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London traders hit $500M jackpot when oil went negative

bloomberg.com

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Re: London traders hit $500M jackpot when oil went negative

#31

Post by gruez »

Ecco wrote: post #28
baconandeggs wrote: post #23

Earlier quoted context omitted.

A speculator does one thing only: takes assets not in (peak)demand today and bets they are gonna be in demand in the future. He takes a calculated risk and a lot of times it doesn't pay off. Everybody involved is getting paid and all the transactions are voluntary. If you think that is theft then I don't know what to tell you.

Well, a theft can be voluntary: that’s what con-artists do all the time!

Con artists are getting your consent via deception. Is this the case what derivative traders are doing?

Re: London traders hit $500M jackpot when oil went negative

#32

Post by Ecco »

gruez wrote: post #31
Ecco wrote: post #28

Earlier quoted context omitted.

Well, a theft can be voluntary: that’s what con-artists do all the time!

Con artists are getting your consent via deception. Is this the case what derivative traders are doing?

Well, one could argue that they are just smarter than other people and manage to find market opportunities. Good for them I guess. But technically since it’s mostly a zero-sum game would it be wrong to consider that they use their smarts to deprive other people of value?

Re: London traders hit $500M jackpot when oil went negative

#33

Post by opportune »

Ecco wrote: post #7

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...

If you were selling oil and had the option of either getting $45/barrel for all the oil you sell next month or somewhere in the $0-$100 range, which decision would you take?

Re: London traders hit $500M jackpot when oil went negative

#34

Post by baconandeggs »

Ecco wrote: post #29
chii wrote: post #27

Earlier quoted context omitted.

> Too bad for him, but he kinda made this happen ... Couldn’t that be considered theft to some extent? why is it "too bad for him" when he loses (to the people he gave value to), but "theft" when he takes value from the people? That's just a double standard. And you also mis-understand derivatives trading's purpose - to offload risk to a third party that is willing to take it.

The double standard question is totally legitimate and a very good one! My point of view is that the trader willingly entered the market with the sole intent of trying to make a profit, whereas the other two just wanted to actually trade goods. Which is why the situation is asymmetrical in my opinion, and why the way we judge it could be as well.

> whereas the other two just wanted to actually trade goods.

They wanted to trade excess goods, in other words, unrealized profits, for something usable to them to realize the profits of their labor.

Everyone's intention is to profit, that is the reason you sell to the market.

Re: London traders hit $500M jackpot when oil went negative

#35

Post by chii »

Ecco wrote: post #29
chii wrote: post #27

Earlier quoted context omitted.

> Too bad for him, but he kinda made this happen ... Couldn’t that be considered theft to some extent? why is it "too bad for him" when he loses (to the people he gave value to), but "theft" when he takes value from the people? That's just a double standard. And you also mis-understand derivatives trading's purpose - to offload risk to a third party that is willing to take it.

The double standard question is totally legitimate and a very good one! My point of view is that the trader willingly entered the market with the sole intent of trying to make a profit, whereas the other two just wanted to actually trade goods. Which is why the situation is asymmetrical in my opinion, and why the way we judge it could be as well.

making a profit and trading goods are the one and same goal. it's not asymmetrical at all. After all, isn't the point of trading goods to produce excess value after the trade (i.e., profit)?

Re: London traders hit $500M jackpot when oil went negative

#36

Post by gruez »

Ecco wrote: post #14
ClumsyPilot wrote: post #11

Earlier quoted context omitted.

Youn are kindsupporting his proposition - that nothijg evonomically productive has happened. Of trading is a zero sum game, liek OP is proposint, their winning just take from other parts of ecobomy

Yeah, I understand the “when people gamble most will lose and someone will be lucky”. But the big difference I see in this case is that many legitimate businesses work with crude oil so not all of those people are gambling / willing to gamble.

>But the big difference I see in this case is that many legitimate businesses work with crude oil so not all of those people are gambling / willing to gamble.

But those aren't going to be the losers. Oil producers typically sell their future contracts immediately to lock in a good price. Likewise, oil consumers are typically going to be buying oil futures early, hold them until they expire, and take delivery. In either case they're not going to be affected by the price going negative on the day of expiry.

Re: London traders hit $500M jackpot when oil went negative

#37

Post by vmception »

FabHK wrote: post #30
neximo64 wrote: post #20

Earlier quoted context omitted.

You can always 'create' more oil by pumping it out of the ground once the prices hit a certain amount. So it's not really 'zero-sum'. If the supply isn't locked or restricted it's hard to say that. Same thing with Tesla shares, or whatever it is. If you can create more Tesla shares its not zero sum (which is done often). Currencies too are printed when needed. About the only thing really zero sum are some cryptocurre…

There is positive supply of oil, or Tesla shares. However, the net supply of derivatives (such as options, forwards, futures) is zero.

> the net supply of derivatives (such as options, forwards, futures) is zero.

so we believe, but yes.

also CDOs have entered the chat

Re: London traders hit $500M jackpot when oil went negative

#38

Post by francisofascii »

nulptr wrote: post #15
Ecco wrote: post #12

Earlier quoted context omitted.

I’m fine with the downvotes - I understand it can be a controversial opinion. But I’d love to get some more detailed feedback!

If you accuse someone of theft, shouldn't the burden of proof be on you? Also, if two people make a bet, and one person wins, is that theft?

If one person knows the probable outcome and the other one does not, you can certainly frame it as theft.

Re: London traders hit $500M jackpot when oil went negative

#39

Post by arcticbull »

tus88 wrote: post #22

So which traders lost $500M?

Commodities trading like this isn't really zero-sum like, for instance, options trading or equity futures trading. Oil producers who had a giant backlog of oil and nobody to sell it to (and full storage) were paying people to take it off their hands that month. Some enterprising folks were able to find some storage, hold on to the oil until the next expiration date, and were rewarded to playing a role in the market.

Re: London traders hit $500M jackpot when oil went negative

#40

Post by baconandeggs »

Ecco wrote: post #28
baconandeggs wrote: post #23

Earlier quoted context omitted.

A speculator does one thing only: takes assets not in (peak)demand today and bets they are gonna be in demand in the future. He takes a calculated risk and a lot of times it doesn't pay off. Everybody involved is getting paid and all the transactions are voluntary. If you think that is theft then I don't know what to tell you.

Well, a theft can be voluntary: that’s what con-artists do all the time!

Now that you've reached the point of calling everything theft, there is nowhere to go. Congratulations.
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