Another question. Once the future expires they have to take in that oil physically. Did they do that and sell in the regular market?

No. They sold an equal number of future contracts so they were flat and did not need to take inventory. That part is a routine shorting scenario. The odd part of this is that market conditions caused demand to drop so far that sellers paid buyers to take the contracts (and inventory). So these guys were paid to honor their TAS contract but had already sold the inventory to others via the futures contracts.

To put in a simpler terms, they didn’t have to take delivery, because they sold the oil earlier in the day to someone else. Since they didn’t have any oil at the time, they sold it “short”. Then, at the end of the day when they “bought” the oil at the negative prices, it was used to cover the contracts for the oil they sold earlier in the day.

Please tell me if I’m correct:

1. Sell futures contract At $15 (bearish position)

2. Buy futures at TSA when it’s negative - an equal amount to the ones u sold- to cover the futures you initially sold

Yup. When the price at the end of the day is negative, you get money both when you originally sell, and also when you later buy.

Please tell me if I’m correct: 1. Sell futures contract At $15 (bearish position) 2. Buy futures at TSA when it’s negative - an equal amount to the ones u sold- to cover the futures you initially sold

So basically they sold the contract earlier in the day for a higher price and then and covered their position at a much lower price.

Assuming I’m correct: My question is, doesn’t this require margin? If so, how much? What was their initial cash position?