sure steve, there are probably many like me here who want to see a dissection of what happened and could have happened as accurately as possible. why all the fascination is as you know; its a very compelling story! i would love to read more discussion between you and atticus on how vn could have averted this incident from happening.
You win LM. He sold the Mar puts at 6.00 as a standalone long index trade. I can't arrive at a position which would maintain a bullish posture and substantially reduce his risk. Risks that include EVERYTHING up to Nitro's 4th moment. You simply don't sell duration at six-handles on SPX. You don't buy index futures while maintaining an inventory of short puts. It's INSANITY. Edit: My wife sold puts on her 30,000 shares long ALGX, so I stand corrected. At least it wasn't an index trade and she's still seeking treatment.
I always thought the so-called Texas Hedge was a joke, that no one with 2/3 of a brain would consider that a workable strategy. Guess I was wrong in underestimating the hubris of some in this business. Peel away the Ph.D., the self-serving books, the arrogance, the eclectic personality, and what does one have left of the guy (VN--not you, Beck)? A degenerate gambler. A reckless, helpless degenerate gambler. He has a problem. And he needs help, one step at a time. Until he gets help, he should stay away from OPM, and, quite frankly, from his own. I wish him and his families the best. May he get the help he needs, and may he find some comfort in the fact that there are more important things in this life than money.
Assuming that the investor was in early enough to profit. What if you only recently invested? Opportunity cost? This also doesn't sound like an argument that would win if you insert any other fund in here. Worldcom, Enron and Tyco all made more money for me over the past 10 years than I lost when they went under, so their executives are off the hook?
<i>"A guy whose current net worth is still higher than everyone who participated in this thread put together."</i> Which means exactly what? The fact that he kept some fractional gains as personal wealth confirms what? For awhile this gossip topic was interesting to me. Now it's run the course. In all reality, what impact does VN have on any of our lives? None. What do we stand to gain = benefit from his ascent and/or demise? Nothing. I don't know him at all, just what I've read from the books before they became intolerable to turn another page. But I have seen him dozens of times before, via others who gambled in similar ways. His story solidifies one important fact for me: imperative to remain unbiased in market direction and be equally skilled in trading all three distinct trends: up, down and sideways. Failure to do that = no long-term success as a trader.