I think then, anything could exists.
Oh damn.
It's so easy to slip and fall into the predictions game (and its so alluring)
Il pas on this one
Is it possible that index futures can go negative like oil futures?
- Thread starter helpme_please
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Oh damn.
It's so easy to slip and fall into the predictions game (and its so alluring)
Il pas on this one
wow and this is called ELITE trader. An index future can't go below zero cause it would be arbed away in real life if it even became close to zero. Financial future = spot + intrest carry costs.
for oil future there are storage costs involved, it's these that brought the value below zero.
for oil future there are storage costs involved, it's these that brought the value below zero.
So, in the Dow 30 companies go to zero or below.
The ones below zero, other traders are paying you to buy shares from them?
No.
Little of correlation between being good at this and personal trait of complaining, because one
- always have a choice :
Here is a scenario where index futures can go close to zero:
We discover that a huge asteroid is going to hit Earth in 5 days and life is going to cease to exist. If your broker is fast enough to send you your account left over after you sold everything, you will have a few days trying to enjoy life as we knew it.
But you will probably spend it on guns...
We discover that a huge asteroid is going to hit Earth in 5 days and life is going to cease to exist. If your broker is fast enough to send you your account left over after you sold everything, you will have a few days trying to enjoy life as we knew it.
But you will probably spend it on guns...
Please, look at my comments about indexes above.
In DOW if one company stock became 0 even before that. It will be removed and replaced to other one.
Theoretically yes. They could trade at any price the exchange software allows if the market participants are irrational enough.
In practice, extremely doubtful. As others have mentioned, it makes economic sense for oil to have a negative price in the circumstances due to the carry. But for equities I can't imagine any scenario where it would make economic sense. The most likely way I think it could happen is if you had an incredibly massive erroneous trade / flash crash type scenario that was able to temporarily overwhelm all arbitrage. If this ever happens, it would be an amazing buying opportunity because it would be guaranteed to go above zero again.
EDIT: I just realized, the existence of circuit breakers actually makes the flash crash scenario impossible, unless it happens by a glitch in the software.
In practice, extremely doubtful. As others have mentioned, it makes economic sense for oil to have a negative price in the circumstances due to the carry. But for equities I can't imagine any scenario where it would make economic sense. The most likely way I think it could happen is if you had an incredibly massive erroneous trade / flash crash type scenario that was able to temporarily overwhelm all arbitrage. If this ever happens, it would be an amazing buying opportunity because it would be guaranteed to go above zero again.
EDIT: I just realized, the existence of circuit breakers actually makes the flash crash scenario impossible, unless it happens by a glitch in the software.
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That would be impossible, unless the stock market was negative. No one would ever pay some way to take their stocks, the lowest a stock can go is zero, and there is no delivery, and the stocks do not have to be stored some where.
Oil went negative, not for traders, but for those taking delivery only.
Oil went negative, not for traders, but for those taking delivery only.