From What's Trading:
Cabin Smoke Sparks Put Buying in Boeing (BA)
Boeing (BA) drops $1.63 to $76.06 and is weighing on the Dow on reports of a cabin fire on a parked Dreamliner plane – Link to Story. Weekly 77.5 and 75 puts are the most active in options today and seeing opening activity. The fire was reportedly in a compartment with batteries and other electrical equipment — Briefing. 4190 calls and 8200 puts traded on BA and implied volatility in the options, which Friday fell below 17 and made a stab at 52-week lows (near 16), is up 12.5 percent to 19.Kids these days.
If you want to learn yourself some serious disasternomics read:
The complexity of price discovery in an efficient market: the stock market reaction to the Challenger crash
Abstract
We provide evidence on the speed and accuracy of price discovery by studying stock returns and trading volume surrounding the crash of the space shuttle Challenger. While the event was widely observed, it took several months for an esteemed panel to determine which of the mechanical components failed during the launch. By contrast, in the period immediately following the crash, securities trading in the four main shuttle contractors seemingly singled out the firm that manufactured the faulty component. We show that price discovery occurred without large trading profits and that much of the price discovery occurred during a trading halt of the firm responsible for the faulty component. Finally, although we document what are arguably quick and accurate movements of the market, we are unable to detect the actual manner in which particular informed traders induced price discovery.
...To analyze intraday price movements, we used data from Francis Emory Fitch. As reported in Table 2, by 12 noon, within 21 min of the crash and 13 min of the News Wire account, Lockheed had fallen 5.05%, Martin Marietta had declined 2.83%, and Rockwell was down 6.12%. Martin Marietta continued to slide for the next few minutes, finally reaching a low of 8.51% off from its pre-crash price. At resumption of trading in Morton Thiokol at 12:36 p.m., it was down 6% from its pre-crash price....
