Traders with advance knowledge of the Hamas terrorist attack profited by shorting a major Israeli exchange-traded fund (ETF) days beforehand, two law professors show in a new paper.
In the week leading up to the Oct. 7 attack, short-selling skyrocketed for the MSCI Israel ETF, going from the single-digit thousands in September to more than 200,000 shares on Oct. 2. Short-selling also shot up among Israeli securities on the Tel Aviv Stock Exchange.
Short-selling is essentially a bet that an asset's price will fall (typically made by selling a borrowed security). The professors found the spikes in trading were "economically and statistically unusual," and that they surpassed short-selling during crises such as the Covid-19 pandemic and the 2014 Israel-Gaza war.
