alt Hacker News> There was even a brief moment when the price of an oil barrel went negative
More accurate: The price for an _option_ to buy/sell oil was negative, not the price of the barrell itself.
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duskdozer • yesterday at 3:15 PM
How could the option price go below 0? Why couldn't someone just not exercise it in that case?
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No, the price of a contract for future delivery to a specific location went negative just before the delivery date, at a time when there was almost no unoccupied oil storage nor transport capacity at said location.
In that circumstance you might sell your right to some oil for almost nothing rather than deal with the consequences of accepting it. You might even pay someone to take it off your hands.
Options is “right but not obligation”. Physically settled futures are an obligation at maturity.