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There was plenty of uncertainty and pessimism.

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It seems likely it was a correction to an overvaluation of the market but events of the time certainly contributed to the volatility. The Answer’s Blocked in China. Almost as if market watchers had been expecting it, the steep decline of the Shanghai Composite on Monday 24 August was named "Black Monday" before Asian markets had even closed. As far as the cause of Black Monday, most experts don’t have a definitive answer.

Make sure to familiarize yourself with our rules and guidelines before participating. It didn’t understand how to do that during the Depression. The bear market lasted for a week and many feared this heralded a coming recession. More than 16 million shares were traded.

Those events prompted some improvements to how central clearers operated (e.g., CME introduced the SPAN system in 1988).The crash also precipitated a pretty much permanent change in the valuation of options. Was it not that big of a deal? That triggered an all-out panic on Black Tuesday. Day traders (if they were truly "day traders", not just in name) were not harmed as badly, they closed out their positions on a daily basis.It was a defining experience for me. (Or, similarly, owned a preponderance of options, which are bets with no intrinsic worth past expiration date. [2]On October 14, the DJIA dropped 95.46 points (3.8%) (a then record) to 2,412.70, and it fell another 58 points (2.4%) the next day, down over 12% from the August 25 all-time high.On Thursday, October 15, 1987, Iran hit the American-owned (and Liberian-flagged) supertanker, the Sungari, with a Silkworm missile off Kuwait's main Mina Al Ahmadi oil port. Three days after Black Monday there was another drop, Black Thursday, where stocks across Europe and North America fell more than 9%. Together with the drops of 1,191 and 1,465 points on 27 February and 11 March, the four largest Dow daily losses up to Black Thursday were all linked to the COVID-19 pandemic. The drop surpassed Black Monday, which occurred just a few days before, to be the greatest single-day point drop ever. A lot of people lost everything, there were even suicides.The major change that resulted was adding the “circuit breakers” that shut down trading whenever there is a significant drop due to panicked sell offs.As far as the cause of Black Monday, most experts don’t have a definitive answer. There is no punctuation involved in putting "ed" endings on words.As far as the cause of Black Monday, most experts don’t have a definitive answer.It is really disturbing that these massive events can happen with no warning, devastating countless real people's lives, and the "experts" can go "yeah we don't really know for sure why that happened".While in hindsight we know that the economy did not crash as a result and that the market would recover, its hard to now recall (or overstate) the bewilderment and fear of investors at the time. By 9:30 a.m., the London FTSE100 had fallen over 136 points. By the end of the day, the Dow had fallen to 230.07, a 12% loss.

This correction wiped out many people who sold "puts" and spent their days waiting for them to expire. After 1987 the "volatility smile" became much more pronounced - this feature basically reflects that the market regards large crashes as more likely.Even though the Wikipedia article disputes it, there are still a lot of folks that believe that portfolio insurance was the cause, including one of the inventors of it.

And the more complicated the market, the better-hidden the actual bet becomes?New comments cannot be posted and votes cannot be cast/r/History is a place for discussions about history.

What caused Black Monday: The stock market crash of 1987?

I've been doing reading on major crashes throughout history. It seems likely it was a correction to an overvaluation of the market but events of the time certainly contributed to the volatility. This was stopped by regulations and circuit breakers.The reason it isn’t recalled is that it had little effect on the overall economy— the Fed flooded money into the system and stopped the panic.