In former Air Force captain Dale Brown’s military fiction novel Storming Heaven, a group of renegade terrorists attack civilian targets using commercial airliners, and their targets include airports, the capitol building, and even the white house. If this leads the reader to conclude Dale Brown used the 9-11 hijackings as a template for Storming Heaven, think again; Storming Heaven is copyrighted in 1994, long before the attacks occurred. At one point in the story, the terrorists have a conversation about how to profit from their destruction. They decide the best method to achieve their aim is with stock “put options” contracts involving airline companies, because the contract is worth more as the stock declines in value. Dale Brown may have foretold the future, because there is wide speculation the 9-11 terrorists similarly used the put option method to financially benefit from their attacks.

Put Options Contracts – Profitable when Stock Declines in Value

To give the reader a flavor of what a stock “put option” is: IBM has a stock of 100 shares that are initially set at $50 a share. This $50 a share for the stock in a put option contract is called the “strike price.” The person who owns the stock (the seller) enters into this agreement with the buyer. The contract will expire in exactly one month (or some other fixed date) from the date the contract was entered into. The buyer is obligated to give the seller $300 (or some other number) up front to write the contract. In that time, the stock could go up or down. If the stock declined to say $40 a share within the one-month period, the buyer could purchase the one hundred shares of IBM for $40 a share. Thus, the buyer has paid $40 a share times 100 shares plus the initial payment of $300, which equals a total of $4300. But the way a put option contract is written, the buyer can immediately sell it back to the seller for the strike price of $50 a share (the seller must buy the stock at the strike price if the buyer chooses to sell it back to him/her). $50 a share times 100 shares equals $5000 the seller must pay the buyer for the returned stock. The profit the buyer has made is the $5000 he sold it for minus $4300 (purchase price plus the $300 up front), yielding a net profit of $700.

• Forming A Nonprofit Organization

  Nonprofit organization (abbreviated as NPO) is neither a legal or technical definition but generally refers to an organization that uses surplus revenues to achieve ...

• California Non Profit Corporation

• Buying And Selling Car For Profit

• Jewish Non Profit Organizations

• Google Profits 2004