Yesterday, I wrote that the odds placed on the Federal Reserve cutting interest rates are done by speculators over at the Chicago Board of Trade. This is where the Fed Funds futures are traded. Thus far, the odds favor a cut.
But, what will happen if they don't?
According to the "Financial News online us", "An anonymous investor has bought put option contracts on the DJ Eurostoxx 50 index that amounts to €6.9bn" or $9,593,760,000 dollars.
When buying a put or a call you must be right about the direction of a securities move as well as the timing of your bet. In this case, the "puts" expire on September 21st.
With all of the BS flying around in the financial world, it’s really hard to know what to believe. If someone actually bought $9,593,760,000 dollars in puts expiring on the third Friday in September, either that person knows what’s going to happen, or they are total idiots.
Since I don't believe someone with $9 billion dollars is a total idiot, I would like for a regulatory agency to explain to us what this person knew if they end up being right.
Yesterday marked the anniversary of 9-11, and no one has explained who bought the "put" options on United and American Airlines a week before September 11th occurred.
This being said, I am a little nervous, as well as skeptical, about the anonymous investor who plunked down $9 billion dollars on the market crashing before September 21st.
If this investor is right, don't you think they would have advanced knowledge about what the fed will do next week? Or, are they just placing a huge speculative bet?
We will find out next week.
