Amaranth 'Highlights' Tumultuous Year

This column was originally published on Street Insight on Dec. 19 at 11:50 a.m. ET. It's being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.

As we close out this year, I wanted to review some of the highlights in derivatives this year.

1. The story with the most pervasive impact on the financial markets was that of hedge fund Amaranth.

However, while the headlines were concerned with Amaranth's failure, the real story was what the hedge fund did to the energy markets. The rise and fall of crude and natural gas prices can be linked to Amaranth. The fund participated in and perhaps exacerbated the massive speculation and volatility that took place in the energy futures and options markets. However, once the marginal speculator would no longer enter the market, the music stopped. ...