Comments on: It's Probably Not Another "Bin Laden Trade," But This Massive Mystery Options Play Hints at a Bearish End to 2009

By: Jason Simpkins

Jason Simpkins — Tue, 18 Aug 2009 13:07:00 +0000

To Our Readers:

We received a lot of good comments on this story, both via e-mail and in terms of the comments posted here. We thank you and continue to encourage such strong readers involvement and interest, which makes Money Morning the provocative and informative publication that it continues to be.

In terms of the contrasts between 2001 and 2007, the writer makes an excellent point. In 2001 there was hugely disproportionate shorting going on that, in retrospect, was clearly related to the horrific events of 9/11. That’s why in Sept 2007 the disproportionately large 120,000 contract position raised eyebrows because people were wondering if it was a repeat situation.

But even the more-recent situation was backdropped by a great deal of uncertainty, which is what makes these transactions so interesting to study. And as part of our mandate to look for the story behind the story, we’ll continue to search out similar topics of interest.

Many thanks;

William Patalon III
Executive Editor
Money Morning

By: Mike

Mike — Fri, 14 Aug 2009 02:26:30 +0000

I’m confused how the trader could stay unknown. Often Pete Najarian talks on Fast Money about someone trading 5,000 contracts of an option as if the buyer has superior knowledge but someone (more likely a group of someones) had to take the other side so that size trade was probably shopped around a few hours? days? Someone knows and it seems like they would talk. Did Bernie Madoff take the other side of the bi Laden trade? – he didn’t talk. Thinkorswim says orders for 20 lots get pulled aside and looked at before trading. I know when I’m trying to close 10 lots from relatively illiquid products I get fills if I route orders in 2 or 3 lot increments. Someone is always looking.

By: Johnny Appleseed

Johnny Appleseed — Thu, 13 Aug 2009 04:14:59 +0000

Reading the “tea leaves” is the phrase that jumps out at me — I really though the Dow would go to 6500 or lower and still believe that all the markets will go lower this fall as the Fed pulls back at the end of October, the “stimulus” paving of interstates nears completion, and folks may get a bit jittery when the jobless rate does not improve in what will, I assert, be a “jobless” recovery later on in late 2010 or even 2011 — the trade deficit, etc., I’ve considered that – but average joe is kind of important here — he’s not working, his house is being foreclosed upon, and his buddies see it happening — I sure as heck am not advising anyone on what to do b/c I don’t understand how macroecon. and financial econ. theory got turned upside down so quickly — or to the average person — so quickly – -it was really a long time coming and it’ll be a long time recovering. Good Luck folks and have fun while you’re doing it — and don’t play with money you may need to crack the mortgage, pay tuition, life insurance, property taxes, etc.

By: STUART SUGDEN

STUART SUGDEN — Wed, 12 Aug 2009 11:18:01 +0000

I believe this article tells only half the story. Are we not talking about Sep 2001, not Sep 2007? Prior to Sep 11, 2001 there were massive bets on airline stock prices going down, specifically the two airlines of the downed jets. at 10x the normal amount of put options (1000% increase). The purchasers of those put options made millions. There was a big sell off in the S&P from 1200 to below 900 in 2 weeks prior to 10/6/08. I am unclear why this would be associated with bin Laden. Nothing unusual happened in Sep 07