The story...

On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls. Again, there was no news at that point to justify this imbalance
http://www.hereinreality.com/insidertrading.html

Our take...

The suggestion here is that there were no market reasons for anyone to be selling American Airlines in quantity, and therefore only foreknowledge of 9/11 can explain the put options. And if you didn't bother checking out the facts, and simply believed the article, then you might be convinced. We prefer to check out these details for ourselves, though, and when we did this claim looked something less than accurate.

Take a look at the current share price trend, as an example. The American Airlines price was tailing off significantly in the weeks prior to 9/11.

The price had fallen over 20% in under two months. Might investors have thought it could fall further, and so be tempted to buy puts?

What’s more, immediately before 9/11 American Airlines released a string of bad news:

12:48pm 09/07/01 [AMR] AMR NOTES 'POOR' ECONOMIC CONDITIONS, 'FALLING' DEMAND

12:49pm 09/07/01 [AMR] AMR SAYS DEFERRING JET PURCHASES BEYOND FIRM ORDERS

12:47pm 09/07/01 [AMR] AMR'S AMERICAN RETIRING 5 MORE 727 AIRCRAFT EARLY

12:48pm 09/07/01 [AMR] AMR: AMERICAN TO RETIRE ENTIRE 727 FLEET BY END OF 2002

12:46pm 09/07/01 [AMR] AMR SEES Q3 LOSS 'CONSIDERABLY LARGER' THAN Q2'S

12:47pm 09/07/01 [AMR] AMR ANTICIPATES 'SIGNIFICANT' LOSS IN Q4

12:49pm 09/07/01 [AMR] AMR SAYS CUTTING 2001-02 CAPEX BY NEARLY $1.2 BLN

12:50pm 09/07/01 [AMR] AMERICAN AIR FEELS SQUEEZE OF FUEL PRICES, LABOR COSTS

1:07pm 09/07/01 AMR warns of wider losses - William Spain

2:44pm 09/07/01 Analyst: Airline Stocks Face At Least Another Bad Quarter

2:51pm 09/07/01 [AMR] AMR DOWN 3.4% AT $30.08 FOLLOWING Q3 WARNING

4:04pm 09/07/01 Boeing stock rating cut over commercial growth - August Cole

http://www.marketwatch.com/news/newsfinder/browse_day.asp?scid=0&siteID=mktw&strYear=2001&strMonth=9&strMonthName=September&strDay=7& strDayName=Friday&nextPage=371 41.5442824074-788605255

Seems significant to us, and very good reason to think American Airlines share prices would fall further. To investigate this, though, we checked out what investors were saying on the Yahoo! finance boards.

ALOHA EVERYONE !!!
by: TWAFA007 (M/Goldeneye, FL)
Long-Term Sentiment: Sell 09/07/01 02:59 pm
Msg: 13284 of 111136

Aloha...

As for stock quotes on AMR, I dont quote on stocks I dont own, but I will be a buyer after the 1Q,02, at the $20 mark +/- $2-3...
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=7080750&tid=amr&sid=7080750&mid=13284

This poster expected the price to fall by another 50% or so in the next 6 months. And expectations of bad news continued elsewhere:

BIG LAY-OFF to be announce next week!
by: kingikabod
Long-Term Sentiment: Strong Sell 09/07/01 11:44 pm
Msg: 13297 of 111136

thougths?



Bear Market Will Be Long
by: thefrenchcurve 09/08/01 12:18 am
Msg: 13300 of 111136

Market bottom and recovery won't happen until 2Q of 2002 about April 1st, give or take a few days. Look for the new "irrational exhuberance" to begin about the 65-7000 DJIA level.

AMR Losses may TRIPLE
by: nnyjou 09/09/01 03:15 pm
Msg: 13338 of 111136

American Airlines' Losses May Triple --

FORT WORTH, Texas, Sep 09, 2001 (Fort Worth Star-Telegram - Knight Ridder/Tribune Business News via COMTEX) -- AMR Corp., whose American Airlines unit managed to fill 76.6 percent of its seats in August, nevertheless said Friday that it expects to post a third-quarter loss "considerably larger" than the $105 million it lost in the second quarter before one-time accounting items.

GOLDMAN CUTS AMR ESTIMATES-again
by: nnyjou 09/10/01 01:31 pm
Msg: 13352 of 111136

-- [B] After AMR warning, Goldman again cuts '01 airline EPS estimates --

By Elaine Grant
St. Louis, Sept. 10 (BridgeNews) - Goldman Sachs analyst Glenn Engel on Monday lowered his 2001 per share estimates for Delta Air Lines Inc., American Airlines parent company AMR Corp., Northwest Airlines Corp. and United Airlines parent company UAL Corp. The cuts come just days after Engel reduced his estimates for all major airlines.
* * *
The new cuts are in reaction to a Friday warning from AMR that it expects a larger third-quarter loss than previously anticipated. Analysts had been expecting a loss of 39 cents per share for the third quarter, but AMR said it expected its loss for the quarter to be "considerably larger" than the 68-cent-per-share loss reported in the second quarter.

In other words, the picture all round was bad. That was obvious, a falling share price could be predicted, and it's no surprise that a newsletter might recommend buying puts. Maybe foreknowledge wasn’t required, after all.

But there’s also a further possibility. AMRO Analyst Ray Neidl told CBS MarketWatch said "you can expect to see further warnings from other airlines next week" (the week beginning 10/11).
"Airline Stocks face at Least Another Bad Quarter"
http://www.marketwatch.com/news/newsfinder/browse_day.asp?scid=0&siteID=mktw&strYear=2001&strMonth=9&strMonthName=September&strDay=7& strDayName=Friday&nextPage=371 41.6506365741-788611921

What if UAL had been about to release unexpectedly bad financial news? Or it was rumoured that might happen? That would hit the share price, obviously. If that had leaked out, then you would expect others to pile in early and benefit from the fall. It could be there was insider dealing pre-9/11, but relating to company finances, not the attack