It is not about big brains. It is about arrogance. Stay humble no matter how good you are. Arrogance can kill you financially.
Optionsellers.com goes bust and the apology video is painful to watch
- Thread starter Sweet Bobby
- Start date
It is not about big brains. It is about arrogance. Stay humble no matter how good you are. Arrogance can kill you financially.
But they wanted profit!! Their aim is 25% return for their clients. If they would've never been able to achieve that return figure even with leverage because his position is usually 50% to 100% OTM as he said in one of the interview. And plus he really believed that their position would never get ITM with his position being so far OTM as he believes that those commodities would never move that much so he obviously feels credit spread are not that necessary.
And according to his interview, he said he does exit and/or roll his positions to limit losses so why didn't he exit earlier when he was just losing much less? I find this puzzling as well.
This is a classic example of trading without stop discipline.
Some on ET argue against stops... " Stops just create losers. Stocks always come back if you just hanging there". Until one time they don't.
Similar thing is going to happen to some leveraged Nasdaq players in the next real bear market.
That shouldn't be puzzling to most traders. Everyone has experience of doing that.
Letting losses run is a deeply ingrained natural human tendency and most of us will be susceptible to it even after 30 years of trading.
Our only hope is making risk management a core part of every trade. So we don't fall victim to to this trap.
But if you have a very high win rate and large losses are very rare, you are going to eventually feel you don't need worry about risk management so much.
Personally i trade a system with a win rate of around 35 to 40%. The importance of risk management is obvious when you have such a low win rate and long losing streaks, it is harder to become complacent about it.
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Wiped out all his client funds but still sits there with his fat ass watch and gay cuff links. And talks about BBQ and bass fishing. Only happens in America. What a Schmuck. Hope this guy gets put behind bars.
Why? Because this Schmuck CEO still wears a watch, probably sits on a fat mansion and most likely has grossly violated his fiduciary duty that he contractually and by law assured his investors. I hope they strip him naked and then he can commit suicide. Zero compassion with criminals like him.
All money managers are protected by the disclaimer "No guarantee that your investments can make you money. Markets are risky". He can claim to be hit by an unexpected black swan event. I think he will still be wearing his watch.
It’s true and you are likely correct.
I am assuming that customers losses were limited to deposits and not additional losses....maybe big watch guy is going to ask his customers, sorry - FAMILY - to help him cover his margin calls.
They probably, have been selling naked calls for years and figured that they have it in the bag! However, the risk profile for selling naked calls is the risk is unlimited to the upside! When, there is a big run up, now you have to cover quick because the losses keep piling on! If the calls are thinly traded, you are at the mercy of the call sellers who can jack the call option prices sky high knowing you have to pay to exit! And if you are stuck in deer in headlights mode and paralyzed in fear, you now double, triple your losses because you cannot pull the trigger to get out with the huge losses!
Losses were not limited to deposits. Many owe tens of thousands, some more, to FC Stone. I’m one of them. We owe about $55,000 and when we talked to FC Stone, ours was one of the smallest balances.