Billions in Put Options purchased betting that the market will crash (UPDATE: CALL MADE?)

Operation Noble Eagle is the U.S. military operational designator to the military's efforts in the War on Terrorism that were carried out on US soil. The operation began September 14, 2001, in response to the September 11 terrorist attacks, and continues to the time of this writing. Operation Noble Eagle comprises, among other things, air interceptor patrols over and around cities and the mobilization of thousands of National Guard and Reserve troops to perform security missions on military installations, airports and other potential targets such as bridges. This operation also marks the first combat mission of the F-22 Raptor.

Operation Noble Eagle

Take that back, the operation has been going on for a long time, however this is the first time that I can tell that troops are being deployed to the DC area over no public "threat" .. I will keep looking to see if there has always been a deployment in DC since 9/14 and if the new deployment is just a change of units.

hello all many will not know me yet as i new to ats so please check my profile for my posts to get small knowledge on me im glad to c this thread here bcuz i can say from a inside source this is 100% true, lil history, the calapse of us$ is a guaranteed sure, many under embrella project like this, but recently they pumped tons of billions into martket bcuz

they play script like plan for ats project like this 1, so to not make poeple panic and see economy crashing they made these big deposits past few week,even as they make new terr attacs they also want max profit also so they r ready to pull the trigger again i kno wen it will happen, also in conjunction is the main reason why they are doing this, another terr attac is the impetus for all us this crashing the market is just for profit from what will happen, 9/22 this sell option expires so the terr attac WILL happen anytime from now till.......


9/22 and my source says very very likely on or very near to 9/13/07 so please spread word and b prepare, possibility will be dirty b0mb on the west coast sumwea or sumthing related to this matter

just a dumb question. if the market does crash......what happens to the money in my checking account? a checking account would be safe right??

I've been trying to wrap my head around this as well, and I've seen it through to an end thought or 2.

Someone has seen financial data, and/or wants to sabotage the profitability of some kind of partial stock ownership portfolio. The put buyer showing himself so publicly, wants the proverbial day trader to be afraid, and dump.

If the "day trader" is your average sheople and does very little conspiratorial research like us, they stand to lose their a$$e$. If the day trader see this put option for billions they figure they should hop on-board too, and sell put option style, Therefore becoming a self fullfilling prophecy, of the devaluation of the stock.

Now is anybody talking about how hidden the buy options are? I'm willing to bet that the put options devalue, then that 4.5 billion investor comes back with 10 billion and buys shares of that de-valued stock at a new shiny discount.

If you have 4.5 billion to invest/lose, you have so much more than that in another asset, liquidity or not.

So kids I can now sleep at night...

-ADHD

reply to post by INOTIBOT


It depends on whether or not there's a rush on the banks. If lots and lots of people all try to withdraw cash, the banks may have to freeze assets of some people in order to avoid paying out money they don't have.

That's not very likely, but it's certainly possible, because of the way banks do business. If they have, say for example, $1,000,000.00 in deposits from all their customers - they don't have a million bucks in the safe just in case everyone decides to cash out on the same day. The bank might only have 100,000.00 in available cash...

So, you can imagine what happens if people panic and all rush the bank trying to get their money out.

Originally posted by INOTIBOT
just a dumb question. if the market does crash......what happens to the money in my checking account? a checking account would be safe right??

Don't worry, your deposits, up to $100,000, are insured by the FDIC with the finest, most conservatively printed paper that the consortium of private banks aka the Federal Reserve can offer.

Sleep tight! all is well.

Originally posted by INOTIBOT
just a dumb question. if the market does crash......what happens to the money in my checking account? a checking account would be safe right??

as far as i know, your checking or savings accounts are insured by FDIC
up to a Maximum of $100,000 per account....

the only problem with that is it may take more than 6 months for anyone to get compensated for a defunct account.



~~~~~~~~~~~~~

in reply to these september crash dates that are being bandied about....

the dates are suspiciously tied to;
A; the Fed prime rate meeting on 18 Sept.
B; the several different 'options' expirations that range from 19-27 Sept.

i suppopse that these dates give some credulity to these fantastic 'doom' scenarios, to be occurring in mid to late Sept.

enjoy the ride, even if its just a virtual ride !

Originally posted by INOTIBOT
if the market does crash....what happens to the money in my checking account? a checking account would be safe right??

I'm sure many are wondering the same thing INOTIBOT. If we find ourselves asking questions like this...it implies a degree of uncertainty. Maybe it would be wise to have as much cash-on-hand as possible...until the uncertainty subsides. Given the public's awareness of the current economic climate, I would expect to see runs on some of the more troubled banks.

thanks for your response...........now I also have an orange account, not sure if that bank is as safe as my boa account, any ideas?

also I think this is a precursor to invade iran.

basically another 911 but much larger in sept.......... does anyone have any information on this? something about attacking washington dc or NY. Does anyone know how to see if certain people are moving out of these states in large numbers. Or does anyone know if there is a practice norad date in sept?........just wondering

reply to post by sn00daard


This was easy to figure out. Degree of difficulty 2. Keep trying.

Poster's personal (professional) reference-----G. Noory

Take care. -------------------------------PC

Doesn't FDIC insurance mean that bank deposits are safe now?



This is one interpretation of FDIC insurance...I'm imagine the Fed might phrase it differently. On a related note, there seems to be a common misconception that the contents of bank safe deposit boxes are insured...they aren't

reply to post by Yarcofin


I'm still sitting on my money amigo. While the market has came back down on a lot of stocks, it's still not very stable and right now fear rules the market. It wouldn't take much to make it go either way really. I really want to jump back into the market, and I have a huge risk tolerance for stocks and mutuals; however, what if something does happen and my $1000 or so sitting in cash becomes really valuable?

Doesn't NSPD 51 allow the government to declare martial law in the event of an emergency that severely effects the economy?

I have really learned a lot from this discussion. Thanks to all for having it. I've read everything that all of you great minds have posted up to this typing, but I haven't seen one specific possibility discussed.

Back in July, I began to think that it would be possible for certain high profile money men like George Soros to have an active interest in rocking the country's economic boat. Assuming that some Dem sympathizers could cause a major ripple, wouldn't they be able to do it at approxinately the time of their choosing?

If, as you say, the unknown investor(s), stand to lose very little, or gain a lot, we're talking about what amounts to a "safe bet" in political circles. I'm not a financial wiz, but politics is my bread and butter. The last thing the GOP needs right now is a new scare just before we go in to the holiday spending cycle.

Even if all they manage to do is light up the discussion boards with fearful chat, that could be used to advantage by some creative minds. The position of certain Bush adminisration personnel suggests to me that somebody couldbe ready to let fly with silicaious propoganda to exploit any and all negative results from this gambit.

If you're not going to lose much, why NOT bet against the market if it might trigger something you can politically exploit? It's a safe bet that the MSM would play along. the GOP wouldn't do this to themsleves, so...

Originally posted by Alien42
Doesn't NSPD 51 allow the government to declare martial law in the event of an emergency that severely effects the economy?

I see where you're going with that, and you may very well be correct. You can see the full text HERE.

I've been saying for a while now that the markets need a correction, at least 10-15% and while it has not come down to that level yet, many of the stocks that I personally watch are at levels I would expect them to be at. So to me, it isn't out of the question for the market to drop another 15%. With the volatility in the market, fear, subprime concerns and the like, anything could spark the market to drop big. And yes, the bet seems to be safe because the market is not going to jump up big anytime soon. I read in another post that 3rd quarter earnings come out the 21st of September and that will either drive stocks up or down depending on who is scheduled to announce their earnings at that time. It's my personal belief that most of the stocks are way over valued by the market and I guess you could say, that even though I am losing money on some stocks, that I'm glad the market is coming down. The way credit is being thrown about is a very scary thing. Debt is the root of slavery and it won't be the companies that are effected by the debt, it will be the people who followed along in it. If the market drops say 15-20% in the coming weeks, that would be about 30% from my view point and would actually help the market in the long run. If stocks do drop that low, you can bet that I'll be buying the next day and picking up some good buys on stocks that shouldn't be at that price range.

I'm a little puzzled by what several posters have said now about how they (the investors who bought the puts). don't have much to lose. If a put doesn't reach the strike price before the expiration date of the contract, you lose. And if it doesn't come fairly close to the strike price, you lose whatever it cost you to buy the contract. In other words, you lose everything you invested. And according to what I've read, that would be over 700 million for this particular investor.

So perhaps one of you taking this position could explain to me how they couldn't lose -- or didn't have much to lose. Perhaps there's some fantastically complicated financial arrangement here that is, or could be done to make buying all those puts relatively safe...and I'm just missing it.

It wouldn't be the first time

Originally posted by Justin Oldham

Originally posted by Alien42
Doesn't NSPD 51 allow the government to declare martial law in the event of an emergency that severely effects the economy?

I was thinking about that one also, very convenient for all the bills been sign by our present president to put them to work if something like a major market crash or terrorist attack happen.

Ok - FYI, the tickerforum site seems to be at least technically correct.

The 'anomalic research' site is very messed up - if you read this site other than for fun, you will become very confused as to what's going on. They have it wrong, and worse, they flip-flop on the point several times.

Someone bought put options. THAT is the bet that the stock market will drop. Selling put options is a bet that it will not.

I used to trade a lot of commodities as a hobby - don't have time for it now, so I was really up on this stuff at one time. It pretty much translates over into stocks in terms of technical terminology, so let me see if I can dredge this up from memory correctly. It DOES get to be confusing.

An option is an instrument that gives its buyer the right to purchase or sell the underlying instrument at a certain price, by a certain time. For the seller, it is an obligation, not a right.

Let's look at that. Let's say I own an acre of land. I don't think the city is going to build out that way. If it did, the land would be worth a lot more. If not, it's good for growing hay, which is what I'm doing with it now. The land currently appraises at $5,000.

A guy comes to me, and this guy thinks it's going to be prime mall property a year from now. I don't. So I sell him an option to buy the land for $5,000, with a time limit of one year, at a price of $1000. This means that I just made $1,000 for my risk that the land will be worth a lot more. That risk will last for a year, the option's term. At the end of the year, the option will expire. If the land is worth $5,000 or less, the option will expire worthless. If the land is worth more than $5,000, I will receive the money I got in selling the option, $1,000, and the $5,000 that the option entitles the buyer to buy the land for, and I won't have the land anymore.

I can't make more than the $6,000 on the deal. However, I can lose a huge amount of profit, much more than the $6,000, because the land may now be worth $50,000 an acre in a year if the city expands that way. As the seller of the option, I am bound to sell it for the $5,000. It is an obligation to me.

From the point of view of the buyer of the option, I am hoping the land goes up in value. If it does, I am entitled to buy the land for $5,000. It is a right, but not an obligation. I do not HAVE to buy the land for $5,000, or any amount. The option has possible "real value", that is, if I bought the option at or in the money, and "time value". Time value is related to the time that the option still has to run, and is affected by volatility. If the land market is really bouncing around (maybe the city hasn't decided), then the time value will be inflated. As time runs out, let's say I only have a week before my option expires, and the city STILL hasn't decided, I may have lost my $1,000, because the time left for them to do so is very short before my option runs out.

Since the buyer has the option to buy the underlying instrument, the acre of land, at a fixed price in the future, this would be a "call" option. Call options can be bought and sold. As the buyer of a call option, I'm hoping the underlying instrument increases in price - I'd like to buy a $50,000 parcel of land for $5,000. As the seller of a call option, I'm hoping the land's value decreases or remains the same (if it's out of the money), because then I get to pocket the option payment as free money. The term "call" is used because the buyer can "call it away" from me. (I know it's stupid)

So, options have two values - time value, which is affected by volatility and the remaining time, and real value, which is related to how far "in the money " they are.

Since the land appraised for 5K, and as the seller I sold him an option to buy it for 5K, it is "at the money". "At the money" options mean it strictly has no cash value, but as the seller of the option, I'm afraid that it might be worth a little more than appraisal, or that minor fluctuations in land value will cost me some profit if he exercises the option, so an "at the money" option will carry some "uncertainty value" as well as "time value".


Had I sold him the option to buy it for $4,000, well, the land is worth $5,000, so that sort of option would be "in the money". "In the money" options have both "real value" in this case $1,000 of real value, since the land is worth more, and "time value", which represents my risk the land will increase in value. In the money options cost more, because you're sort of partially buying the land. I might sell you an in-the-money call option if I'm convinced the land will DROP in price, because then I'll make your time value and real value. Let's say I know there's a superfund dump site on there, sell you a call option at $4,000, for a fee of $2,000. Now you have the right to buy it from me a year from now for only $4,000, but when you get around to looking at it more closely, you'll see that you have an acre full of benzene or something and run away. I get to pocket the option fee of $2,000.

Had I sold you the call option to buy the land at $10,000, then there is only time value. I'm betting it will go up in value, but not that much in a year.

Now, if I sold you that call option to buy my land at $5,000, and the land ends up worth $50,000, then at the year mark, you will "exercise" your option, and I will have to sell it to you for $5,000, losing the land. You might also just sell the option at a profit before that time, and let someone else exercise it.

PUT options are the reverse - and they're a bit less intuitive than a call option.

In a put option, I don't own the underlying instrument - but I'm betting it will go up in price. So as the seller of a put, I undertake an obligation to buy it at a fixed price in the future. Let's go back to the acre of land.

My next door neighbor has 100 acres of land he'd like to dump. He's betting that the EPA will find the benzene contamination and it will be worthless. I'm betting that the city will annex us, and I secretly know that the benzene contamination was a bad soil sample. I don't have the money to buy 100 acres of land. But I want to cheat my neighbor out of some money, so I sell him a put option. Basically, as the seller of the put option, this put option gives me the obligation to purchase the 100 acres of land a year from now, at $5,000 an acre. I don't have $500,000. But that doesn't matter, because my cousin on the annexation committee let me know that the city is a week away from annexing it.

For the burden of having to buy the land at $5,000 an acre a year from now, I am paid $10,000 by my neighbor. So, he's out $10K as the purchaser of the put option, and as the seller of the put option, I just made $10K.

From his point of view, the land is full of benzene contamination and will cost a fortune (and be worthless) to clean up. He just paid out $10,000 for what he thinks is the right to dump the land on me next year. As the seller of that put, it is my obligation to buy it. As the buyer of the put, it is my neighbor's right but not his obligation to sell it to me at that price.

A year goes by - and the city has annexed the land. It has no real contamination, and the land is now worth $50,000 per acre. My neighbor will NOT exercise his option to sell me the land for $5,000 - it's worth ten times that - so the option will expire worthless. I made $10,000 for taking the risk as the put option seller. The buyer of the option - my neighbor - is only out the initial option fee. He has no other risk. The seller of the option - me - is potentially out $500,000 if the year passes and the land IS worthless. But in this case, I knew that it would be going up in price and made some free money.

Put options can also be in, out, or at the money, and also have time value and can have real value. It's just harder to see it with a put option.

Put options

seller: Has nothing, is hoping the underlying instrument will go up in price. Makes the option fee up front. Will end up with the underlying instrument if the value drops low enough to put it below the option strike price and the buyer exercises. Has a legal obligation to buy at the option strike price.

buyer: Owns the instrument, and is expecting the underlying instrument will go down in price. Pays out the option fee up front. Has the right but not the obligation to sell the underlying instrument to the option seller at the option strike price. i.e. "put it to him" at the strike price. Let's say the land is worthless, the buyer can sell the land to the option seller at the strike price anyway, "putting the land to him" at an inflated value.

call options

seller: Owns the underlying instrument, is expecting the underlying instrument will go down in price. Makes the option fee up front. If the value goes up instead, the option buyer may "call it away from him" at a low price. Makes the fee up front. Has the legal obligation to sell the instrument at the strike price.

buyer: Pays the fee up front. Hopes the underlying instrument will go up in price. If it does, he will exercise the option and "call it away" from the seller at a cheap price.

That's real simplified, but it's pretty much right if I didn't have a brain fart. There are all sorts of complicated things you can do that I don't touch on, like spreads, straddles, hops, in or at the money options, time spreads, calendric spreads etc that use differential values to make money of the decay of the time value and the like. But you see that more in commodity trading than you do stock trading. It's even weirder in commodities, as you're selling something you don't own to someone that doesn't want it etc.

So, the BUYER of the put option is betting that the market will tank. NOT THE SELLER. The guys on "anomalic research" or whatever it was are wrong. The sellers are betting it won't go down that far. If it does, they'll end up owning worthless stocks. The sellers of the put options are betting that the market will grow in value, or at least not fall that far.

Originally posted by ClintK
I'm a little puzzled by what several posters have said now about how they (the investors who bought the puts). don't have much to lose.

let's use an anology.........

i used to go to the horse track,
whenever a race had a 'trifecta' available
And there were 6 horses racing - - -
one could place a Trifecta box for less than $250.00
and IF the Win-Place-Show horses paid more than the $250.oo invested
then you'd Win

on more than one occasion i'd 'box' the field--pay my $250. & win a Grand or more (if the long shots Win-Placed-Showed i.e. came in 1st/2nd/3rd)
it's not such a 'gamble' when the absolute worst you can do is break-even
when the top favorites W-P-S, or perhaps lose $50. against your initial bet.

i think the same principle is being applied here



[edit on 26-8-2007 by St Udio]