Was there insider trading before September 11?

Was there insider trading before September 11?

Akshit Gupta

This article written by Akshit Gupta (ESSEC Business School, Master in Management, 2022) presents the case whether there was insider trading before September 11?.


The plane crash on the World Trade Center on 11 September 2001 is an infamous occurrence of a terrorist attack that is etched in the hearts of every individual in the world. The attack had a severe impact on the global stock markets. The markets across USA saw a sharp sell-off as seen by the sharp decline of 14% in S&P 500 index in the first week after markets opened on September 17,2001. The market chaos was caused by the panic amongst investors and the loss in value the crash brought to the economy. The airlines and the insurance industries were the ones that were most affected by this crash.

The abnormal pattern in financial markets

During the investigation of the attack, political, economic and financial impacts of the crash were considered. Concerning the financial impact, an unusual pattern of trading was found to have happened in the stocks of major airline companies including United Airlines, American Airlines, Delta Airlines and KLM Airlines. The question of whether an abnormal trading pattern was observed in the financial markets, gauged the interest of common people.

As per the analysis done by market analysts, a discrepancy in the put-call options on the stocks of the mentioned airlines were discovered. As per Bloomberg data as quoted by Snopes, “On September 6, 2001, the Thursday before that black Tuesday, put-option volume in UAL (the parent company for United Airlines) stock was nearly 100 times higher than normal: 2,000 options versus 27 on the previous day.”

(Options are a form of derivative instruments that have an underlying stock and gives the investor a right to buy or sell the stock (not an obligation) at a previously agreed upon price and time. The options can be classified into two categories: put options and call options. The Put options give the investor the right to sell a stock at a predetermined price and time and is generally used by an investor when he/she anticipates a fall in the prices of the underlying stock in the near future. Whereas, a Call option gives the investor the right to buy a stock at a predetermined price and time (not an obligation) and is used by an investor when he/she anticipates a rise in the prices of the underlying stock in the near future.)

The analysis raised questions about the possibility of an insider trading activity that took place before the infamous plane crash. The chances of traders being aware about the possible terrorist attack on the World Trade Center was a cause of worry.


After exhaustive investigation, the various federal agencies including Securities & Exchange Commission (SEC) and Federal Bureau of Investigation (FBI) found no conclusive evidence on the stated abnormalities and no person was found involved in connection to the prospective act of insider trading which might have resulted in illegally generated high profits for some individuals.

But as far as the high level of trades are concerned, some level of abnormalities can be seen in the high put call ratio ranging between 25-100 times of the ratio seen in normal trading days. However, the lack of conclusive evidence led to no sanctions or penalties to the people who could have been involved in these activities. I would be happy to receive your opinions on the same. What do you all think about the trading patterns and the abnormalities observed in the months preceding the day of the attack?

Useful Resources

September 11 Put Call
Poteshman A. M. (2006) “Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001” The Journal of Business, 79(4): 1703-1726.
Wikipedia article
Business Insider Article

Article written by Akshit Gupta (ESSEC Business School, Master in Management, 2022).

This entry was posted in Contributors. Bookmark the permalink.

Leave a Reply

Your email address will not be published.