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September 19, 2007

$4.5 Billion Bin Laden Trade

posted by MR WAVETHEORY at 9/19/2007 08:37:00 AM
Someone is betting big that the stock market will crash on or before September 21, 2007. 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. That's according to someone who's been doing this about 25 years.

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.

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.

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Blogger Davis Freeberg said...

This is really fascinating. Great commentary. Is there any indication as to whether most of the contracts traded on the same day or is this something that has been accumulating even before the Fed cut? It's hard for me to believe that someone would try to day trade some kind of a terrorist event, but I suppose anything is possible.

9:51 AM  
Blogger MR WAVETHEORY said...

it's quite unbelievable. i couldn't believe myself but the numbers tell quite a story! it could be part of a very complex options strategy.

2:29 PM  

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