October surprise? Spike in Put Options...

I've no idea if this is significant or not, but I just read some interesting details at the following link that document a spike in Put Options having been placed recently. The number and amount of these options are similar in size to those placed before 9/11.

This is something I'd really like to see some discussion on....

Here's the link:

www.freemarketnews.com...

Very nice find, the exact kind we need to see a future hit coming our way..

I strongly believe that if we are going to be attacked it HAS to be before the elections because I do not honestly see the Republicans holding the house.. me technically being a Republican am voting Democrat this election, an attack will surly result in REpublicans winning...

The only problem with your post is I do not have a member ship to see the actual puts on the stocks, even Gold apparently has had puts which is odd if the numbers are really as high as you say, but not being a member I cannot see them. Could you externally quote them please?

EDIT: Just adding that according to that link, the Puts where set for Oct. 6th. Don't panic until anything happens, this should only be speculation, no more doomsday threads!! How ever, in the horrific event that something happens, remember the puts and know someone high up there knew.

[edit on 10/1/2006 by Rockpuck]

Rockpuck,

I've no idea whether this is significant or not- I've read that some people think that normal market forces are at play in an over-heated market, and I've read other opinions that see a sinister foreshadowing....

I'm researching this now, but I thought I'd also drop it here to see if anyone has any ideas and / or hard facts.

This would appear to be significant.
I'm surprised this isn't getting more attention.

Weren't the Put Options for Sept-11 placed on Sept-6? It may be jumping the gun but these supposed options set for Oct-6th could be the big red flag we've been looking for.

Can anyone provide more information?

nice first post periscope, how did you come across this?

[I'm giving this another bump]

Where's the discussion on this?
Soon as I saw this thread I thought people would be all over this.

"Do you like October suprises? Is there a big bang coming to hit the markets? If you believe that those in the know use insider information before major events then you might be interested on the HUGE number of October 6th put options for the big indexes.."

With all the chatter on here, the mainstream news, and other sources about an imminent attack, I would think there would be some discussion about "HUGE" number of Put Options for Oct 6th. Can anyone verify, as I'm not too market saavy, if there is indeed an abnormal increase in Put Options for that date?

I am not all that keen on market talk either.. From what I have read on 9/11 though there where significant puts on the airline industry, specifically the ones used in the attacks. If your making a put option on say gold, and it doesnt follow through you could loose millions. Two weeks ago when oil prices began to fall, a company cant remember which one, read it in the paper) actually lost billions betting natural gas prices would go up and instead went way down.

I ran this past a financially savvy person here at my office, and it scared the #$%& out of him.

His one consoling thought... whoever placed these options anticipates the NY markets still being open for action, and the "potential attack" would not be in NYC.

Another thing to keep in mind is that the markets are currently in a rather aggressive rally. The stock market is expected to break its all-time record any day now. It only makes sense that shortly after it does there will be a downward correction. There always is. Allthese puts may be peopel anticiapting that correction.

Originally posted by SkepticOverlord
His one consoling thought... whoever placed these options anticipates the NY markets still being open for action, and the "potential attack" would not be in NYC.

It fits in with the idea that the next attack might be in Chicago. It also fits in with the Alex prediction that an event will happen before election time...time will tell.

Originally posted by jtma508
Allthese puts may be peopel anticiapting that correction.

That's the other side... these put options are logical selections for profiting on broad market correction. And a high-volume of orders may simply mean that someone is betting on making a lot form a small correction.

There are two sides to this issue... but a startled day-trader is a rather interesting twist.

What concerns me about this is the number of people who "know" about something happening on a specific day (if indeed this does pan out to be another Sept. 11 situation) and to think of the low-down sliminess of people who would try to make money on it rather than expose it!



This isn't just disconcerting, it's really kind of insane-making!

Originally posted by SkepticOverlord
I ran this past a financially savvy person here at my office, and it scared the #$%& out of him.

His one consoling thought... whoever placed these options anticipates the NY markets still being open for action, and the "potential attack" would not be in NYC.

So your saying that if there is a potential attack, it should not be anticipated to hit NY? What about Washington.. or does it even matter because if a significant event happend to make all the markets go down the stock exchange wont be open? I don't think it was open after 9/11 anyways..

Okay...let's look at some basics before paranoia starts to set in.

First off, Great find Periscope.

Let's look at what a put option is for the uninitiated: A put option allows a buyer of a stock to buy that stock with the ability to sell it at its face value by some future date. Most put buyers by the nature of the buy are bearish. Meaning they expect the price to fall below the face value. This was why the airline put options just before 9/11 were so alarming: the buyers were betting that airline stocks would drop like a rock in the near future -- and they did after the attacks.

For more info on put options, read this article

Now what did he find?

Mainly he is highligting funds that essentially track the larger stock indexes. That then goes to the pemise that something bad is about to happen.

If put buyers are placing bets that they can sell the low face value of these funds for higher than it's currently trading by some key date, then they're betting that the markets are about to sink.

That's frightening to a certain extent, but it doesn't necessarily mean preknowledge of a terrorist attack.

The put buyers also seem to be violating their own theory by the last purchase: The GDX fund.

Here's a description:

The investment objective of the Market Vectors Gold Miners Index Fund (GDX) is to provide equity results that correspond generally to the price and yield performance of publicly traded equity securities of gold and silver mining companies, as represented by the Amex Gold Miners Index (GDM), a specified market sector Index published by the American Stock Exchange (Amex). The Amex Gold Miners Index (GDM) is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.

Okay, common sense would dictate that if anything to drag the markets down were to occur (i.e., a terrorist attack were to occur on U.S. soil) then commodities like metals, food, and other tangible basics would go ballistic. Instead, these put options seem to counter this thought.

The bet here is that the stocks of companies that make their money mining gold and silver are about to plummet. That seems counter to the something-wicked-this-way-comes scenario.

Except, and here's my theory, while gold and silver prices will continue to jump -- which they have by and large over the past year -- the metals are still largely driven by consumer demand for jewelry and other precious luxury items.

If suddenly something drastic were to happen to the U.S. economy, then the demand for jewelry, and thus gold and silver, would drop. Sorry honey, can't afford that diamond and gold tiara for you this Christmas.

If that were to happen, then demand to mine new amounts of gold and silver would plummet. That would also constrict the supply of gold and silver, since no new amounts are being input into circulation, and hence would drive up the price of gold and silver -- which is expected to happen during times of crisis (see Hezbollah/Israeli war).

I hate to be Chicken Little, but this does does give me pause.

Here's more info on these stocks:

American Stock Exchanges' Diamonds Trust, Series 1

the Trust representing proportionate undivided interests in the portfolio of securities consisting of substantially all of the component common stocks, which comprise the Dow Jones Industrial Average (the DJIA). The Trust seeks to match the total return of the DJIA. The Trust's holdings are comprised of the 30 stocks in the Dow Jones Industrial Average, which is designed to capture the price performance of 30 United States blue-chip stocks.

]The Trust was created to provide investors with the opportunity to purchase a security representing a proportionate undivided interest in a portfolio of securities consisting of substantially all of the common stocks, in substantially the same weighting, which comprise the Standard & Poor's 500 Composite Price Index

The exchange-traded fund S&P Depositary Receipts SPDRs (AMEX: SPY) has closed above every resistance level during this current rally and today touched new intra-day rally highs. The S&P SPDRs are only 0.7 cents from a new closing high. We expect the S&P SPDRs to reach that new closing high shortly. Almost every market analyst we watch has talked down this rally. There is nothing better than a rally that keeps on making new highs while the experts say it will not continue. Once new highs are reached, look for the rally to pick up steam.

Info on the QQQQ

GDX info


I also found a blog that postulates that something is going to happen on Friday, as indicated by these put options....


5 days left?!

[edit on 2-10-2006 by behindthescenes]

[edit on 2-10-2006 by behindthescenes]

[edit on 2-10-2006 by behindthescenes]

Great summary Behindthescenes.

I did not get the gold either.. and even if say something happened where buyers no loner bought jewlery.. still I think a significant amount of traders would want to move some of their funds into a commodity such as gold. It is safe, if troubled times are coming in the end Gold will still be worth something where as a company may not be.

May the markets are getting ready for a major correction that will cause all stocks to go down a little, though it has been said again and again we need to see the signs. The stock markets the best sign we have to see if something may just be coming our way, and with all the speaches from AQ over the past month, calling for all Muslims to leave with a final warning, calling for the American Heroshima.. If there was to be an attack before the elections would seem most probable. Any military exercises going on during the 6th?

I also have a cooler head, nonalarmist theory about the situtation.

If you take time to play around with these stocks in Marketwatch.com, you will see that indeed there are put spikes in October. But there are also spikes in November and December. And even a little into next year. All months through March of '07 show significant put options on these stocks.

Which leads me to my evolving theory: Perhaps we're seeing a more politically-motiviated investment cue. Could the investors be betting on a Democratic sweep of both houses? That would certainly throw the economy into a tailspin for a limited time.

Also we're again flirting with all-time DOW highs. If we reach it, there's a significant psychological fear factor that could come into play, which could lead to a market reversal.

Just thoughts.

Although, I still keep remembering that September article about Karl Rove promising his GOP candidates an Oct. Surprise.....

Sounds scary enough...

Could this also be a conspiracy of another sort?

Could the 'powers that be' be constructing another style of scare tactic, knowing that people now monitor the stock markets for exactly this purpose... to have an advanced warning to an impending attack?

Would keep the fright tactics moving along nicely I think, and nothing of death and destruction to tie into this construction.

behindthescenes-

In the course of digging into this, I think that the data is saying that the expiration date of these options is the end of the 3rd week in October. So, do you think that they're going to expire on the 6th or the 20th?

I left a voicemail for my broker; when he gets back to me I'll post what I find.

Originally posted by periscope
behindthescenes-

In the course of digging into this, I think that the data is saying that the expiration date of these options is the end of the 3rd week in October. So, do you think that they're going to expire on the 6th or the 20th?

I left a voicemail for my broker; when he gets back to me I'll post what I find.

Traditionally, a put option expires by the 3rd Friday of the month the purchase is made. In this case, the 20th. But that's traditional. Without seeing details of the puts, one could postulate that the seller changed the expirations to make the deal more or less risky for them. They could have a shorter expiration or a longer one.

As for that article I found, I don't know why the writer is expecting something this Friday....

I just noticed this as well.

Notice the prices, both the current price and the put option prices.

While it's true that the general bet is for prices to go lower, we're not talking by much, which leads me to believe that this is a short term bet on the existing price.

For instance, DIA:

Currently trading, as of noon Oct. 2 for $117 per share. PUt options range from $80 to $128. But if you look at the volume of trading activity at each level, the two prices that stand out are $96 and $116.

The $96 is striking though because the investors are betting that DIA will fall below $96 a share. Even if the share reaches $95, that would be an 81% decline from current prices.

With QQQQ, at $40.60 per share currently, the puts range from $26 to $45. The highest volume bet is $41 -- so those guys already made their money. The cluster of volume buys is between $39 and $42 per share, with a small volume spike at $34 per share.

The conclusion I draw? Well, I don't have one solidly. Except that the investor's bets overall don't need much downward movement to make money.

Curious.

A friend of mine, a couple of months ago, took an options trading seminar here in the Dallas area. The silly thing was $2900, and I told him he was crazy.

Anyway, he said it was a pretty informative seminar and all, but the one odd thing that stood out in his mind was that the people running the seminar kept stressing to everyone to only do CALL options. They told everybody that PUTS were a little too complicated for the seminar at the time and required a lot of extra paper work, so they would just focus almost exclusively on CALLs.

I told him that does sound fishy. And of course they were real keen on finding out if anyone had lots of extra cash reserves. He obviously didn't, and I told him it was best that he didn't have any extra money. I told him they were probably
setting people up for some kind of scam later on down th road, like what happened to alot of day traders years ago.