How suspected Dortmund bus bomber allegedly planned to make millions – CBC Sports

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.

Type of trade

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.

Reason for trade type

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…

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