{"id":194881,"date":"2008-08-12T05:00:00","date_gmt":"2008-08-12T10:00:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/08\/12\/was-the-fix-in-on-bear-stearns\/"},"modified":"2008-08-12T05:00:00","modified_gmt":"2008-08-12T10:00:00","slug":"was-the-fix-in-on-bear-stearns","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/08\/12\/was-the-fix-in-on-bear-stearns\/","title":{"rendered":"Was the Fix in on  Bear Stearns?"},"content":{"rendered":"<p>This is weird.  A week before Bear imploded, someone <a href=\"http:\/\/www.bloomberg.com\/apps\/news?pid=20601109&amp;sid=aM3K1AiyyN.E&amp;refer=home\">bought $1.7 million worth of put options<\/a>, 5.7 million at $30 and 165,000 shares at $25, expiring in a week.<\/p>\n<p>The thing was, when he placed the put options, Bear was trading at $62.97.<\/p>\n<p>Which meant that the only way that he could win was if the stock fell by <span style=\"font-weight: bold;\">more than 50% in a week<\/span>:<\/p>\n<blockquote><p><span style=\"color: rgb(0, 0, 153);\">&#8220;Even if I were the most bearish man on Earth, I can&#8217;t imagine buying puts 50 percent below the price with just over a week to expiration,&#8221; said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities &amp; Futures LP. &#8220;It&#8217;s not even on the page of rational behavior, unless you know something.&#8221;<\/span><\/p>\n<p><span style=\"color: rgb(0, 0, 153);\">&#8230;<\/span><\/p>\n<p><span style=\"color: rgb(0, 0, 153);\">John Olagues, who started trading options 30 years ago, said he has never experienced anything like it. Olagues, who runs a New Orleans consulting company called Truth in Options, also manages more than $1 million for a client who had a stake in Bear Stearns, which plummeted 94 percent in value on March 17. The drop prompted Olagues to start poring over options trading records and call officials at the CBOE.<\/span><\/p>\n<p><span style=\"color: rgb(0, 0, 153);\">&#8220;In just one tick, the company&#8217;s share price lost nearly all its value, a steeper drop than Enron&#8217;s right before its de- listing in 2001,&#8221; said 63-year-old Olagues, referring to the bankruptcy of Houston-based energy trading company Enron Corp. &#8220;I&#8217;ve never seen a stock perform like that in my life.&#8221;<\/span><\/p>\n<p><span style=\"color: rgb(0, 0, 153);\">Olagues, who was an options market maker at the Pacific Exchange and then the CBOE from 1976 to 1984, said he knows all about so-called time decay, implied volatility, arbitrage and the complexities of options trading. The former all-conference pitcher at Tulane University, who started Truth in Options in 2003, said he has found options transactions that convince him Bear Stearns was the victim of insider trading.<\/span><\/p>\n<p><span style=\"color: rgb(0, 0, 153);\">&#8220;I would stake my reputation on that,&#8221; he said.<\/span> <\/p><\/blockquote>\n<p>But will anyone go to jail?  Of course not.  Jails are for little people.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is weird. A week before Bear imploded, someone bought $1.7 million worth of put options, 5.7 million at $30 and 165,000 shares at $25, expiring in a week. The thing was, when he placed the put options, Bear was trading at $62.97. Which meant that the only way that he could win was if &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1004,985],"tags":[],"class_list":["post-194881","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/194881"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=194881"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/194881\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=194881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=194881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=194881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}