Volume Spikes
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The story...

Very high amounts of trading occurred in American Airlines and United Airline put options immediately before 9/11, indicating someone expected their price to fall.

Our take...

This may be true, but it might be wise to establish exactly how high the trades were. And this is surprisingly difficult to do. Examples:

American Airlines: 1535 puts
United Airlines: 2000 puts

American Airlines: 4516 puts
United Airlines: 4,744 puts "between September 6 and 7"

American Airlines: 2,282 puts
United Airlines: 2,075 puts

American Airlines: 4516 puts
United Airlines: 3150 puts

The real figures are the last ones -- at least, we think -- but there does seem to be some confusion here. Were these levels exceptional, though?

Insight reported that there were repeated spikes in put options on American Airlines during the year before Sept. 11 (June 19 with 2,951 puts, June 15 with 1,144 puts, April 16 with 1,019 and Jan. 8 with 1,315 puts). In the same period, United Airlines had slightly more action (Aug. 8 with 1,678 puts, July 20 with 2,995, April 6 with 8,212 and March 13 with 8,072).

So it seems the American trades were the highest they'd been in the previous year (assuming the 4,516 figure it correct), although there may be reasons for that (see elsewhere). The United Airlines trades were less than half the spikes in April and March, though, suggesting they weren't as unusual as some people claim.

And that raises a problem for another aspect of this story, a claim originated by Mike Ruppert and retold here by David Ray Griffin:

These purchases were for two and only two airlines: American, and United, the two airlines whose planes were used in the attacks. And also, for Morgan Stanley Dean Witter, which occupied 22 storeys of the World Trade Centre. The price of these shares did of course plummet after 9/11. As the San Francisco Chronicle said, "these unusual purchases, which resulted in profits of at least tens of millions of dollars, raise suspicions than the investors had advance knowledge of the strikes".

For our purposes, the most important implication of this story follows from the fact that US intelligence agencies monitor the market looking for signs of imminent, untoward events. These extraordinary purchases therefore would have suggested to intelligence agencies that in the next few days, United and American airliners were going to be used in attacks on the World Trade Centre. That is fairly specific knowledge.

This is applying hindsight in a fairly dramatic manner, and it’s also leaving out crucial information: the American puts followed the trading day after the company had released a major profit warning, when you’d expect investors to believe the shares had further to fall, and the United Airlines trade volumes were lower than the spikes that occurred in March and April. If a United Airlines spike of 8,072 in March didn’t suggest an imminent attack, then why should 3,150 puts in September have any more effect?

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