The Essex Boys: how nine traders hit a gusher with negative oil

Re:The Essex Boys: how nine traders hit a gusher with negati... by retube on Saturday December 19, 2020 @05:43PM (#25481973)

their view was the price was going to drop during the day. so they entered into contracts to buy oil at the end of the day, at whatever the prevailing price was. Now they are long oil. During the day they sell oil futures, flattening their position. Net at end of day, they're contracted to buy at some price, but contracted to sell at a bunch of higher prices. Hence in the money.

My basic maths implies they sold - and bought - 10k lots, which is 10m barrels. So a huge position.

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Re:The Essex Boys: how nine traders hit a gusher with negati... by kasey_junk on Saturday December 19, 2020 @06:59PM (#25482505)

The interesting part of this trade is that their TAS trade was “in the money” at the same time their long positions were.

That’s not supposed to happen. Your hedge should cost you profit but because of oil going negative both sides of their trade were profitable.

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Re:The Essex Boys: how nine traders hit a gusher with negati... by joejohnson on Saturday December 19, 2020 @06:36PM (#25482353)

When did they buy these oil futures which they were selling throughout the day?

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Re:The Essex Boys: how nine traders hit a gusher with negati... by usefulcat on Saturday December 19, 2020 @07:49PM (#25482832)

It may have been more or less at the same time. Commit to buy X shares at the close; sell X shares now. Or vice versa.

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Re:The Essex Boys: how nine traders hit a gusher with negati... by retube on Sunday December 20, 2020 @12:57PM (#25488125)

A futures "buy" is not an actual buy. Its an agreement to buy at some agreed price at some point in the future. So they entered into agreements to sell during the day, then effectively covered that commitment by entering into agreements to buy at the end of the day.

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