Loading 6 Votes - +

Trader Vanity Behind $100 Oil While $200 Oil Looms

Obviously, there is no need to "make" a market for oil given the global demand. With the price of oil looming in the upper $90s, however, one trader decided he wanted to make history. Looking to be the first person to ever own $100 oil, this trader intentionally timed and bought 1000 oil barrels to drive the price above $100. After breaking the $100 per barrel mark, he immediately resold his oil at $99.40 (a $600 loss). With the $100 record out of the way, futures trading has already bid on $200 per barrel in 2008.

In After The Trade Is Made, a "Market Maker" is defined as a firm that risks their capital to trade chosen securities against clients and other dealers. In layman’s terms, someone who persists in trading a product "makes" the market for that product through perceived demand. While not acting as a firm, the aforementioned trader’s actions (and subsequent trickle effects) clearly demonstrate the market making principle; the purchasing whims of a single entity can have global impact on a product’s price – even when its not "real" demand.

Similarly tagged OmniNerd content:

Share & Socialize

What is OmniNerd?

Omninerd_icon Welcome! OmniNerd's content is generated by nerds like you. Learn more.

Voting Booth

What if a spouse cheats?

7 votes, 3 comments