What trading mechanism was widely blamed for amplifying the 1987 stock-market crash?

Portfolio insurance was widely blamed for amplifying the 1987 stock-market crash.

Portfolio insurance was a computer-assisted strategy designed to limit losses by selling stock-index futures as markets declined. As prices fell, the strategy generated additional sell orders, potentially reinforcing the downward movement.

On October 19, 1987, this kind of program trading operated alongside investor panic, crowded positions, market-structure problems, and uncertainty about economic conditions. Researchers and regulators generally treated it as an amplifier rather than a single, complete explanation for the crash.

The event led to major changes in market supervision. U.S. exchanges introduced coordinated circuit breakers, which can temporarily halt trading after large declines. The crash therefore became a landmark in the history of automated trading and modern risk controls.