Options trading was out of control in those days, too. Everybody was selling puts and praying the market would continue upward. It didn't, and lots and lots of folks had to meet disastrous margin calls, selling into a down market and making it worse.
BooYaa, you're right. I forgot about those stupid things.
Dangerous as hell and lot of folks got burned really badly.
I never had to make margin calls to customer, because I avoided those sales like the plague. But some guys in the office who were playing with them, just went home. It was a triple Wild Turkey day, that was for sure.
But... IBM went from about 165 a share down to 119, I called everyone I knew and sold a ton of the stuff. Ford dropped to about 65 a share or something stupid like that. I called everyone who was loosing money on everything else and pushed the hell out of blue chips. In my mind, it was a fire sale.
Those customers who agreed and took advantage completely wiped out any loss they suffered that day.
The Federal Reserve, none other!, had to open the discount window to let these players borrow (through banks of course) enough capital to settle their trades and/or meet margin calls, or the CME almost surely would not have been able to open its doors the next day.
At one point during Black Monday, SP options were being quoted with a forty point bid/ask spread. One market maker was so harassed by various parties that he screamed at one of his would-be persecutors, ''Hey, I'm making the best market I can, you (bleep). If you think you can do better, here's my damned deck (of orders).'' The individual did not take him up on his offer.
A unique incident (so far) in financial history.