Is it possible that index futures can go negative like oil futures?

Most index futures like ES are cash settled. Even Eurodollars are cash settled.

The Crude Oil contract is physically settled - and with a very specific, rather restrictive and prescribed procedure at that. You either had to deliver FOB from rack space at Cushing, Oklahoma (full up), or transfer title from existing storage at the sellers discretion.

Completely different situation than a cash settled stock index.

helpme_please said:
The recent negative price of oil futures is unprecented. Caused a lot of losses to traders and I heard even the brokerage software failed to work as expected.

Is there any risk that price of index futures can go negative like oil? I can't imagine how it can happen. Can the experts here share your views? Any worst-case scenario you can think of that can cause this to happen?
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Girija said:
Index can slip on liquidity concerns. Hypothetically I would say yes.
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Hypothetically, wouldn't that also imply most of the components (stocks) in the Index have also dropped into negative territory ???

Then there's the issue raised by Bone about cash settle versus physically settled.

Regardless, the price action distance to travel that low even to get near Zero would be twilight zone stuff. People will be jumping out the windows.

wrbtrader
 
All that needs to happen is a law passed that says shareholders are liable for a company's debt.

Is that really out of the realm of possibility?
 
old coot said:
All that needs to happen is a law passed that says shareholders are liable for a company's debt.

Is that really out of the realm of possibility?
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First of all the OP spoke about INDEXFUTURES, so what you suggest should happen for hundreds of multinationals at the same time. Is that really out of the realm of possibility?

They can pass a law that says that all shareholders will be killed if they don't sell their shares at a negative price. Is that really out of the realm of possibility? ROFLMAO.

Depends if you are a dreamer or a realist:
  • If a dreamer: anything can happen
  • If a realist: is not going to happen
Can you show us a list of the companies that would go under zero if "your" law would pass?
 
Read history. As far as anything could happen, think back just a few years, then look at today's headlines. And don't inject bleach while doing so. Hell, just look up the concept of oil going negative, before it actually happened. If I owned United Airlines and had to be responsible for its debt, I'd pay somebody to take it.
 
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Has any of you ever seen an equity share registered with the SEC and listed on a public exchange trade negative?

The only reason that the WTI future went negative for a brief time was because of a very restrictive and prescribed physical delivery procedure in the terms of the contract and for the lack of physical storage. There is no such thing in an equity share. And it’s entirely conceivable that the same structural dynamic could happen for the June WTI contract unless demand picks up.
 
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old coot said:
Read history. As far as anything could happen, think back just a few years, then look at today's headlines. And don't inject bleach while doing so. Hell, just look up the concept of oil going negative, before it actually happened. If I owned United Airlines and had to be responsible for its debt, I'd pay somebody to take it.
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We don't speak about stocks we speak about indexfutures. And for that question the answer is NO.Try to read what the question was.

"First of all the OP spoke about INDEXFUTURES, so what you suggest should happen for hundreds of multinationals at the same time."
 
Ah, I see the problem here. I tend to read words as what the words actually mean.

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old coot said:
Read history. As far as anything could happen, think back just a few years, then look at today's headlines. And don't inject bleach while doing so. Hell, just look up the concept of oil going negative, before it actually happened. If I owned United Airlines and had to be responsible for its debt, I'd pay somebody to take it.
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Well, you'd be responsible for SOMEONE'S retirement I guess.


(Keep UAL, they are not done yet. Neither is Boeing.)
 
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