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Sunday, October 01, 2006

Five Days! Our Brain Hurts a Lot / We've Got Five Days! That's All We've Got 

According to two conservative websites, White House political strategist Karl Rove has been promising GOP insiders that there will be an "October surprise" before the midterm elections.
-- Raw Story, 9/21/06

From the standard disclaimer at FreeMarketNews.com, whence cometh the following item:
Free-Market News Network does not represent, warrant, or endorse the accuracy, reliability, completeness or timeliness of any of the information, content, views, opinions, recommendations or advertisements contained on, distributed through, or linked, downloaded or accessed from any of the information contained in this News Story.
That goes double for Zemblan patriot K.Z., the very model of level-headed equanimity, who sent the item our way, and needless to say, that goes triple for us.

Now the item, attributed to "a faithful reader and commentator" who goes by the vaguely allusive moniker "A. Magnus":

Do you like October suprises? Is there a big bang coming to hit the markets? If you believe that those in the know use insider information before major events then you might be interested on the HUGE number of October 6th put options for the big indexes. Check out the concentrated puts on the Diamonds DOW Trust (DIA).

Ditto for the S&P Depository Receipts (SPY).

And the NASDAQ (QQQQ).

Even the Market Vectors Gold Miners has significant puts for October 6th.

Make no mistake - something wicked this way comes, and the smart money has already taken preventative steps.

A put option, as explained to us many years ago by Distinguished Professor of Economics John Steed, gives a stockholder the right to unload his shares at a specified price within a specified time; it is, in cruder terms, a bet that the value of the stock is about to plummet.

Monday we've got Friday on Our Mind . . . .

UPDATE: From honored visitor Bad Imp in the comments immediately below:
An observation: All put options for the index tracking stocks mentioned (DIA, QQQQ, SPY) expire on 21 Oct. There's no such thing as an "October 6th put option".

I'm not sayin' the crew at 1600 Pennsylvania Ave aren't capable of any evil to advance their agenda, but something about this story isn't right.
Put options traditionally expire on the third Friday of the month (which would in this case be the 20th). However, Bad Imp's mention of 21 October set off a small alarm in our usually-dormant noggin; we didn't know why until this morning, when we made our daily pilgrimage to the Whiskey Bar and saw the following quote from retired Air Force Col. Sam Gardiner:
He says, "I know that some naval forces have already received 'prepare to deploy orders' [PTDOs], which have set the date for being ready to go as October 1. Given that it would take about from October 2 to October 21 to get those forces to the Gulf region, that looks about like the date" of any possible military action against Iran. (A PTDO means that all crews should be at their stations, and ships and planes should be ready to go, by a certain date--in this case, reportedly, October 1.) Gardiner notes, "You cannot issue a PTDO and then stay ready for very long. It's a very significant order, and it's not done as a training exercise."

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