her financial statements? A list of his/her friends, business partners, religious affiliation, phone calls, etc...? Do you believe that people are innocent until proven guilty? Do you believe that people have a right to privacy?
Now what should have occured is an investigation into this market strategy that netted the investor and the instituiton profits of millions of dollars. Where could a proper investigation lead to? Perhaps to insider knowledge of the attacks, perhaps not because the 9/11 C. can't imagine ties to Al-Qaeda. Now how mindless is that? Hell we can drop the investigative hammer on Enron and World Com and Martha Stewart for insider trading, but not on this unnamed investor and the institution which could lead to foreknowledge of the attacks? Now that is American taxes at work!
"Semantics. You're twisting their words beyond recognition. You see the word "conceivable" and that somehow proves to you there was some coverup."
I'm twisting their words?? Funny. Look up the meaning of conceivable. Apply it to the statement located in the footnote, and somehow you deduce that the 9/11 commission throughly investigated the investor and institution and determined there was no link. I use the meaning of the word to determine
that the Commission couldn't imagine the person has ties to Al-Qaeda.
Well words have meaning. Words are used to convey meaning and you seem to be twisting the words to fit your agenda. My agenda is simple, they should have investigated the person rather than imagining he didn't have ties. Very simple and straight foward, with no cover up implied or intended. You claim I'm arguing for a cover up. I'm not. I'm arguing that the 9/11 C should have expressed to the American people, for whom they work, that an investigation into this investor and the instituion resulted in no evidence linking the two to Al-Qaeda. But we didn't get that, we only got what they imagined, and they imagined that the two didn't. Case closed, Burke.
Because they explicitly said why they didn't publish his name. He had nothing to do with the attacks.
Uhh no they didn't! Re read the quote my good man and you will see that they didn't explain why they didn't publish the names. Your connecting two points when one doesn't exist. Point 1, the commission can't imagine a relationship with Al-Qaeda. Point 2. We didn't publish the name for that reason.
You are making a huge assumption in your analysis.
One last point, the 9/11 Comm. couldn't imagine that the investor had ties to Al-Qaeda. Now doesn't that limit the scope to just one terrorist group? How many terrorist groups are out there anyway? Who else could have benefited from foreknowledge? Were there other groups or persons of interest that this person had ties to? Is it possible that there were Americans who had foreknoweldge of the attacks and financially benefited from the attacks through put options? Who was the institution representing with the purchase? All legitmate questions to be asked and investigated but the 9/11 Comm. didn't do that. Why?(Insert your own conspiracy theory here)
They couldn't imagine this person having ties to Al-Qaeda. I can see why that might keep an investigative body from investigating a potential criminal activity. NOT!
See once you begin thinking, there are many questions raised that deserve to be answered. If you see a conspiracy, that is your perogative.
I do see evidence of a possible conspiracy and I think I've laid logical groundwork to base that decision on.
I use the meaning of the word to determine
that the Commission couldn't imagine the person has ties to Al-Qaeda.
I don't. I think they used it to convey a possibility they could have missed some extraordinary evidence - which implies they thouroughly examined the ordinary evidence. Obviously I'm making an assumption. So are you.
I don't see the point in harrassing some investor because the 9/11 commission didn't word their conclusion very well. If the investor did have terrorist ties, though, then I'm sure some enterprising journalist will make a career out of it.
I think they used it to convey a possibility they could have missed some extraordinary evidence - which implies they thouroughly examined the ordinary evidence. Obviously I'm making an assumption.
Well we don't know if they missed it, found it ,lost it, ignored it or covered it up, because all the American people received was their footnote.
I'm making no assumptions at all my fine friend. I'm clearly stating a fact as stated by the Commission and clearing up some issues. Harrassing and investigating an investor are two seperate issues. If I were a famliy member who lost loved ones in the attacks, I would want the most complete exhaustive , greatest, most well funded impartial investigation into the greatest mass murder of all time . Well I'm not a family member and I still want those items and I think we would all agree that is exactly what didn't happen.
I do agree with you however that someone could make a career out of it. Maybe we should team up and get rich...or get shot. ;)
I think they used it to convey a possibility they could have missed some extraordinary evidence - which implies they thouroughly examined the ordinary evidence. Obviously I'm making an assumption.
Well we don't know if they missed it, found it ,lost it, ignored it or covered it up, because all the American people received was their footnote.
I'm making no assumptions at all my fine friend. I'm clearly stating a fact as stated by the Commission and clearing up some issues. Harrassing and investigating an investor are two seperate issues. If I were a famliy member who lost loved ones in the attacks, I would want the most complete exhaustive , greatest, most well funded impartial investigation into the greatest mass murder of all time . Well I'm not a family member and I still want those items and I think we would all agree that is exactly what didn't happen.
I do agree with you however that someone could make a career out of it. Maybe we should team up and get rich...or get shot. ;)
I would like to see the authors analysis of the same companies put options that were double their pre 9/11 levels in april of the same year (approximately 8000 in april versus 4000 pre 9/11 I do believe), yet...oh my gosh...no terrorist attack in april..how come...omg what happened.
TAM
Well see, the ones in April were all front companies for Swing Dangler. His Al Qaeda buddies played a nasty little joke on him, and told him the wrong date. Now he's pissed off, and going after anyone who may have made a buck off the REAL attacks.
Look up the meaning of conceivable.
You keep using that word. I do not think it means what you think it means.
http://www.projectcensored.org/newsflash/unanswered_questions_911.html#put
Christian Berthelsen and Scott Winokur of The San Francisco Chronicle wrote on September 29, 2001 that as of that date investors had yet to collect more than $2.5 million in profits made in these put stock options of United Airlines, and “the uncollected money raises suspicions that the investors—whose identities and nationalities have not been made public—had advanced knowledge of the strikes.”
Do you guys have anything beyond October 2001? It is the same with the "hijackers are still alive" story, repeat the events as they were seen 5 years ago, accurate or not, and ignore anything to the contrary.
You can buy options with periods of up to several months BTW. It is entirely possible that the investors thought the stock would continue to drop. As for them wanting to avoid suspicion, I can't think of anything more suspicious that avoiding getting your money.
Alex, what exactly is your contribution to this discussion?
Manny, look it up in a dictionary, my fine friend, and you will read exactly what it means.
I would like to see the authors analysis of the same companies put options that were double their pre 9/11 levels in april of the same year...
Well he could do that but it would be pointless because the analysis was done on the trading DAYS before the attack, not months. Perhaps you should re-read the statements by experts in the field regarding the put option activity. Or is it easier to ignore those and postulate your own conspiracy theory?
Alex, what exactly is your contribution to this discussion?
Buddy, if I were to fart it'd be a greater contribution than anything you've brought up so far. Your only arguments have been based on intentional misinterpretation of other peoples statements. In short, you're intentionally fabricating information in order to support your ridiculous assertions. Such behaviour is worse than useless, it is counter-productive. If you were to shut up you would immediately increase your contribution to these forums and to peoples understanding of the real events of 9/11 as a whole. I'd suggest that you seriously consider doing exactly that.
Buddy, if I were to fart it'd be a greater contribution than anything you've brought up so far. Your only arguments have been based on intentional misinterpretation of other peoples statements. In short, you're intentionally fabricating information in order to support your ridiculous assertions.
Care to provide any facts and truths to support your statements? Oh wait you can't because I've used the same material you have. By that logic, your calling yourself a liar. And it appears the only thing you accomplish with your posts is to call people names who provide evidence contray to your world view.
Is that the tactic you use to ignore the issues? Why do you do that? Or is that your subtle way of admitting defeat in a arguementitive discussion?
Care to provide any facts and truths to support your statements?
As soon as you present an argument worth discussing, I'll be more than happy to. And no, vomiting out theories which we've already discussed on this site does not count. Do some research first. If you can come up with a theory that hasn't already been debunked, I'll be more than happy to look at it.
This may come off as incredibly stupid, but I must ask, isn't there a simple way to find out who purchased the stock options? Do they not have these things documented?
My entire financial life is documented from birth to death whether it's buying a latte at Starbucks or a house.
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