Danny Schechter - ColdType

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share price. They were betting that a stock selling for $60 share
would go down to thirty.
Bamber admitted they were concerned, “we did start to
notice on the Monday, Tuesday, and Wednesday some abnormal
trading patterns going on with regard to the depth of the
money on put options, on Bear Stearns stock ... Anyone who
owned that thirty-dollar strike put option with an expiree in
ten, nine, and eight days would be able to sell the stock at
thirty dollars …”
According to Bloomberg News, the people who owned
those shares ended up making $250 million on an investment
of $1.7 million in less than a week.
I told Bamber, “The last time I heard about puts was on
September 11, 2001. We learned later that people had taken
out investments or Puts in American and United Airlines
before 9/11 expecting those stocks to go down. That’s still a
mystery.”
Bamber agreed. “Well, yes,” he said. ”In terms of prior to
9/11 there was unusually high volume in the put options on
airline stocks, American and United, as well as some of the
reinsurance companies. So someone knew how to profit from
that event. A similar scenario played out right here.”
I put it to him, “you know we’re taught that markets have
their own laws, and that financiers are into due diligence,
monitoring money closely and responsibly because it’s in their
interest to do so. But yet, when you look at the markets it feels
like they are an insane asylum.”
Bamber agreed laughing at the sentiment of my statement,
“(Laughs.) A good way to describe it, given the volatility that
we’re in right now.”
Bamber acknowledged that there may have been an “element
of fraud.”
He explained, “There’s obviously an element of fraud, you’re