Optionsellers.com goes bust and the apology video is painful to watch
- Thread starter Sweet Bobby
- Start date
They were over leveraged. Trying to make 25% a year net of fees selling deep otm juice is far from a good idea (especially in low rate environments).
BUT I find it fishy that a guy who has 30 years experience trading commodity futures blew up on a 40% NG move over a 10 day period. These moves are not uncommon in some of the thinly traded commodities.
I think other things will surface about this hedge fund. He was either short a stupid amount of NG calls or he was hiding stuff from his clients and this NG move was the last straw.
BUT I find it fishy that a guy who has 30 years experience trading commodity futures blew up on a 40% NG move over a 10 day period. These moves are not uncommon in some of the thinly traded commodities.
I think other things will surface about this hedge fund. He was either short a stupid amount of NG calls or he was hiding stuff from his clients and this NG move was the last straw.
Good for you. I am an options buyer nowadays. I like the limited risk on worst case scenario. With lots of upside on calls and puts.
I disagree with you there sir. I have been eyeing NG for 4 years. What it did last week over those 2 days was totally UNCOMMON.
And NG is not "thinly traded". If you want thin, go to the softs like Milk.
(And I am not seeing this "40% move" you speak of. I see 20%?) Anyways, heh.
I know. That's why I don't invest in the stock market. I put all my money into lottery tickets. Risk only $1 or $2 for the chance to make hundreds of millions!
short call position in crude oiL???
Maybe they mean short puts?
Or short natty calls??
I remember many years ago when I first got involved in futures... a story specifically about a natural gas trader who wrote calls on NG every month for years and years and years. He was just printing money. Every month reliably. Making millions. Until one day I believe it had something to do with greenspan saying something about NG. And the price exploded from like 2 to 11 in a few days??
And he lost everything he had and then a whole bunch more.
Risk of ruin.
Imagine you were naked short SF puts a few years ago. That’s a career ender.
They happen.
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I agree with you. The move was strong but there seemed to be plenty of time to make adjustments. Especially easier to cut losses because it's not his money. Or maybe that she video is so remorseful. It will be interesting to see what unfolds. If it gets exposed to the public... The big news is in the catastrophic event, the follow up details... Not so much.
More discussion on this blow-up.
It seems they had naked calls where the risk is unlimited to the upside. For supposedly, experts in selling options for premium, they should have known better! Atleast, buy a higher strike call to mitigate some of the risk. They were arrogant for their own good!