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

[Overnight]

Balls to the walls? That is OUCH!!! LOL But he DID have safety net!!! He bought 26 calls at $0.009 each for the 244 shorts that he shorted at $0.05 each!!! He HEDGED!!! LOL I am SURE his lawyer would bring this up as proof that he did vertical spreads according to his POA, I am sure!!

And the best of all, you can't even call him a crook!! He REALLY invested their money and invested their money like "they were his family". If this is how he invests somebody's money like they were his family, wonder how he invests somebody's money not like they are his family, worse like they are his enemy? Very scary dude indeed...

Well, JSOP, why don't you, I and everyone else here come up with the ET hedge fund?

How it works is, half of us go long in a thing, the other go short. We get investors to feed us our money monkey. We charge the transaction fees.

After a time, we all close simultaneously, and the clients all break even, minus the fees. No harm no foul to them, as they all knew there would be fees involved, but we rake in the dough on the fees?

So we would not be crooks, and they (our clients) would come out relatively unscathed. It's so easy, a caveman can do it? Teehee.

 

[JSOP]

Well, JSOP, why don't you, I and everyone else here come up with the ET hedge fund?

How it works is, half of us go long in a thing, the other go short. We get investors to feed us our money monkey. We charge the transaction fees.

After a time, we all close simultaneously, and the clients all break even, minus the fees. No harm no foul to them, as they all knew there would be fees involved, but we rake in the dough on the fees?

So we would not be crooks, and they (our clients) would come out relatively unscathed. It's so easy, a caveman can do it? Teehee.

Natural gas futures options, here we go!!! Let's go make some widows!! We shall invest like they are our family!!

 

[waklyn1]

After seeing the charts above, I looked at the excel worksheets more closely. I was wondering how can he lose money on puts if the NG prices shot up. I was right to doubt. It turns out he didn't, except on the 1 or 2 puts with the 2650 strike , he actually made money on the rest of the OTM puts. So this client had $800K+ of losses from the calls, but actually made profits on pretty much all of the puts, still bad losses but much better than the $1.6 million losses that he made out to be on the excel worksheet.

I am the author of the google sheets worksheet. It was copied by "Slope of Hope" (with no attribution) but I corrected some calculations after that point, added better color formatting, and included all positions from 11/8 through 11/15, i.e. the other commodities (gold, silver, coffee, soybeans).

If you look at the spreadsheet , you'll see that yes, the 214 short /NG puts that started in my account on 11/8 went from a paper + recognized profit of
11/8: $49K
11/9: $60K
11/12: $66K
11/13: $61K
11/14: $53K (including an $8K recognized profit)
11/15: $39K

Against this, the 244 short calls and 26 long calls over the same period went
11/8: $-33K
11/9: $-90K
11/12: $-159K
11/13: $-489K
11/14: $-1,046K
11/15: $-1,047K

The interesting thing to me is that it would have been better off to just sell all the puts on 11/8 or 11/9 than to hold on to them and get closed out on 11/15 when the increased volatility/vega had pushed up the prices of the short puts (even though they were *more* out off the money than on 11/8 or 11/9)

 

[JSOP]

I am the author of the google sheets worksheet. It was copied by "Slope of Hope" (with no attribution) but I corrected some calculations after that point, added better color formatting, and included all positions from 11/8 through 11/15, i.e. the other commodities (gold, silver, coffee, soybeans).

If you look at the spreadsheet , you'll see that yes, the 214 short /NG puts that started in my account on 11/8 went from a paper + recognized profit of
11/8: $49K
11/9: $60K
11/12: $66K
11/13: $61K
11/14: $53K (including an $8K recognized profit)
11/15: $39K

Against this, the 244 short calls and 26 long calls over the same period went
11/8: $-33K
11/9: $-90K
11/12: $-159K
11/13: $-489K
11/14: $-1,046K
11/15: $-1,047K

The interesting thing to me is that it would have been better off to just sell all the puts on 11/8 or 11/9 than to hold on to them and get closed out on 11/15 when the increased volatility/vega had pushed up the prices of the short puts (even though they were *more* out off the money than on 11/8 or 11/9)

No your puts (I assume that's your account) were closed out on Nov. 15??!! WHY?? They were OTM and making money. WHY were they closed out? To cover for the margin call on the calls? Well it's a good thing that they were held until Nov. 15, you got more out of them than if you had closed them on Nov. 8, right after you shorted them.

 

[PJB1994]

No your puts (I assume that's your account) were closed out on Nov. 15??!! WHY?? They were OTM and making money. WHY were they closed out? To cover for the margin call on the calls? Well it's a good thing that they were held until Nov. 15, you got more out of them than if you had closed them on Nov. 8, right after you shorted them.

All of the account positions were forced to be liquidated to cover the margin call. I believe the short puts were closed out a day after the calls were closed. I don't know why all the positions were not closed out on the same day, but on the day the puts were closed, natural gas prices actually dropped substantially, making it more costly to close them, resulting in even larger debit balances. Clusterfu$K all around.

 

[waklyn1]

No your puts (I assume that's your account) were closed out on Nov. 15??!! WHY?? They were OTM and making money. WHY were they closed out? To cover for the margin call on the calls? Well it's a good thing that they were held until Nov. 15, you got more out of them than if you had closed them on Nov. 8, right after you shorted them.

They were not all shorted on Nov 8. Look at the left hand side of the spreadsheet at column B (Date opened). All of the puts were opened a month or more prior to the collapse, and some were opened as far back as January 2018. The spreadsheet starts at Nov 8 just to show a snapshot of the positions at that time (up $49K -- and the entire strangle up $15.9K).

Nov 14th was the catastrophic event - i.e. a margin call went out and IntlFCStone (or OptionSellers.com?) went ahead and just started closing out all positions.

In what order they closed positions I can not tell, since yes, they would have been better to close out all the /NG Puts on Nov 14th which would have ended in a $53K overall gain or the puts rather than delay until Nov 15th when it ended up with a further $14K loss due to that delay.

They did the same thing with the Silver and Gold strangles, waiting until Nov 15th, which resulted in another $30K loss compared to having closed them out on Nov 14th.

The reasons why they weren't all closed out on the same day (too many positions to close? manual closes by OptionSellers.com instead of auto-closes by IntlFCStone?) will likely be discovered in court.

 

[newwurldmn]

No your puts (I assume that's your account) were closed out on Nov. 15??!! WHY?? They were OTM and making money. WHY were they closed out? To cover for the margin call on the calls? Well it's a good thing that they were held until Nov. 15, you got more out of them than if you had closed them on Nov. 8, right after you shorted them.

Non orderly liquidations is the absolute worst thing that can happen to you.

In this case OS had to stop the hemorrhaging and closed the calls (buying lots of delta making the puts more OTM). Then when that is over the market sells off and the puts are less OTM and they need to be closed off. It’s just another way short vol is tricky when the shit hits the fan.

 

[KINGOFSHORTS]

So whats the update on this guy?