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I am wondering if the average Joe could have made a profit yesterday, on the CLK2020CRUDE OIL FUTURES (MAY 2020) contract, that ended having negative prices.

I've seen that there are CFD products like: OILUSMAY20, OILUSJUN20, etc., but I've also discovered that they expire earlier. For example, OILUSMAY20, expired on 17/04/2020, but the crazy volatility took place on 20/04/2020.

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    What would the average Joe have done if he couldn't sell the contract and ended up needing to take delivery of 1000 barrels of oil? The point is that the storage cost is the hidden variable here. Commented Apr 21, 2020 at 7:26
  • Yes, indeed. But what if he wanted to just short it?
    – learner
    Commented Apr 21, 2020 at 7:44

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You could get a an account with a broker and just sell the futures contract. Close out your position at the end of the day.

If you sell a futures contract at 1000 and it drops to 500, you would make the same money if you sell the same contract at 250 and it drops to -250.

Note that, you don't 'short' a future, you just sell it. Shorting a stock requires borrowing it first, but with futures you don't need to do that. You just start at zero position and just sell it.

The fact that this specific contract went nagative is remarkable, but otherwise makes no difference to how the trading and settlement works. Many people are surprised that a price can go negative, given our daily experience in shops etc, but for financial contracts a price is just a number.

However, many people and systems still think that a negative price is incorrect and get caught out. See the story about Interactive Brokers. I'm sure that the regulators will want to examine what went wrong there.

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