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> 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.
I think it's safe to say the traders deliberately 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?
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're probably spooked about it because it sounds borderline manipulation. 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.
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It seemed like every retail-trading angle was a losing proposition.
Idunno, my oil ETF shares are still up 40% from March so..... OIL closing was bullshit, though
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're probably spooked about it because it sounds borderline manipulation. 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.
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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?
Do you really need me to explain why fraud is wrong? Fraud is wrong because you're betraying someone's trust. It's bad for society because it adds friction to business dealings. When you can't trust your counterparty, you have to expend tons of money doing due diligence. This is true regardless if you're smart or not. Being the smartest person in the world isn't going to help you if you're being deceived (assuming yo…
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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
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Er no. It is. The losers were Chinese banks/investors. Chinese banks created a ton of financial products linked to oil futures, they didn't know what they were doing and left it to the last minute to roll (afaik, none of the products in the US blew up).
USO blew up. The held 25% of all the negatively priced contracts at close. The crux of this story is that investors piling into these ETFs created a massive sell side pressure at the close which this hedge fund found a way to arbitrage.
Blaming retail investors is a very common trope of the financial markets recently. Truth is there just isn't that much retail fire power.
To your point: look at the USO roll schedule on the day the futures went negative you would have noticed that they were basically done 75 percent into the next month in the days before.
So we're now talking about a few 100 million USD exposure in the front month due to uso that needs to be rolled. That can't be the one to blame...
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Idunno, my oil ETF shares are still up 40% from March so..... OIL closing was bullshit, though
It’s hard to find an equity that’s not up 40% since March lol —- the S&P is up 43% so that’s technically, shockingly a market underperform, and a bunch of tech companies are up 200% or more.
I think most people saw the opportunity, but just didn't know how to properly capitalize on it. At least that's where I was. I wasn't going to take delivery of any oil, that's for sure. At least nothing that stood to make anything significant from. Then, there was also the whole contango thing too.