Background:
My 90 year old grandfather accrued $10m in his lifetime. He loved his options and would get, pardon my vernacular if it is incorrect, margin calls every month because he traded so much that it exceeded his credit based on equity in his account: so he was a heavy options trader. He only sold puts and calls, never did he buy a single option.
He has now passed. A trustee is in charge of his accounts (family member). Lawsuits are flying left and right. I strongly suspect theft for a number of reasons. Trustee is required to follow prudent investment standards (opposite of gramps). However, despite several warnings, trustee has simply continued to trade massive amounts of options. Its like grandpa is still here!
Question:
How would a trustee intentionally write "loser" options either on grandpa's'account or their own account, then purchase the options that will obviously lose or win, allowing trustee to lose my grandfathers money through trades to benefit himself?
I have come up with this: trustee sells a put from their private account to grandpa as follows: Put, Google $800 for $2 per contract. This may be very elementary to you, i don't even know if you are allowed to write such a lousy option that nobody would buy unless they wanted to lose their premium.
Ok, i think you get the idea. Maybe you can advise me to more clever means that a trustee may steal via the avenue i have described. It would draw the least attention if an option was sold on grandpas account that 1) trustee could buy before anybody else could buy it or nobody else would want to buy it and 2) grandpas account would be guaranteed to lose on this trade. If grandpas account bought an option it would stand out because he never bought, only sold.
Thank You for your help!
My 90 year old grandfather accrued $10m in his lifetime. He loved his options and would get, pardon my vernacular if it is incorrect, margin calls every month because he traded so much that it exceeded his credit based on equity in his account: so he was a heavy options trader. He only sold puts and calls, never did he buy a single option.
He has now passed. A trustee is in charge of his accounts (family member). Lawsuits are flying left and right. I strongly suspect theft for a number of reasons. Trustee is required to follow prudent investment standards (opposite of gramps). However, despite several warnings, trustee has simply continued to trade massive amounts of options. Its like grandpa is still here!
Question:
How would a trustee intentionally write "loser" options either on grandpa's'account or their own account, then purchase the options that will obviously lose or win, allowing trustee to lose my grandfathers money through trades to benefit himself?
I have come up with this: trustee sells a put from their private account to grandpa as follows: Put, Google $800 for $2 per contract. This may be very elementary to you, i don't even know if you are allowed to write such a lousy option that nobody would buy unless they wanted to lose their premium.
Ok, i think you get the idea. Maybe you can advise me to more clever means that a trustee may steal via the avenue i have described. It would draw the least attention if an option was sold on grandpas account that 1) trustee could buy before anybody else could buy it or nobody else would want to buy it and 2) grandpas account would be guaranteed to lose on this trade. If grandpas account bought an option it would stand out because he never bought, only sold.
Thank You for your help!
