The fact itself as it happened is not so strange. There have been several attacks in Europe and terrorists are looking for flashy events to terrorize the population. The strange thing was when it was discovered that the perpetrator of the attack was not a jihadist but a 28-year-old man of Russian-German origin who sought to profit from the fall of the shares in Borussia Dortmund’s stock market after the attack.
The Financial Terrorist Strategy
The terrorist’s strategy was clear. A day before the attack bought 15,000 options to sell shares of the club due June 17. These options would allow you to sell shares of Borussia Dortmund at the price of that day until the expiration date. What the terrorist expected was that the shares fell after the attack, buy them cheap and sell them at the price agreed by the options. However, the stock did not fall and caught him fairly quickly. The move, fortunately, did not go well.
Although they are a useful financial instrument for legitimate purposes (for example to protect investments from falling prices), stock options allow you to earn money when a stock falls in price. This can tempt people to cause stock market crashes. Is terrorism a surefire way to do it?
Terrorism and stock market crashes
Although it seems obvious that terrorism has negative repercussions on the stock market, not always the obvious is true. The most striking case, obviously, is the 9/11 attacks. Stock markets fell widely. Although the American stock market had to close four days, the European fell that week more than 10%. The American, when it opened, fell 11.6% in several days. But as always there were companies that went up and others that fell (such as airlines that fell 30%).
Not all attempts are as brutal as 9/11. The one who lived in Spain on 11-M was also tremendous, but on a much smaller scale. The Madrid stock market fell on the day of the attack by 2.18% and the next day by 0.98%. But what really did lower the bag was the victory of the PSOE on Sunday, as on Monday the stock opened with losses of 4.15%.
From then on, it seems that the attacks have not had so much impact on the stock markets, probably because although terrible the scale is smaller. Those in London (7-J) dropped the London stock market by 1.68%. The bombing of Paris against Charlie closed the bag with small rises. In other words, it is not easy to predict the impact of the attacks on the stock market in general. Although one thing is certain by sectors there are repercussions.
Every time there is an attack security and defense companies are going up while airlines and tourism are down. In the rise and fall also influences whether the market is bullish or bearish. If the stock market trend is to drop, any news scares investors. If it is to climb, very fat has to be the attempt so that the initial movements do not recover in a few days. The 11-S came just in an incredible bear cycle, the puncture of the dot com.