Bin Laden's put options...

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Michael S. Glees

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Sep 13, 2001, 5:53:32 AM9/13/01
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Hi!

Have you already heard of the latest rumours? Osama Bin Laden is
supposed to have made stacks of money by buying put options before the
attacks. With stock prices falling after the attacks, he could have made
billions of dollars...

Cheers,
Michael

Warwick Dumas

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Sep 14, 2001, 7:45:47 AM9/14/01
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Michael S. Glees wrote in message <3BA0821C...@glees-online.de>...


A true irony of the system if it's correct and he got away with it.


Jez

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Sep 13, 2001, 9:39:23 AM9/13/01
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What's a put option?
Jez.

Big Mad Karl

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Sep 13, 2001, 9:57:24 AM9/13/01
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Jez <ma...@csv.warwick.ac.uk> wrote:
: What's a put option?

An option is the right to buy/sell shares at todays price, but in the future.

A put option is selling them. It's called an option as you don't *have* to
buy/sell, but you have the option not to, i=unlike a future, where you *are*
required to buy/sell.
the opposite is (IIRC) a GET.

You need to 'buy' the option, as it's a form of bet, the cost is based on
what the broker reckons will happen.

Options are useful, as it allows you to trade large volumes of shares which
you couldn't otherwise afford, so I could, say, GET 10,000 microsoft shares
at 100 pounds at the option price of 10p (1000 pounds, not 1,000,000) and
then buy them from the broker and immediatly sell them in (say) two months
at 150 pounds, making 500,000 for a stake of 1000, and as I can buy and sell at the same time
I need never own any shares.

A PUT works similarly, if the price falls, I buy at the future price, and sell at todays price,
again making money.

Of course, if I guessed wrong, I exercise the option not to, and lose the 1000
pound stake.

The broker usually wins...

Michael S. Glees

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Sep 13, 2001, 12:30:52 PM9/13/01
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Hi!

Big Mad Karl schrieb:

Well done. Being a banker myself, I couldn't have explained it better.

> The broker usually wins...

Well, gambling only pays when you're winning, as Genesis put it back in
1973...

Cheers,
Michael

Michael S. Glees

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Sep 13, 2001, 12:32:49 PM9/13/01
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Hi!

Warwick Dumas schrieb:

But he would have a problem if he had options for US stocks as their
markets are still closed. And AFAIK you cannot trade US stocks or even
bonds with US underlyings on other exchanges. (That's at least true for
the Frankfurt Stock Exchange.) So he wouldn't be able to gain maximum
profits...

Cheers,
Michael

Martin Eyles

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Sep 13, 2001, 6:42:20 PM9/13/01
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But it had a knock on effect on other stock - one which I'm sure would
be predicted if you knew about the plane-bombing

--
"He was weary, sweating and yet chilled."

Martin Eyles
martin...@ntlworld.com
http://homepage.ntlworld.com/john.eyles/martin/

Michael S. Glees

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Sep 14, 2001, 12:30:02 PM9/14/01
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Hi!

Martin Eyles schrieb:


>
> Michael S. Glees wrote:
> > Hi!
> >
> > Warwick Dumas schrieb:
> >
> >>Michael S. Glees wrote in message <3BA0821C...@glees-online.de>...
> >>
> >>>Hi!
> >>>
> >>>Have you already heard of the latest rumours? Osama Bin Laden is
> >>>supposed to have made stacks of money by buying put options before the
> >>>attacks. With stock prices falling after the attacks, he could have made
> >>>billions of dollars...
> >>>
> >>A true irony of the system if it's correct and he got away with it.
> >>
> >
> > But he would have a problem if he had options for US stocks as their
> > markets are still closed. And AFAIK you cannot trade US stocks or even
> > bonds with US underlyings on other exchanges. (That's at least true for
> > the Frankfurt Stock Exchange.) So he wouldn't be able to gain maximum
> > profits...
> >
> > Cheers,
> > Michael
> >
>
> But it had a knock on effect on other stock - one which I'm sure would
> be predicted if you knew about the plane-bombing
>

They said on n-tv (German subsidiary channel of CNN) that Japanese stock
exchange authorities were investigating transactions which took place
shortly after the attacks, as they are likely to be related to Osama bin
Laden's organisation.

Cheers,
Michael

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