clear
Friday July 21st, 2017 12:37AM
1:45PM ( 10 hours ago ) Weather Alert

AP Explains: How suspected bus bomber hoped to make millions

By The Associated Press
Related Articles
  Contact Editor

LONDON (AP) — As get-rich-quick plans go, it wasn't well thought out.

The man accused of bombing the bus carrying the Borussia Dortmund soccer team allegedly hoped to make millions off an expected slump in the team's share price by using an obscure financial trade, a "put option."

These trades are typically used by professional traders at banks or investment firms, suggesting the bomber had some experience with financial markets. The average person who wanted to make money off a dropping share price would more likely have taken out a bet on one of innumerable gambling websites or used a day-trading website.

"It indicates someone with a bit more financial awareness than your average person," said Chris Beauchamp, senior market analyst at IG Group in London.

___

WHAT KIND OF TRADE DID HE USE?

Buying "put options," as the suspect allegedly did, gives the trader the right to sell a stock at an agreed price. So if the stock drops, the trader can use the option to sell the shares at the higher price. By then buying them back at the lower price on that day, he earns a profit.

It's a form of insurance, and is something companies use to protect themselves against the risk of volatility in financial markets.

Options can be very expensive to buy, although online trading systems now make them accessible to anyone, experts say. German prosecutors say the 28-year-old suspect took out a five-figure loan to buy thousands of them against Borussia Dortmund's shares on the same day as the April 11 bus attack. The team is the only top-league German club that has shares listed on a stock exchange.

___

WHY SUCH A COMPLICATED TRADE?

Trading experts say it would have been easier to profit from a drop in the share price by simply "shorting" the soccer team's stock through an online trading website. Shorting a stock means selling shares you don't own, with the obligation of buying them back at some point. That can be risky, however, causing big losses if the shares go up instead of down.

While more complicated to trade in, the advantage of a "put option" over "shorting the stock" is that the trader has the right to decide whether — and when — to use it. If the stock had gone up, instead of down, he could simply have canceled the trade at a relatively low cost.

"He may have wanted to wait and see how the shares reacted and cash in later, for example in case the shares went up in the short term," said Beauchamp.

___

COULD THE BOMBER HAVE MADE A LOT OF MONEY?

In theory, yes, though exactly how much is unclear. The bombing damage was, thankfully, limited although one of the team's defenders was injured and had to have surgery. But if the alleged bomber had killed Dortmund team members, that would probably have caused the shares to drop sharply, giving him the opportunity to make a big profit.

The plan, however, was carried out clumsily. The suspect bought the options from a computer at the same hotel where the soccer team was staying, authorities said. The size and timing of the trade raised the attention of investigators. So even if he had succeeded in causing the shares to drop, he would have been easy to catch.

The plan also seems crude in an age when trading scams tend to rely on more sophisticated — and less deadly — schemes like using insider information or hacking to influence a share price.

Shares in Borussia Dortmund actually rose the day after the bombing attempt and only fell when the team lost its Champions League match later that evening.

On Friday, they rose 2.5 percent to 5.50 euros apiece.

  • Associated Categories: Associated Press (AP), AP Sports, AP National News, AP Online National News, AP World News, AP Business, AP Business - Economy
© Copyright 2017 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Experts: Convicting ex-officer in teen's death will be tough
Legal experts say authorities who've charged a white suburban Dallas police officer with murder in a black teenager's death face a tough task in getting a conviction
1:49AM ( 21 minutes ago )
Kershaw, Bellinger lead Dodgers to 10-2 win over Padres
Clayton Kershaw pitched into the eighth inning, rookie Cody Bellinger hit a grand slam and drove in five runs, and the Los Angeles Dodgers beat the San Diego Padres 10-2
1:17AM ( 53 minutes ago )
'Canelo' Alvarez dominates Chavez Jr., Golovkin next up
Saul "Canelo" Alvarez dominated a grudge against Julio Cesar Chavez Jr., winning a unanimous decision in a fight that left no doubt who is the top active Mexican boxer
1:03AM ( 1 hour ago )
Associated Press (AP)
Nepal man, 85, dies trying to become oldest Everest climber
Officials say an 85-year-old Nepali has died while attempting to scale Mount Everest to regain his title as the oldest person to climb the world's highest peak.
12:03AM ( 2 hours ago )
Starlin Castro helps Yankees to 11-6 win over Cubs
Starlin Castro homered and drove in three runs against his former team, helping the New York Yankees to an 11-6 victory against the Chicago Cubs
11:56PM ( 2 hours ago )
Mud in your eye: Always Dreaming wins Kentucky Derby in slop
Always Dreaming splashed through the slop to win the Kentucky Derby by 2 3/4 lengths, giving trainer Todd Pletcher and jockey John Velazquez their second victories in the race but their first together
11:35PM ( 2 hours ago )
AP Sports
San Diego police killed boy, 15, in school parking lot
San Diego police have shot and killed a 15-year-old boy they say pulled a gun on them in a high school parking lot
10:30PM ( 3 hours ago )
'Oh, the humanity!' Hindenburg anniversary, broadcast marked
Hundreds of people have gathered at a military base in New Jersey to mark the 80th anniversary of when the German airship Hindenburg burst into flames
9:24PM ( 4 hours ago )
Nigeria says 82 Chibok girls free in Boko Haram exchange
82 Chibok schoolgirls freed 3 years after Boko Haram mass abduction in exchange for suspects
8:35PM ( 5 hours ago )
AP National News
The Latest: Always Dreaming unofficially wins Kentucky Derby
Always Dreaming has unofficially won the 143rd Kentucky Derby
7:01PM ( 7 hours ago )
Nigerian official says 83 Chibok girls free from Boko Haram
83 Chibok schoolgirls released 3 years after mass abduction by Boko Haram, authorities say
6:59PM ( 7 hours ago )
Thousands of people fill arena to hear from Warren Buffett
Listening to Warren Buffett never gets old to the thousands of Berkshire Hathaway shareholders filling an arena to listen to the billionaire investor at the company's annual meeting
6:26PM ( 7 hours ago )
AP Online National News
Nigerian official says 62 Chibok girls have been released
62 Chibok schoolgirls released 3 years after mass abduction by Boko Haram, authorities say
5:48PM ( 8 hours ago )
The Latest: French cybersecurity agency to probe Macron hack
A French government official says the state cybersecurity agency will investigate a hacking attack against presidential candidate Emmanuel Macron
2:36PM ( 11 hours ago )
The Latest: French in Quebec turn out in droves to vote
French natives are turning out in droves in the Canadian province of Quebec to cast a ballot in France's presidential runoff
2:15PM ( 11 hours ago )
AP World News
The Latest: Many French cheer end of vitriolic campaign
From depressed northern France to the streets of Paris, many French voters are looking forward to the end of a presidential campaign marred by hostility, hacking and low-brow political discourse.
1:18PM ( 12 hours ago )
The Latest: Bettors putting money on underdog Le Pen
V The betting firm Ladbrokes says far-right Marine Le Pen is attracting 90 percent of the bets on the eve of the French presidential election, as people gamble that France be in line for an upset.
10:59AM ( 15 hours ago )
French watchdog: Macron data mixed in with fake news in leak
France's election campaign commission says "a significant amount of data" from the campaign of centrist presidential candidate Emmanuel Macron has been leaked on social networks following a hacking attack
10:46AM ( 15 hours ago )
AP Business
The Latest: Trump wishes the nation a festive Cinco de Mayo
Trump sends warm wishes for Cinco de Mayo
8:57PM ( 1 day ago )
Puerto Rico to close 179 public schools amid crisis
Puerto Rico is closing 179 public schools in a move expected to save millions of dollars amid a deep economic crisis that has sparked an exodus to the U.S. mainland in the past decade
6:28PM ( 1 day ago )
US jobs data show some scars from recession finally healing
US jobs data show some scars from recession finally healing
4:48PM ( 1 day ago )
AP Business - Economy
Experts: Convicting ex-officer in teen's death will be tough
Legal experts say authorities who've charged a white suburban Dallas police officer with murder in a black teenager's death face a tough task in getting a conviction
1:49AM ( 21 minutes ago )
Kershaw, Bellinger lead Dodgers to 10-2 win over Padres
Clayton Kershaw pitched into the eighth inning, rookie Cody Bellinger hit a grand slam and drove in five runs, and the Los Angeles Dodgers beat the San Diego Padres 10-2
1:17AM ( 53 minutes ago )
'Canelo' Alvarez dominates Chavez Jr., Golovkin next up
Saul "Canelo" Alvarez dominated a grudge against Julio Cesar Chavez Jr., winning a unanimous decision in a fight that left no doubt who is the top active Mexican boxer
1:03AM ( 1 hour ago )
Durant scores 38 points, Warriors beat Jazz to take 3-0 lead
Kevin Durant had 38 points and 13 rebounds and the Golden State Warriors beat the Utah Jazz 102-91 to take a 3-0 lead in the Western Conference semifinal series
12:42AM ( 1 hour ago )
S. Koreans want new leader to create jobs minus corruption
South Koreans expect the next president to create jobs and end the cozy ties between big family-run businesses and the government that often lead to corruption
12:32AM ( 1 hour ago )