‘Bin Laden’ Options Trades
As if the mortgage-market meltdown isn’t enough to spook investors, some market players are worrying about unusual options bets that some observers have dubbed “Bin Laden Trades.” The blogosphere and options trading desks have been rife with speculation about these trades, which are unusually large bets that the market will make a huge move in the next month. Some entity, or entities, has taken a large position on extremely deep in the money S&P 500options, both puts and calls, that won’t pay off unless the market undergoes an extremely large price move between now and the options’ expiration on Sept. 21.
Someone is making some pretty big bets that the market is going to dramatically move in the next few weeks. As the article further notates, it is reminiscent of the action prior to September 11th when large out of the ordinary put contracts were placed on many of the publicly traded U.S. airline companies. So naturally, this is causing a stir on the street as it could be an indicator of an upcoming event…or perhaps it is just someone attempting to manipulate the level of fear already in the market.
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S&P 500, what industries is that heavy in that wouldn’t necessarily be as heavy in other indices?
Nevermind, answered my own question:
http://www.indexarb.com/indexComponentWtsSP500.html
Is S&P more oil/energy heavy?
That index is a cross section of many industries, in an attempt to reflect the economy as a whole. The index as a whole can be traded via an ETF know as a SPDR…which would allow someone to short the entire market.