London traders hit $500M jackpot when oil went negative

I'd greatly appreciate if any of you can explain how such a trade happened in layman's terms. Every time I try to look various vocab, I end up getting deeper into the glossary of hyperlinked words on investopedia and totally lose sight of the bigger picture.

The crux of this trade was the TAS order type. It seems like these guys arbed the liquidity difference beyond their wildest dreams... But now they&#x27;re probably spooked about it because it sounds borderline manipulation.<p>Order types are constantly getting traders or exchanges in trouble. If you know about the less popular ones you always stand to beat out your competitors who dont. TAS reminds me of D-quotes on NYSE.

I think most people saw the opportunity, but just didn&#x27;t know how to properly capitalize on it. At least that&#x27;s where I was. I wasn&#x27;t going to take delivery of any oil, that&#x27;s for sure. At least nothing that stood to make anything significant from. Then, there was also the whole contango thing too.

&gt; There are also rules that forbid trading with the goal of deliberately affecting the settlement [price]<p>&gt; Vega’s jackpot involved about a dozen traders aggressively selling oil in unison before the May West Texas Intermediate contract settled at 2:30 p.m.<p>I think it&#x27;s safe to say the traders <i>deliberately</i> affected the settlement price. Granted they took on a lot of risk, it was still deliberate. Now the question is can that be proven, and was it deliberate enough?

Interestingly enough crude options went zero bound for nearly half a day before market makers started to realize their quotes were off. One of the most thrilling experiences trading in a very long time.

There&#x27;s an episode of MacroVoices that was recorded in real-time as prices were going negative. You can hear the pain in Erik&#x27;s voice as he realizes how much profit he missed out on.

Awesome now they can afford to pay London rents. :-D

<a href="https:&#x2F;&#x2F;archive.is&#x2F;2yDfi" rel="nofollow">https:&#x2F;&#x2F;archive.is&#x2F;2yDfi</a>

Can someone ELI5 how energy trading works? I understand stocks, where you earn a portion of the company in return for dividends&#x2F;capital gains, and options, where you bet on the underlying movements on stocks. But how does this work?

Doing God&#x27;s work their every waking hour.

Matt Levine&#x27;s take (author of the Bloomberg column <i>Money Stuff):</i><p><a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;opinion&#x2F;articles&#x2F;2020-08-04&#x2F;some-people-made-money-on-negative-oil-prices" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;opinion&#x2F;articles&#x2F;2020-08-04&#x2F;some-p...</a>

What scares me is that someone with $100M would (with only a little imagination) have an incentive to buy a biological lab, start a pandemic and make $500M. But perhaps I watch too many movies ...

No discussion here about the environment. This indirectly fuels demand.

So which traders lost $500M?

I really wonder if those guys really created $500M worth of “value” for the rest of the world. Because if they didn’t, it means it’s theft...