Optionsellers.com goes bust and the apology video is painful to watch

[srinir]

Their fees were the $69 round trip.

Is that per contract?

 

[manonfire]

Their fees were the $69 round trip.

I thought he would also have to be an introducing broker to skim the commissions to FCStone. He gave up his IB registration in 2012 according to nfa website.

Were their any disclosures that he was sharing in the commission revenue in any way? That commission is way out of line with even broker assist retail. Perhaps that's why FCStone kept the positions open, may not have been the first time they bailed him out.


https://www.nfa.futures.org/basicnet/SearchResults.aspx?type=firm&firm=OPTIONSELLERS.COM

 

[Dolemite]

And he's got clients all around the world, people as far as Malaysia, Nigeria (undoubtedly the real Prince himself)

For once the tables were turned on that crafty Nigerian Prince!

 

[JSOP]

If you tell people you have a hedge fund and tell people to invest in the hedge fund because he has the edge and hedges said edge, isn't it a hedge fund through promotion? After all, he's hedged, right?

Or am I missing some humor here. Sorry, feeling weary. Is it time for my meds?

I think you ate too much raw turkey. LOL

 

[JSOP]

For once the tables were turned on that crafty Nigerian Prince!

LOL Good one!! Yes he lost everything that he gained from those phishing schemes. Karma!

 

[Overnight]

I think you ate too much raw turkey. LOL

No more turkey here, we scarfed the remainders over the weekend. I may still be feeling the effects of a tryptophan overload. (But if that were true, why do I feel wired?)

 

[PJB1994]

Is that commission per contract regardless of the trade amount or does it change according to trade amount? What about management fees?

It was per contract round trip. There were no management fees, but he reduced the $69 fee if you had more money in your account (reductions at the $1M and $10M levels), I believe - but I don't have those rates handy.

 

[Overnight]

It was per contract round trip...

*choke* He should have stuck with discretionary trading futures at that fee schedule. And he might have survived.

 

[srinir]

It was per contract round trip. There were no management fees, but he reduced the $69 fee if you had more money in your account (reductions at the $1M and $10M levels), I believe - but I don't have those rates handy.

Wow, This works out more than 2/20 hedge fund structure.
For diversification reasons he will be selling teeny options on NG, Coffee, CL,Wheat, Gold, Bonds, Indices etc. He is also time diversifying in his approach, so selling teenies on 2,4, 6 months out. Assuming 10 contracts in 10 asset classes in 3 different month time frame is 300 contracts. Almost 20k/month. Even assuming 1 million account size, that is 25% fee

 

[JSOP]

Wow, This works out more than 2/20 hedge fund structure.
For diversification reasons he will be selling teeny options on NG, Coffee, CL,Wheat, Gold, Bonds, Indices etc. He is also time diversifying in his approach, so selling teenies on 2,4, 6 months out. Assuming 10 contracts in 10 asset classes in 3 different month time frame is 300 contracts. Almost 20k/month. Even assuming 1 million account size, that is 25% fee

Yeah but that $69 would include what he would have to pay FC Stone. Assuming he places all of his trades broker-assisted which would incur the most expensive commissions. TD Ameritrade charges $45 for broker-assisted trades for stocks, assume they charge the same thing for options on futures. So that would leave him (69 - 45) = $ 24 X 300 contracts that would be 7.5K per month, for 12 months, that's $90K per year, commissions/fees pocketed by him. So that article was right. That would be his annual fee, not in management fee but in pocketed commissions. Now that's what he charges for any account sizes below $1 million. So let's say the account size is $500K, 90K/500K = 18% fee. So he has to make basically 43% return in order to give his clients 25% return net of fees according to this calculation.