Mystery Trader Who Bet Market Would Crash by September 21?
September 22nd, 2007The options have expired worthless. When I originally mentioned this, I asked, “Hedging or forknowledge?”
Hedging appears to be the answer.
However, in Summer of Fear Coming to a Close, Clif Droke theorizes that the put options deal itself was some kind of fear generating tactic. To me, that seems like it would leave way to much to chance with such large bet.
Why not buy some deep out of the money put options on the QQQQ (or some other index ETF) and then spend several million dollars to drive down the NASDAQ 100 futures (or some other index futures), triggering sell programs on the funds that are comprised of the companies in the targeted index? Do it on a day with a lot of bad news. “The market” will think the futures are dropping because of the bad news, when it’s mostly just your swindle in operation. The match you used to start the fire will quickly intensify as the winds of fear and panic move through the market. Well, lookee there, it wouldn’t take too long before those deep out of the money put options were suddenly in the money and worth a mint. I saw something like this happen to Amazon re: options. Jim Cramer talks about how he used to do it. Military deception is also interesting to read about with regard to market moves like this.
Again, if I was forced to guess, I’d say that this particular options deal was just cost-of-doing-business hedging by some fund. As I demonstrated above, there are much more effective ways to panic the herd into movement than simply buying options.
