Why did oil prices fall so rapidly just before the attack on Iraq? Some commentators suggest that options accelerated the collapse as speculators were forced to sell more futures contracts to cover their positions in a falling market. Is this correct, though? Can a particular type of derivative trading instrument – such as an option – cause instability in the market, making prices fall further and faster than they otherwise would have done, or are prices simply responding to a sudden change in market perceptions?...
