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International Policy Institute for Counter-Terrorism
* Between September 6 and 7, the Chicago Board Options Exchange saw purchases of 4,744 put options on United Airlines, but only 396 call options. Although there was no news at that time to justify so much "left-handed" trading, United Airlines stock fell 42 percent, from $30.82 per share to $17.50, when the market reopened after the attacks. Assuming that 4,000 of the options were bought by people with advance knowledge of the imminent attacks, these "insiders" would have profited by almost $5 million.
* On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls. Again, there was no news at that point to justify this imbalance; but American Airlines stock fell 39 percent, from $29.70 to $18.00 per share, when the market reopened. Again, assuming that 4,000 of these options trades represent "insiders," they would represent a gain of about $4 million.
* No similar trading in other airlines occurred on the Chicago exchange in the days immediately preceding Black Tuesday.
* Morgan Stanley Dean Witter & Co., which occupied 22 floors of the World Trade Center, saw 2,157 of its October $45.00 put options bought in the three trading days before Black Tuesday; this compares to an average of 27 contracts per day before September 6. Morgan Stanley's share price fell from $48.90 to $42.50 in the aftermath of the attacks. Assuming that 2,000 of these options contracts were bought based upon knowledge of the approaching attacks, their purchasers could have profited by at least $1.2 million.
* Merrill Lynch & Co., with headquarters near the Twin Towers, saw 12,215 October $45.00 put options bought in the four trading days before the attacks; the previous average volume in these options had been 252 contracts per day. When trading resumed, Merrill's shares fell from $46.88 to $41.50; assuming that 11,000 option contracts were bought by "insiders," their profit would have been about $5.5 million.
* European regulators are examing trades in Germany's Munich Re, Switzerland's Swiss Re, and AXA of France, all major reinsurers with exposure to the Black Tuesday disaster. (Swiss Re estimates that its exposure will be $730 million; Munich Re expects to pay out as much as $903 million.) It is not clear if any trades in these stocks ring alarm bells; and some negative earnings news announced shortly before the attacks means that a certain amount of unusual selling may have been a normal market reaction and not anything more sinister.
* Amsterdam traders have noted that there was unusual trading activity in KLM Royal Dutch Airlines put options before the attacks.