9/11 Insider Trading — Put Options Conspiracy

Overview

On September 10, 2001 — one day before the deadliest terrorist attack in American history — someone placed an enormous bet that American Airlines stock was about to plummet.

The bet came in the form of put options: financial contracts that pay off when a stock’s price declines. On that single day, 4,516 put options were purchased on American Airlines, compared to a daily average of approximately 748. That’s a 604% increase. The day before, 4,744 put options were purchased on United Airlines — roughly 25 times the normal volume. Both airlines would, within 24 hours, have their planes hijacked and flown into buildings.

Similar spikes appeared in the stocks of companies headquartered in the World Trade Center. Morgan Stanley, which occupied 22 floors of the WTC, saw 2,157 put options purchased on September 7 — versus an average of 27 per day. Merrill Lynch, based in the WTC financial district, showed a 12-fold increase in put options.

On September 12, the Chicago Board Options Exchange flagged the trading as suspicious. The SEC launched an investigation. The FBI opened a parallel inquiry. The 9/11 Commission mentioned it — in a footnote. And then, for all practical purposes, the matter was declared resolved and everyone moved on.

The put options mystery is one of the most persistent 9/11-related questions because, unlike most 9/11 conspiracy theories, it doesn’t require believing that the government demolished buildings with controlled explosives or fired missiles at the Pentagon. It requires believing something much simpler: that someone knew the attacks were coming and decided to make money from that knowledge. Given everything we’ve learned about 9/11 intelligence failures — the infamous “Bin Laden Determined to Strike in US” presidential brief, the FBI agents whose warnings were ignored, the missed surveillance opportunities — the idea that someone somewhere had advance knowledge isn’t tinfoil hat territory. It’s a documented intelligence failure, and the only question is how specific that knowledge was and who had it.

The Evidence

The Numbers

The trading anomalies were first identified by the Chicago Board Options Exchange on September 12 and subsequently analyzed by multiple researchers. The key data points:

American Airlines (AMR):

• September 10: 4,516 put options purchased (vs. average of ~748/day)
• Put/call ratio: 60:1 (normally close to 1:1)
• No comparable trading spike in any prior period

United Airlines (UAL):

• September 6: 4,744 put options purchased (vs. average of ~188/day)
• Put/call ratio: 25:1
• Again, no comparable trading spike in prior periods

Morgan Stanley (22 floors of WTC):

• September 7-10: 2,157 put options (vs. average of 27/day)

Merrill Lynch (near WTC):

• September 7-10: 12,215 put options (vs. average of ~252/day)

Reinsurance companies (Munich Re, Swiss Re, both exposed to enormous WTC claims):

• Anomalous trading activity in the days before 9/11

Notably, there were no comparable spikes in airlines or companies unrelated to the attacks. If the trading were random noise, you’d expect to see similar spikes across the broader market. The anomalies were concentrated precisely in the companies that would be most affected by the attacks.

The Academic Analysis

The most rigorous academic analysis came from Allen Poteshman of the University of Illinois, published in the Journal of Business in 2006. Using econometric models, Poteshman examined whether the pre-9/11 put option volume was consistent with normal trading patterns. His conclusion: the put option activity on American Airlines was “consistent with investors trading on advance knowledge of the attacks.”

Poteshman’s analysis controlled for market conditions, historical trading patterns, and various confounding factors. It remains the most cited academic study of the trading anomalies and has not been rebutted in peer-reviewed literature.

A separate analysis by Marc Chesney, Remo Crameri, and Loriano Mancini of the University of Zurich, published in the Journal of Empirical Finance in 2011, examined a broader range of securities affected by 9/11 and similarly concluded that the trading patterns were statistically anomalous — “consistent with insiders anticipating the events.”

The Non-Academic Response

Not everyone found the evidence convincing. The most prominent debunking came from the 9/11 Commission itself, which devoted a single footnote to the topic:

“Exhaustive investigations by the Securities and Exchange Commission, FBI, and other agencies have uncovered no evidence that anyone with advance knowledge of the attacks profited through securities transactions… A single U.S.-based institutional investor with no conceivable ties to al Qaeda purchased 95 percent of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10.”

The Commission’s argument: the same investor who bet against United Airlines also bought American Airlines stock — an inconsistent strategy if you knew both airlines’ planes would be hijacked. Therefore, the trading was coincidental.

This explanation has been challenged on several grounds:

1. The investor’s identity was never publicly disclosed
2. The “115,000 shares of American” purchase could have been a hedge, a separate strategy, or a deliberate obfuscation
3. “No conceivable ties to al Qaeda” does not mean “no foreknowledge” — foreknowledge could have come from intelligence sources, not terrorist organizations
4. The Commission’s single-footnote treatment of a topic this significant struck many observers as dismissive

The Buzz Krongard Connection

One name that surfaces repeatedly in discussions of the 9/11 put options is A.B. “Buzz” Krongard. Krongard was the Executive Director of the CIA from 2001 to 2004 — the third-ranking official in the agency. Before joining the CIA, Krongard was the chairman of the investment bank Alex. Brown & Sons, which was acquired by Bankers Trust, which was subsequently acquired by Deutsche Bank.

Deutsche Bank’s Alex. Brown unit was identified as the bank through which many of the suspicious put options were placed.

Conspiracy theorists have pointed to this connection as evidence of CIA foreknowledge of the attacks. The logic: a former head of the bank through which suspicious trades were placed became a senior CIA official. The counter-argument: Krongard left Alex. Brown in 1998, three years before 9/11, and there’s no evidence he maintained trading authority or knowledge of specific transactions at the bank.

The Krongard connection is circumstantial. But it illustrates why the put options theory persists: the financial world and the intelligence world overlap in ways that make the usual “no conceivable ties” reassurances less reassuring.

The Investigation (or Lack Thereof)

What the SEC Did

The SEC launched an investigation into pre-9/11 trading within days of the attacks. According to the Commission, the SEC and FBI ultimately investigated 103 suspicious trading cases. They concluded that the trading was explained by legitimate market activity and that no traders had connections to terrorism.

What the SEC Didn’t Do

What the SEC didn’t do is equally telling:

• No public report: Unlike most major investigations, the SEC never published its findings. The conclusions were communicated to the 9/11 Commission but not to the public.
• No trader identities: The identities of the traders were never disclosed, citing privacy and investigation concerns.
• No FOIA compliance: Attempts to obtain the investigation records through Freedom of Information Act requests were largely unsuccessful, with the SEC claiming the records had been destroyed as part of routine file management.

The destruction of investigation records is the detail that keeps conspiracy theorists up at night. The SEC maintains that record destruction was routine and unrelated to the 9/11 investigation. Critics point out that destroying records of the financial investigation into the worst terrorist attack in American history is, at minimum, a remarkably poor institutional decision.

What Foreknowledge Would Mean

The put options question matters because of what it implies. If someone did profit from advance knowledge of 9/11, the possibilities are limited:

1. Al-Qaeda associates traded on their own advance knowledge (possible but risky — it would create a financial trail leading directly to the terrorists)
2. Intelligence agencies had more specific foreknowledge than they’ve admitted (the most commonly alleged scenario)
3. Financial insiders received tips from intelligence or law enforcement contacts who knew an attack was coming
4. The trading was coincidental (the official explanation)

The first three scenarios all imply that someone knew the attacks were coming with enough specificity to identify the airlines involved and the buildings targeted. This doesn’t necessarily mean anyone in the U.S. government was complicit in the attacks — it could mean that intelligence agencies had more warning than they’ve acknowledged and failed to act, which is a different (and less dramatic) claim than “inside job.”

Cultural Impact

The 9/11 put options story has become one of the most frequently cited pieces of evidence by 9/11 conspiracy theorists, precisely because it doesn’t require exotic theories about controlled demolition or missile strikes. It requires only believing that someone made money from foreknowledge — something that happens routinely in the financial world (insider trading is a multi-billion-dollar enforcement problem).

The story has been featured in the documentary Loose Change, Michael Moore’s Fahrenheit 9/11, and numerous books about 9/11. It regularly appears in Reddit discussions and conspiracy forums as one of the “smoking guns” of 9/11 foreknowledge.

For mainstream analysts, the put options remain an uncomfortable loose end — not conclusive evidence of conspiracy, but not satisfactorily explained either.

Timeline

Sources & Further Reading

• National Commission on Terrorist Attacks Upon the United States. The 9/11 Commission Report. 2004. (Footnote 130.)
• Poteshman, Allen M. “Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001.” Journal of Business, 2006.
• Chesney, Marc, Remo Crameri, and Loriano Mancini. “Detecting Informed Trading Activities in the Options Markets.” Journal of Empirical Finance, 2011.
• Priest, Dana, and William Arkin. Top Secret America. Little, Brown, 2011.
• Griffin, David Ray. The New Pearl Harbor Revisited. Olive Branch Press, 2008.
• SEC enforcement records (partially available through FOIA requests).

Related Theories

• 9/11 Inside Job — The broader 9/11 conspiracy theory
• 9/11 Advance Knowledge — Intelligence failures and foreknowledge claims