Market Crash Forecast Suggests New 9/11

[Shapecity]

<div class="quote_poster">Quote:</div><div class="quote_post">A mystery trader risks losing around $1 billion dollars after placing 245,000 put options on the Dow Jones Eurostoxx 50 index, leading many analysts to speculate that a stock market crash preceded by a new 9/11 style catastrophe could take place within the next month.

The anonymous trader only stands to make money if the market crashes by a third to a half before September 21st, which is when the put options expire. A put option is a financial contract between two parties, the buyer and the writer (seller) of the option, in which the buyer stands to benefit only if the price of the asset falls.

"The sales are being referred to by market traders as "bin Laden trades" because only an event on the scale of 9-11 could make these short-sell options valuable," reports financial blogger Marc Parent. Dow Jones Financial News first reported on the story.

The trader stands to make around $2 billion from their investment should an event trigger a market crash before the third week in September.</div>

Source: Prison Planet

Keep your eyes and ears open boys.

 

[Chutney]

This reminds me of Casino Royale. I think the bad guy in the movie would do the same thing, except he'd bank on individual companies going through unexpected disasters. I really don't understand how this works, let alone why its allowed. I mean, the mere act of making this investment can be considered an act of terror.

 

[Shapecity]

Let me try to make a simple sports related analogy.

For example, everyone expects the Colts to have another amazing season after winning the Superbowl. The odds for them to repeat are strong.

However, you want to make a risky bet for a larger payoff by betting the Colts are going to miss the playoffs.

To limit the risk you have knowledge Peyton Manning is going to miss the entire season from unforeseen accident.

 

[Chutney]

<div class="quote_poster">shapecity Wrote</div><div class="quote_post">Let me try to make a simple sports related analogy.

For example, everyone expects the Colts to have another amazing season after winning the Superbowl. The odds for them to repeat are strong.

However, you want to make a risky bet for a larger payoff by betting the Colts are going to miss the playoffs.

To limit the risk you have knowledge Peyton Manning is going to miss the entire season from unforeseen accident.</div>
Yea, I think I understand it now. But I still don't get why these type of investments are allowed in the first place. I mean, it almost seems to encourage foul play.

 

[Shapecity]

<div class="quote_poster">Chutney Wrote</div><div class="quote_post">Yea, I think I understand it now. But I still don't get why these type of investments are allowed in the first place. I mean, it almost seems to encourage foul play.</div>

You have to have buyers and sellers for the stock market to work. This is just a form of selling and buying in the opposite direction.