Holy Sh*t! Oil Under $2 A Barrel!

[Smith1776]

Title says it all. The collapse of aggregate demand has led to a surplus glut of oil all around the world. Storage capacity has reached its limit in many parts both world. There's more oil around than we know what to do with. That coupled with continually falling demand and ECON 101 kicks in: a massive dive in prices.

oil.png (154.74 KiB) Viewed 3360 times

[Smith1776]

IT JUST HIT ONE CENT A BARREL HOLY SHIT.

[Smith1776]

It's negative now.

Guys, the price is negative. Like... negative.

[Dieter]

Yeah, this is wild. Huge.

[dualstow]

So does one get cash when they fill up at the gas station now?

On a serious note, I hope the airlines can afford to stock up. Sometimes they have done that in the past and it worked out well for them, and for their stock price.

[ochotona]

This is a sign the real economy is in trouble. Stonks are not a good indicator.

[dualstow]

I don’t have any stonks.

[shekels]

Paper Oil.

https://youtu.be/DbTB1VIFxCE

[shekels]

Ouch. Leverage works both ways.

As a result, the Company has recognized an aggregate provisionary loss of approximately $88 million.

https://www.businesswire.com/news/home/ ... -Contracts

[Vil]

Shorting WTI is forbidden today in Europe, no quotes.. Come on, it has to be a free market

[Mark Leavy]

The Black Scholes options pricing formula doesn't work in the real world. CME has returned to Bachelier's method from the early 1900's. Bachelier's idea that option pricing should be based on Brownian motion was ridiculed at the time.

FROM: CME Clearing
ADVISORY #: 20-171
SUBJECT: Switch to Bachelier Options Pricing Model
DATE: April 21 , 2020

Pursuant to Clearing Advisory 20-152 that was published on April 8 , the clearing house will
switch the options pricing and valuation model to Bachelier to accommodate negative prices in the underlying futures and allow for listing of option contracts with negative strikes for the set of products specified below.

Louis Bachelier

Bachelier's Doctoral thesis, which introduced for the first time a mathematical model of Brownian motion and its use for valuing stock options, is historically the first paper to use advanced mathematics in the study of finance. Thus, Bachelier is considered as the forefather of mathematical finance and a pioneer in the study of stochastic processes.

Hopefully, this little incident will finally put a stake in the Black-Scholes model, which has been transparently bull-shit from day one.

[Libertarian666]

The Black Scholes options pricing formula doesn't work in the real world. CME has returned to Bachelier's method from the early 1900's. Bachelier's idea that option pricing should be based on Brownian motion was ridiculed at the time.

FROM: CME Clearing
ADVISORY #: 20-171
SUBJECT: Switch to Bachelier Options Pricing Model
DATE: April 21 , 2020

Pursuant to Clearing Advisory 20-152 that was published on April 8 , the clearing house will
switch the options pricing and valuation model to Bachelier to accommodate negative prices in the underlying futures and allow for listing of option contracts with negative strikes for the set of products specified below.

Louis Bachelier

Bachelier's Doctoral thesis, which introduced for the first time a mathematical model of Brownian motion and its use for valuing stock options, is historically the first paper to use advanced mathematics in the study of finance. Thus, Bachelier is considered as the forefather of mathematical finance and a pioneer in the study of stochastic processes.

Hopefully, this little incident will finally put a stake in the Black-Scholes model, which has been transparently bull-shit from day one.

Yes, that would be nice. I never thought that model made any sense.