28-year-old Russian Sergey V. German, who today was detained in southern Germany on suspicion of organizing the explosion near the bus of the soccer team “Borussia” (Dortmund), put that the football club will collapse after the attack and was planning to capitalize on this by using options, was announced on Friday, Federal prosecutors in Germany. Strategy the attacker could work, if the quotes Borussia fell at least 11%, but they fell only 4.5%, it is clear from stock data.
According to prosecutors, the suspect in the day of the attack, April 11, bought 15 thousand put options on the shares of Borussia Dortmund GmbH is the only German soccer club whose shares trade on the exchange. Put options give their owner the right to sell shares at a fixed price within a certain time — they can make a profit if the market price of the stock will decrease.
Put option (put option) — standard exchange contracts, under which a buyer acquires the right (but not the obligation) to sell the asset at a predetermined price by a given deadline. If the market price will be below a predetermined, the owner of the option can exercise his right to sell at a higher price. Thus, the conclusion of the option transaction allows the option holder to profit in a situation of falling market prices.
11 APR someone really bought 15 thousand put options issued by the Frankfurt Bank, DZ Bank, the shares of Borussia Dortmund, show data from the Bloomberg terminal. The deal was done at 11:16 on the time of Frankfurt (the blast near the bus of the soccer team happened at around seven in the evening). The options were purchased for €0,18 per share (each with one share), that is, the player spent €2700.
The exercise price of these options (“strike”) — €5,20. This means that considering the cost of option quotes Borussia was down to €5,02 per share, to provide at least break-even rates. We are talking about the “American” option that can be exercised at any time prior to its expiration on 16 June 2017. But shares of Borussia Dortmund at the end of trading on 11 April (the attack was made shortly after the close of trading) cost €5,61, the next day fell to €5.50 and reached at least 20 April at €5,36 — with such quotes the player would lose the amount initially spent on buying options.
The suspect took consumer loan for purchasing options, said the Prosecutor’s office, that is, to the loss of €2700 must also be added the cost of servicing the loan.
However, the attacker could gain profit many times more of their investments if quotes Borussia truly collapsed. This could happen if someone from players was seriously injured or killed, said the German Prosecutor’s office. For example, if the drop in prices by 29% to €4 (at this level the shares of Borussia Dortmund was trading a year ago), a profit of more than €15 thousand
A spokeswoman for the Prosecutor’s office said at a press conference that the suspect has invested in a total of three derivative instrument related to the shares of Borussia. He took the money April 3, invested in the options €79 thousand, and could count on a profit of more than €1 million if quotes the football club collapsed as he expected, said the Minister of internal Affairs of North Rhine — Westphalia, Ralf jäger, reports The Wall Street Journal. Details of transactions as of Friday evening, April 21, was not clarified. Data Bloomberg terminal show that, in addition to 15 thousand put options with a strike price of €5,20 purchased on the morning of 11 April, the same day was a deal at 15 thousand accounting for stock options “Borussia” with a strike of €4.80 and a deal at 15 thousand options with the same strike April 5.
Apparently we are talking about OTC options, in the case of these tools have no concept of leverage is margin, says the head of the analysis financial markets “KIT Finance Broker” Vasily Koposov. Theoretically, Sergey V. could earn, and without waiting for the execution of the option, the increase in the price of the option contract. According to the Bloomberg terminal, the contract price increased to €0,26 next day after the attack, compared to €0,18 for which the suspect could purchase call options on 11 April. “Failed to do so (to sell the option. — ) apparently due to the fact that the OTC contract — could not find a counterparty to the transaction,” suggests Koposov.
After the terrorist attacks in new York on 11 September 2001, the stocks of American Airlines and United Airlines, whose planes were hijacked by terrorists, during one trading day fell on 39-42%. After that, traders noticed high trading volume of put options on shares of their parent Corporation AMR and UAL during the days before the terrorist attacks, financial regulators and intelligence agencies have been studying these suspicions, but did not come to the conclusion that someone could know in advance about the attacks and capitalize on this.
The most famous scandal with the manipulation of options trading in Germany happened in 2008, when sports car manufacturer Porsche unexpectedly announced that he bought at the market options, giving the right almost 75% of the shares of the Volkswagen group (about 20% owned by German regional authorities). Before that, several hedge funds have opened up massive short positions in Volkswagen shares, hoping to drop their prices. Knowing that the available stock on the market is almost gone, hedge funds began to panic to close a losing position, the price of VW stock soared several times, and the Volkswagen became the most valuable company in the world.
What is known about the alleged terrorist
Sergey V. 28. According to the Prosecutor General’s office, he has a German and Russian citizenship. Recent years, he lived in tübingen.
According to investigators, the suspect booked a room at the hotel in March on two dates with 9 to 13 April and from 16 to 20 April, because then was not known exactly which games “Borussia” will play in Dortmund. The room was picked up, so that it the alleged terrorist was able to observe the scene. In the hotel he checked in on April 9, two days before the attack.