> There was even a brief moment when the price of an oil barrel went negative
More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.
More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.
In that circumstance you might sell your right to some oil for almost nothing rather than deal with the consequences of accepting it. You might even pay someone to take it off your hands.
Options is “right but not obligation”. Physically settled futures are an obligation at maturity.
(Both instruments are not that popular in my country, so my daily language is to put both of them as synonym, while they are different animals in some details)
Generally a dangerous thing to have as synonyms regardless, otherwise you end up with a coal barge in the east river https://thedailywtf.com/articles/special-delivery
Regarding this story: I guess for most private participants, physical delivery is not possible/excluded
It just happened today: https://www.reddit.com/r/wallstreetbets/comments/1siq4m2/any...
https://www.bloomberg.com/news/articles/2015-11-03/that-time...
How did she not get to buy oil while the reddit guy got it delivered?
And down in your reddit thread someone says: > This is fake but this has happened before years(decades?) ago, hence why brokers added to t&c that they will close out unrolled contracts on your behalf so retards playing oil futes and cfds don't end up having barrels of oil shipped to their nearest port <
You're right that your broker will do all they can to avoid you shooting both you and them in the foot. But your agreement with your broker does not control your relationship with the counterparty to your futures contract. If the broker doesn't (or can't) close your position in time you('re both) on the hook.