On 3/10/08 requests were made to the Options Exchanges to open a new April series of puts with exercise prices of 20 and 22.5 and a new March series with an exercise price of 25. The March series had only eight days left to expiration, meaning the stock would have to drop by an unlikely $45 a share in eight days for the put-buyers to score. It was a very risky bet, unless the traders knew something the market didn't; and they evidently thought they did, because after the series opened on March 11, 2008, purchases were made of massive volumes of puts controlling millions of shares.
On or before March 13, 2008, another request was made of the Options Exchanges to open additional March and April put series with very low exercise prices, although the March put options would have just five days of trading to expiration. Again the exchanges accommodated the requests and massive amounts of puts were bought. (I) contend that there is only one plausible explanation for "anyone in his right mind to buy puts with five days of life remaining with strike prices far below the market price": the deal must have already been arranged by March 10 or before.
By 3/24/08 the fails to deliver in BS stock had exploded to 12,588,395 shares naked shorted.
You have heard the stories avout the false rumors that went with the massive naked shorting.
Bottom line, the massive naked shorting with no uptick to temper the fall coupled with the fraudulent rumors took down BS.
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