Absurd 'bet': Made millions from Hamas attacks

Written by Jeppe W

Dec.05 - 2023 10:39 AM CET

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Photo: Shutterstock.com
Photo: Shutterstock.com

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A striking report has emerged, indicating that a select group of 'investors' seemingly capitalized on the Hamas attack on Israel on October 7, turning a substantial profit in the process. This claim arises from a study conducted by two American researchers, Robert Jackson Jr. from New York University and Joshua Mitts from Columbia University.

According to the researchers' report titled 'Trading on Terror,' a remarkably large volume of Israeli stocks was shorted just days before the Hamas attack.

This activity was not seen as mere speculation but as informed trading, suggesting that some individuals had prior knowledge of the impending attack.

Short selling, a strategy employed in these transactions, involves borrowing stocks to sell them with the anticipation that their price will fall.

If the stock price drops, the seller can then buy them back at a lower price, pocketing the difference as profit. However, this strategy carries significant risk, as stock prices can potentially rise indefinitely, in contrast to the limited gains when prices fall.

The researchers found that on October 2, five days before the attack, the volume of shorted shares in the Israel MSCI ETF – a fund comprising several major Israeli companies like Nice, Teva, Elbit Systems, Israel Chemicals, and Israeli banks – was a hundred times larger than on a typical trading day.

On a normal day, a few thousand ETF units might be sold short, but on this particular day, the volume reached 227,000 units.

The researchers suggest that this was not a gamble but informed trading, as those behind the transactions seemed to have knowledge of an impending event in Israel that would negatively impact the Israeli stock market.

Following the attack on October 7, based on the volume of shorted stocks on October 2, it is estimated that the profits from these transactions ran into millions of dollars.

This situation raises serious questions about insider knowledge and the ethical implications of using such information for financial gain.

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