141–150 of 182 posts
“Five days, including the weekend, with the coronavirus going on and a complex system where we have to make many changes, was not a sufficient amount of time,” he said. “The idea we could have bugs is not, in my mind, a surprise.” He also acknowledged the error in the margin model Interactive Brokers used that day.....We have called the CFTC and complained bitterly,” Peterffy said. “It appears the exchanges are going…
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Could be! It was definitely a friend-of-a-friend territory. But often legends of failure are used to warn against real dangers. Little Red Riding Hood is surely fictional, but wolves in the woods definitely weren't. And at least in Chicago in the 1990s, traders and clerks could definitely be wild. During slow periods on the CME floor somebody would get a transparent trash bag, declare it a $20 bag, and then walk arou…
Also told on Page 34 of Ron Insana's Traders Tales: https://books.google.com/books?id=NyeVNsWvJHAC&pg=PA32&lpg=P...
> Its software couldn’t cope with that pesky minus sign, even though it was always technically possible -- though this was an outlandish idea before the pandemic -- for the crude market to go upside down. Wow, just wow. They are handling millions (billions?) of dollars every day and couldn't find the time to test that they can just DISPLAY a minus sign. That's insane. And it's not even that outlandish. People were sa…
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Thanks! Maybe the market maker I worked for was atypical. We definitely had opinions on where the market was going and made good money from that, especially in times of high volatility.
It's hard to make money by pure market-making, so it's common for market-makers to also do some amount of speculation. After 2008, banks were banned from speculating (ish) [1], but were allowed to do market-making. It's common for market-making desks to do speculative trades under cover of market-making activity. It's hard to conclusively prove that any given trade is speculation rather than market-making (which invo…
For futures on physical deliverable objects (well, I guess most futures are such, but anyway) -- would volatility and speculation be dampened/improved if the clearinghouse forced everyone (or the seller) participating in a trade to certify that they had rights to the specific thing being traded? Could actually produce the contract -- like the oil producer is certified to have barrels allowed to be sold? My notion is…
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The other issue here is that there IS an economic justification: everybody bid up the price of storage. If it costs me $60 to store a barrel I can sell for $10 later, then I'll pay someone $40 to take it off my hands now. An asset became a liability, hardly a rare concept to anyone who has owned a car they had to pay someone to tow away... CEO is just passing blame.
Interesting point. Have we commoditized and securitized the storage of commodities yet? Can someone purchase oil storage futures contracts to mitigate this risk?
Their website: https://www.thetanktiger.com
> The objective of the Tank Tiger is to serve as a clearinghouse and a single point of contact for parties who desire terminal tank services or utilization of midstream assets and to bring them together with the companies who own these assets and seek further utilization. It also provides for tenants who are leasing storage to find subleasing opportunities, when it makes sense for them to do so. Our expertise in this field provides a fast and efficient connection so that the uncertainty of storage availability is eliminated from the supply and trading equation. The Tank Tiger can facilitate and reduce market inefficiencies and illiquidity by providing this service.
“Five days, including the weekend, with the coronavirus going on and a complex system where we have to make many changes, was not a sufficient amount of time,” he said. “The idea we could have bugs is not, in my mind, a surprise.” He also acknowledged the error in the margin model Interactive Brokers used that day.....We have called the CFTC and complained bitterly,” Peterffy said. “It appears the exchanges are going…
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There are ETFs that track oil futures (basically like a stock, but backed by oil instead of a company). It's been a while since I've looked at any of this, but I think USO is still the most prominent. There are plenty of things to watch out for with these ETFs. You pay ongoing expense fees. And ETFs, especially those that aren't just holding containers for assets, can have subtleties in their prospectuses that cause…
Sorry but this is terrible advice. If trading Oil Futures is akin to playing Russian Roulette then trading Oil ETFs is akin to juggling live hand grenades. One will go off as soon as you stop! Most commodity and leveraged ETFs are designed to benefit just one party - the designer of the ETF. There are plenty of articles on USO and its travails.
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Taking physical delivery and hedging are not one and the same. It’s entirely possible to use a cash settled future to hedge against market movements; the farmer sells at a steep loss, but their cash settled wheat futures offset a large percentage of the loss on a cash basis. The distinction you’re looking for here is those who are speculating on market prices, vs. those who are hedging against market prices. If you u…
That is the point I was trying to make. Basically if you're in the business of producing or buying and selling the commodity the futures are for you. If you're just speculating how does that help anybody? I guess you could make the argument that having more eyes on the market means there is more information so the price is a better reflection of the true value.
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I don't think they knew in this case they were potentially trading on margin. The broker didn't know either which is crazy.
If anyone is trading futures and did not know they were trading on margin or trading highly levered instruments then they either are trading on a platform that has zero compliance or they misrepresented themselves as an investor.
Effectively the broker lied to them about how leveraged they were.