Shorting vol (naked) with “Other People’s Money…”? What could possibly go wrong?
Q: Have I lost all the money in account, then?
“Stocks are great, until they aren’t,” proclaims the now ‘dark’ website of Tampa-based OptionsSellers.com, explaining to ‘high net worth investors’ that “options are better but most make the mistake of buying them.”
And so, the thoughtful-looking, wealthy grey-haired gentlemen of today should given their Fed-earned money to the managed accounts of OptionsSellers.com, which touted itself as a premier and highly experienced commodities options trading firm. The firm’s president and head trader, James Cordier, explained in a recent interview: “Our goal is to take an aggressive vehicle and manage it conservatively.”
Unfortunately for the clients’ managed accounts, Cordier’s actions were anything but ‘conservative’.
On November 15, 2018, OptionSellers.com notified its investors in an email entitled “Catastrophic Loss Event” that it not only lost all their money, but that they would also owe money to Intl FC Stone for margin calls.
I am writing to give you an update on the situation here with your account.
We have spent the week unwinding our short natural gas call position as expediently as possible.
Today which was to be the final day of liquidation, the market flared as prices appear to have been caught in a “short squeeze.”
The speed at which it took place is truly beyond anything I have seen in my career. It overran our risk control systems and left us at the mercy of the market.
In short, it was a rogue wave and it overwhelmed us.
Unfortunately, this has resulted in a catastrophic loss.
Our clearing firm, FC Stone now requires us to liquidate all positions. We hoped to have this done today. If not, it will be completed tomorrow.
Your account could potentially be facing a debit balance as of tomorrow. OptionSellers.com will be processing fee credits over the course of the coming days to help alleviate debit balances. What these will be will be determined after all positions are cleared.
This has in effect, crippled the firm. At this point, our brokers at FC Stone have been assisting us in liquidation.
Our offices will remain open and we will all still be here to answer your questions and process account closings. We will do everything in our power to ease what discomfort we can.
I am truly sorry this has happened.
I will be updating you again via memo in 24 hours.