Two Words That Sent the Oil Market Plunging: Negative Gamma

Price slump was exacerbated as options traders sold futures
Wall Street banks do deals locking in oil prices for producers

Chris Ralph, chief investment officer at St. James’s Place Wealth Management, sees oil prices bottoming out.Daybreak: Europe." (Source: Bloomberg)

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By Alex Longley

November 15, 2018 at 1:12 PM UTC

Updated on

November 15, 2018 at 4:20 PM UTC

This article is for subscribers only.

As oil suffered its biggest one-day slump in three years, it wasn’t OPEC or President Donald Trump that was shaking the market. Instead, trading desks were abuzz with chatter of “negative gamma.”

So what is it?