It was one of the stock market’s more memorable disasters in recent years ? the 1998 blowup of the hedge fund Long Term Capital Management due to big derivative losses.
As a result of the LTCM fiasco, the market got clobbered and the shares of banks, a big player in derivatives, got slaughtered. For example, the shares of JPMorganChase alone plunged from $50 in late July of 1998 to less than $25 at the depths of the crisis in October. In other words, a 50% haircut in just a few months.