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The most interesting quote in this story to me is the trader suggesting it was impossible for oil prices to go negative. That would be seen as extremely naive

The most interesting quote in this story to me is the trader suggesting it was impossible for oil prices to go negative. That would be seen as extremely naive by any commodities trader I’ve met, given physical delivery is almost always viewed as a worst case scenario in trading. This feels like one of those situations where sophisticated insiders just get to skin new money. Those lessons happen everyday in the markets but these days the VaR is crazy high.

alisonkisk 6y ago
Only the retail trading rube (and a software program used by retail rubes) are quoted as saying they didn't think the price could go negative.
- ineedasername 6y ago
  No, there was also a major Chinese firm that lost everything as well, and is on the hook for about $800,000,000 it's customers doi have.
- phyalow 6y ago
  To be fair, Interactive Brokers is the least rubeish platform for a trader outside of an institution.
cnst 6y ago
It wasn't a trader who didn't know the price could go negative, it was a passive retail investor: https://archive.is/33zf6#selection-3201.1-3205.1 https://archive.is/33zf6#selection-3201.1-3205.1 >>>> “It didn’t occur to us” oil could go negative, A’Xiang Chen, a 26-year-old investor from Shenzhen, told Bloomberg News. https://archive.is/XBP6v#selection-2457.0-2478.0 https://archive.is/XBP6v#selection-2457.0-2478.0 >>>> Thousands of miles away, in the Chinese metropolis of Shenzhen, a 26-year-old named A’Xiang Chen watched events unfold on her phone in stunned disbelief. A few weeks earlier, she and and her boyfriend had sunk their entire nest egg of about $10,000 into a product that the state-run Bank of China dubbed Yuan You Bao, or Crude Oil Treasure. --- I guess that's exactly the part about regulation that would normally prevent people from doing these things without having full understanding of the consequences. Obviously to your point, though, it does sound like the fund managers of that fund didn't exactly have their act together, either.
ineedasername 6y ago
"extremely naive" Especially because there apparantly a warning 17 days earlier that negative prices were a.possibility. A tourist trader might not follow industry news well enough, but I would think outfits like the Chinese firm that lost everything would be a bit more savvy.
- fouc 6y ago
  It's interesting that Interactive Broker's software couldn't handle negative prices. Whoops.
  - alasdair_ 6y ago
    Especially their position as the “pro” version of a retail broker.

alisonkisk 6y ago

Only the retail trading rube (and a software program used by retail rubes) are quoted as saying they didn't think the price could go negative.

ineedasername 6y ago
No, there was also a major Chinese firm that lost everything as well, and is on the hook for about $800,000,000 it's customers doi have.
phyalow 6y ago
To be fair, Interactive Brokers is the least rubeish platform for a trader outside of an institution.

cnst 6y ago

It wasn't a trader who didn't know the price could go negative, it was a passive retail investor: https://archive.is/33zf6#selection-3201.1-3205.1 https://archive.is/33zf6#selection-3201.1-3205.1 >>>> “It didn’t occur to us” oil could go negative, A’Xiang Chen, a 26-year-old investor from Shenzhen, told Bloomberg News. https://archive.is/XBP6v#selection-2457.0-2478.0 https://archive.is/XBP6v#selection-2457.0-2478.0 >>>> Thousands of miles away, in the Chinese metropolis of Shenzhen, a 26-year-old named A’Xiang Chen watched events unfold on her phone in stunned disbelief. A few weeks earlier, she and and her boyfriend had sunk their entire nest egg of about $10,000 into a product that the state-run Bank of China dubbed Yuan You Bao, or Crude Oil Treasure. --- I guess that's exactly the part about regulation that would normally prevent people from doing these things without having full understanding of the consequences. Obviously to your point, though, it does sound like the fund managers of that fund didn't exactly have their act together, either.

ineedasername 6y ago

"extremely naive" Especially because there apparantly a warning 17 days earlier that negative prices were a.possibility. A tourist trader might not follow industry news well enough, but I would think outfits like the Chinese firm that lost everything would be a bit more savvy.

fouc 6y ago
It's interesting that Interactive Broker's software couldn't handle negative prices. Whoops.
- alasdair_ 6y ago
  Especially their position as the “pro” version of a retail broker.