One popular theory suggests there was a suspiciously high volume of “put” trading of airline stocks in the days just before 9/11. Since “put” trading is effectively a gamble that the price of a stock will decrease, conspiracy theorists surmise that trading “insiders” knew about the coming events of 9/11 and placed their bets accordingly. While this may look suspicious in isolation, the general volume of put trading on these stocks reached similar levels at earlier points in the year. The spike in American Airlines trading was the highest of the all airline companies involved, but that’s hardly surprising considering that the company had just released a major warning about possible losses. Indeed, general bad news about the airline industry prompted investment companies to advise their clients to take the put options, removing any need to blame the trading options on foreknowledge of the attacks.
Highly publicized allegations of insider trading in advance of 9/11 generally rest on reports of unusual pre-9/11 trading activity in companies whose stock plummeted after the attacks. Some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation. For example, the volume of put options – investments that pay off only when a stock drops in price – surged in the parent companies of United Airlines [UAL] on September 6 and American Airlines on September 10 – highly suspicious trading on its face. Yet, further investigation has revealed that the trading had no connection with 9/11. A single U.S.-based institutional investor with no conceivable ties to al Qaeda purchased 95 percent of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10. Similarly, much of the seemingly suspicious trading in American on September 10 was traced to a specific U.S.-based options trading newsletter, faxed to its subscribers on Sunday, September 9, which recommended these trades. These examples typify the evidence examined by the investigation. The SEC [Security and Exchange Commission] and the FBI [Federal Bureau of Investigation], aided by other agencies and the securities industry, devoted enormous resources to investigating this issue, including securing the cooperation of many foreign governments. These investigators have found that the apparently suspicious consistently proved innocuous.
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