Abnormal Stock Trading
In the week prior to 9/11, an “extraordinary†amount of put options were placed on United Airlines and American Airlines stocks. If you are unfamiliar with the stock market, a put option is financial contract between two parties that will offer the buyer insurance against a company’s excessive loss. Someone who purchases a put option is expecting a stock to drop or they are protecting their assets. Between September 6 and 7, 4,744 put options were purchased on United Airlines stock, compared to 396 call options. On September 10, 4,516 put options were purchased on American Airlines, as compared to 748 call options. The trading activity was 600% above the normal level. United and American Airlines were the only two companies who had planes hijacked on 9/11. There were also an abnormal number of put options purchased in companies who had a stake in the World Trade Centers.
The majority of the suspicious trading was linked to Deutsche Bank Alex Brown. On September 12, 2001, the head of the bank, Mayo A. Shattuck III, resigned from office. The previous director of the bank was A. B. Krongard, who is the former head of the CIA. Citigroup Inc and Morgan Stanley also received an abnormal number of put options, and both companies held offices in the World Trade Centers, and saw a decrease in stock price after the attacks. On September 10, 2001, Raytheon, a defense contractor, had an anomalously high number of call options traded. The Securities and Exchange Commission launched an insider trading investigation, in which Osama Bin Laden was a suspect, but no action was taken. The trading was traced to areas all over the world, with most activity occurring in the UK, Italy, Germany, Japan, Switzerland, France and the US.
In the days prior to 9/11, the Chicago Exchange saw the highest number of United and American Airlines options traded in history. The names of the investors remain a mystery, because they never claimed their money. After it was discovered that a single U.S.-based institutional investor, with no conceivable ties to al Qaeda, purchased a large amount of these options, the 9/11 Commission dismissed the importance of the events. Unfortunately, the abnormal trading did not tip off law enforcement, as intelligence agencies constantly monitor the stock exchange and the sudden rise in activity could have allowed analysts to “connect the dots†and see that a major event was about to take place involving American Airlines, United Airlines and The World Trade Centers. However, nobody could have imagined the scale of the tragedy.
