NOTE: From The Watchman..
I also interview Karl Denninger from whom this article and links derive from. It will be aired on our Friday 9 PM Pacific over American Voice Radio Network. Go to www.warn-usa.com or www.wingswatchman.org for more info on our WARN Radio: "Into the night" broadcast.
This came through our group.. As with all information, you need to investigate and look into it yourselves. This is just for your information only.
For more news from Our websites.. go to: http://wingswatchman.org http://ddayforamerica.com http://warn-usa.com
In Christ Jesus, Messiah Yeshua… The Watchman Dana G Smith
Update: I was able to get more info from Karl Denninger whose site was referenced in this post.
+++++++++This is his letter back concerning the Financial Armegeddon++++++++++++++++++++++++++++++++++
I referenced this trade in the following entry on the Market Ticker:
http://market-ticker.denninger.net/2007/08/financial-armageddon-warning-friday.html
And there is a LOT of speculation on this topic in the thread here (of
which I’m a participant, but not the originator)
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669
Both of these are on sites I operate; the Market Ticker is my financial
blog, while the Tickerforum is a public discussion area.
As for evidence regarding WHO put on these trades, I have none; I do not
know who placed those trades and as far as I know, if Homeland Security
knows, they ain’t talking.
But the implications are quite ominous.
Apparently similar trades have been placed on the European indices as
well (I do not have direct access to those exchanges, so I cannot verify
this.)
The SPY call spreads that were put on I noticed the day it happened,
however, and this is a VERY abnormal trading pattern.
As I’ve pointed out, there are a few possibilities; in no particular order:
1. The trades were allegedly coded as a spread (one of the subscribers
on my board called the OCC, which is responsible for clearing options
trades, and this is what he was told.) If so, then there are two
possibilities:
a. The writer was trying to write himself a loan on the options market –
a very high-cost loan. This implies that someone is in VERY BIG TROUBLE
financially and is attempting to stave off a collapse using "off the
radar" financing for the next three weeks. If this is the case, we are
at extreme risk of a financial shitstorm (not terrorism related, but a
major options market participant failure will cause a major dislocation
in the markets) If they cannot cover those positions on option
expiration Friday in September, all hell will break loose. The amount
of that loan is approximately $30 million – not a huge amount of money,
but nonetheless, it has to be paid back (plus trading costs)
b. The writer really did place a trade that only pays if the market goes
totally to hell. The amount of money involved here if he’s wrong is not
terribly large (only clearing/’trading costs; he got $5/contract at
inception and will pay $5/contract at expiration) but is still quite
significant – 120,000 contracts is going to cost a few hundred grand on
each side. If it pays, however, its worth insane amounts of money.
Potentially the entirety of the $30m net credit.
Or
2. The trades were miscoded and really are either:
a. A naked call write on the SPY (you’d have to be damn sure the market
is going down to do this, or you will get royally screwed.) You’d also
either need a hell of a lot of margin or someone willing to ignore
margin requirements.
Free Hot Prophecy Updates, News, Articles, Offers, and More, Sign Up Now!
Check out “The In The Light of Prophecy Package”
b. A covered write – effectively, a "pin" of a long SPY position at the
price as of the write. You will get nothing more out of any price
appreciation nor will you lose on the downside. If this is the
scenario, then $1.7 billion of SPY was "pinned" in this fashion. That’s
someone with a VERY big Spyder position they are afraid is going to lose
a LOT of value.
On the 700 SPX strike, I have no rational explanation for that trade.
At all. Nobody in their right mind would purchase 60,000 calls that far
in the money, and only a madman – or someone very sure that the market
was going to go totally to crap – would sell them short. The margin
requirements on that trade if you’re wrong would ruin anyone – literally
anyone (even someone like Bill Gates!) As such if that position is
"real" I have absolutely no rational explanation for it being placed.
As with all actions in the markets, unless you can "get inside someone’s head" it is not possible to know WHY someone placed a given trade.
However, one can draw reasonable conclusions about why a thing would
happen, given the possible reasons – and then apply your own weight to what you think is a reasonable explanation.
Karl Denninger
++++++++++++++++++++Start of Message++++++++++++++++++++++++++
http://www.anomalicresearch.com/ (Much alternative and suppressed
information)
***BILLIONS IN PUT OPTIONS PURCHASED BETTING THAT THE MARKET WILL
CRASH BY 9-21 BY 30-50%??! ***
Posted By: RayelansMailbag
Date: Friday, 24 August 2007, 6:34 p.m.
You can see why banks are running scared…they know the bottom can
fall out at any moment. I’d suggest keeping minimal deposits in banks
and holding on to cash.
ANOTHER HUGE SALE OF OPTION CONTRACTS
Date: Fri, 24 Aug 2007 19:43:25 GMT
Good Morning Everyone,
OTHER THAN THE EXPECTED FINANCIAL ANNOUNCEMENTS, ANYBODY HAVE A CLUE
AS TO WHAT THESE ‘INVESTORS’ ARE EXPECTING?
THEY DID IT AGAIN. . . . ANOTHER HUGE SALE OF OPTION CONTRACTS ON $4.5
BILLION WORTH OF STOCKS BETTING THE MARKET WILL LOSE 30%-50% OF ITS
VALUE IN FOUR WEEKS!
THIS SALE ON THE SPY.X AND THE ONE FROM YESTERDAY ON THE SPY.Y
(MENTIONED TWO STORIES BELOW) ARE BEING REFERRED-TO BY FOLKS IN THE
MARKET AS "BIN LADEN TRADES" BECAUSE ONLY AN ACT OF TERRORISM AKIN TO
9-11 (WITHIN THE NEXT FOUR WEEKS) COULD MAKE THESE OPTIONS VALUABLE.
There are 65,000 contracts @ $750.00 for the SPX 700 calls for open
interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not
a single trade. But quite a bit of $$ on a contract that is 700 points
away from current value. No one would buy that deep "in the money"
calls. No reason to. So if they were sold looks like someone betting
on massive dislocation. Lots of very strange option activity that I
haven’t seen before.
We have found a thread following this activity confirming that people
ARE monitoring it :
Av8rphil States the following :
There are 65,000 contracts @ $750.00 for the SPX 700 calls for open
interest. That controls 6.5 million shares at $750 = $4.5 Billion. Not
a single trade . But quite a bit of $$ on a contract that is 700
points away from current value. No one would buy that deep in the
money calls. No reason to. So if they were sold looks like someone
betting on massive dislocation. Lots of very strange option activity
that I haven’t seen before. I’ve been doing this about 25 years.
http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=8
The entity or individual offering these sales can only make money if
the market drops 30%-50% within the next four weeks. If the market
does not drop, the entity or individual involved stands to lose over
$1 billion just for engaging in these contracts!
Clearly, someone knows something big is going to happen BEFORE the
options expire on Sept. 21.
THEORIES:
The following theories are being discussed widely within the stock and
options markets today regarding the enormous and very unusual activity
reported above and two stories below. Those theories are:
1) A massive terrorist attack is going to take place before Sept. 21
to tank the markets, OR;
2) China, reeling over losing $10 Billion in bad loans to the
sub-prime mortgage collapse presently taking place, is going to dump
US currency and tank all of Capitalism with a Communist financial
revolution.
Either scenario is bad and the clock is ticking. The drop-dead date of
these contracts is September 21. Whatever is going to happen MUST take
place between now and then or the folks involved in these contracts will
lose over $1 billion for having engaged in this activity.
"$1.78 Billion Bet that Stock Markets will crash by third week in
September Anonymous Stock Trader Sells 10K Contracts on EVERY S&P/Y
"Strike" Shorts Stocks "in the money" effectively selling all his SPY
holdings for cash up front without pressuring the market downward This
is an enormous and dangerous stock option activity. If it goes right,
the guy makes about $2 Billion. If he’s wrong, his out of pocket costs
for buying these options will exceed $700 Million!!!
The entity who sold these contracts can only make money if the stock
market totally crashes by the third week in September.
Bear in mind that the last time anyone conducted such large and
unusual stock option trades (like this one) was in the weeks before
the attacks of September 11.
Back then, they bought huge numbers of PUTS on airline stocks in the
same airlines whose planes were involved in the September 11 attacks.
Despite knowing who made these trades, the Securities and Exchange
Commission NEVER revealed who made the unusual trades and no one was
ever publicly identified as being responsible for the trades which
made upwards of $50 million when the attacks happened.
The fact that this latest activity by a single entity gambles on a
complete collapse of the entire market by the third week in September,
seems to indicate someone knows something really huge is in the works
and they intend to profit almost $2 Billion within the next four weeks
from whatever happens! This is really worrisome."
Originally posted 2007-08-27 15:53:04. Republished by Blog Post Promoter