Off hand I'd just about have to say the person who posted that article doesn't know what he's talking about.
<<<The morning of 911, US Bonds moved in 3 to 4 minutes by 1.5 points back and forth three times or $1,500 per contract
in seconds three times in less than 4 minutes.>>>
I'm not a bond trader, but that sentence is pretty much sense free. Bonds are typically traded based on a face value of $1000. I'm not 100% sure about bonds, but an option contract on stocks is 100 shares per contract. 1.5 points would be $150 on one contract, which suggests to me this person is confusing stock market lingo with bank loan lingo.
<<<Sell a call option or buy a put option on Microsoft stock at $100 per share and then liquidate the option at $50, you just made $50 per share on your "short" option.>>>
On 9/11 MSFT was trading around $50, so there isn't much chance anyone would be buying calls at $100 a pop. Slightly out of the money calls with a short term expiration were probably going for around two bucks. If they were out of the money upon expiration, the seller gets to keep the two bucks. Since MSFT spiked after a brief dip around 9/11, anyone selling calls got clobbered. The same is true for the trader who bought puts unless he had his finger on the trigger when the markets reopened.
<<<A derivative gives the ability for selling the market "short" on paper even if you do not own the stock, commodity, currency, bonds, etc.>>>
Does this mean he thinks a trader who sells short outright owns the stock?
<<<Sell a gold futures contract (on paper) at $400 / oz then buy it back at $200, margin requirement to do so on 100 ounces is $1000. Now $400 - $200 = $200 x 100 ounces = $20,000 using $1000>>>
Once again we have Mr. Clueless confusing the option price with the unit price. In addition, our little friend appears to be unaware options require cleared funds and are not marginable. Ignoring the absurdity of the price examples, that particular trade would have required $40K in cleared funds to be accepted.
Off hand I'd say that post is the work of a fool. He obviously wouldn't know an option if one came up and bit him on the leg, and I can't think of any reason to assume the quality of his research is any better in regards to the rest of his claims.
As things stand, the issue of the airline puts is a grey area. The investigation shouldn't have taken 2 years, no disclosure of the identities of those behind the trades has been made, and no explanation for why the proceeds of some of those trades went unclaimed has been offered. |
