For those that had the fortitude to pull the trigger, shorting crude back in early July when all the perfect storm conditions for $200 per barrel oil were on the horizon ... and had the stones to stay with that trade ... made a killing.
This is one of the greatest reversals for any major market of any kind that has ever occurred. And it clearly shows how the crude oil market was being manipulated by speculators and hedge funds.
The impact was fatal for hundreds of small airlines and small- to medium-sized trucking companies, along with thousands of other companies that didn't hedge against the price explosion in energy.
The price of crude, which topped out at $147 per barrel in July 2008, crashed to $35 per barrel by Dec. 18 -- a 76% haircut -- before getting a bid that got the price back above $40 on the eye-popping headline that OPEC would slash daily production by 4.2 million barrels.
On any normal day, crude prices would have shot $10 higher, but after the initial short-lived rally in the energy patch, the market took this sharp reduction in output as a major red flag indicating that world demand was considerably lower than oil traders thought.
Those traders long oil punched out and short sellers jumped all over crude futures, taking oil down $5 per barrel the day after the OPEC cut.
The fallout has been nothing short of unbelievable.
Shares of the closely watched and highly traded U.S. Oil Fund (NYSE: USO) have fallen from $119 to $29, or 75% from the top to today's level.
Owners of the put options that stayed in that trade all the way down made 20 times their money. Huge.
Bryan Perry is a contributor to OptionsZone.com.
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