Background: My 90 year old grandfather accrued $10m in his lifetime. He loved his options and would get, pardon my vernacular if it is incorrect, margin calls every month because he traded so much that it exceeded his credit based on equity in his account: so he was a heavy options trader. He only sold puts and calls, never did he buy a single option. He has now passed. A trustee is in charge of his accounts (family member). Lawsuits are flying left and right. I strongly suspect theft for a number of reasons. Trustee is required to follow prudent investment standards (opposite of gramps). However, despite several warnings, trustee has simply continued to trade massive amounts of options. Its like grandpa is still here! Question: How would a trustee intentionally write "loser" options either on grandpa's'account or their own account, then purchase the options that will obviously lose or win, allowing trustee to lose my grandfathers money through trades to benefit himself? I have come up with this: trustee sells a put from their private account to grandpa as follows: Put, Google $800 for $2 per contract. This may be very elementary to you, i don't even know if you are allowed to write such a lousy option that nobody would buy unless they wanted to lose their premium. Ok, i think you get the idea. Maybe you can advise me to more clever means that a trustee may steal via the avenue i have described. It would draw the least attention if an option was sold on grandpas account that 1) trustee could buy before anybody else could buy it or nobody else would want to buy it and 2) grandpas account would be guaranteed to lose on this trade. If grandpas account bought an option it would stand out because he never bought, only sold. Thank You for your help!
you obviously live in lalala-land ... the only thing you should do is get a lawyer ... not posting on sites ... a fool and his money will soon part ...
I live in chicago metro and have consulted with three local experts who suggested doing my own research while we wait for our case to move through the courts. They are of no help until after the discovery process. It's not my money and never will be. i am helping my quadriplegic father who is being cheated out of his inheritance. Naturally he has had an attorney for some time. If you are knowledgable i would appreciate a constructive reply going forward. Show me how smart you are. The forensic accountants i have consulted with advised me that though the buyer and seller remain anonymous for these types of transactions, by trading certain ultra thin market contracts the trustee could be certain that their account is one party to the trade and grandpas account is the other. If only one person is selling a specific contract, it must be his account on the other end. Further, i was advised trade strategies could be utilized, such as straddles, where the sold options are all in trustees account and the purchased options are all in gramps account. upon expiration of the options at the end of the month, only the purchased options that are required to cover out of the money options sold in trustees account would be transferred from gramps account to trustees. I get it that i am not particularly knowledgable on this subject, which is why i dont participate in the markets at all. Its also why i am asking for help on this board. If you choose not to help, don't make ignorant assumptions as to the particulars of my finances nor their trajectory. It is my understanding that such foolish assumptions lead to substantial losses for options traders.
It could 'theoretically' be done in ways described above, actually doing it would be way harder since the trustee would have the 'competition' of the market makers involved and he could not be sure he actually 'gets the lucrative deal'. All in all seems very unlikely scenario's ... but not totally impossible ... the risk of having a non-knowledgeable trustee who just gambles the money away is much bigger ...
It would be possible to do what you have described on thin markets. Some options have no quotes. No market maker or any trader is even looking at them. On those markets it would be easy to trade at strange prices that would benefit one participant over your grandfather.
Market doesn't need to be empty, any not so liquid market would do. still think it's far-fetched though (and if true, very illegal in several areas, and not that hard to prove). it's still a bit difficult to understand what made you come up with this accusation? do you have access to trading records for exampe? it would not be that difficult to determine whether trades were made outside of normal market prices when you have the right data.
This makes me think of a story of a guy walking kinda awkward going to the doctor. The doctor asks him what the problem is.. well, he tells that he's great, but he knows a friend of a friend that needs some advise about getting a cucumber out of his ass.. The real deal here is that there is no trustee, neither an old geezer with a grubstake of $ 10 million. He's clearly trying to find a way to fleece someone out of the money, entrusted to him because they believed in his (non-existing) trading talent, and doesn't wanna get caught for fraud. Not millions, but just a couple of grand.. The whole grandpa stuff is obviously a load of bull crap, since he tells us the guy knew the money game, making him millions, yet still, at 90 and the grim reaper 2 steps behind him, he still had, not 100 grand or 1 million, but 10 million on a trading account? This simply does not add up.
what was the mel brooks movie.- the producers... they try something and have unintended consequences long story short. - once. I had 2 accounts and it was year end. ..i had some calls and puts in both . one a regular trading account and the other an IRA. i tried something to take a loss in my regular account and keep the profit in the IRA. what happened was. the market turned and I made more money in my regular acct and paid more taxes on it. and I ended up loosing in my IRA...
Yep, you can sell a call in one account and buy the call in the other. I have done it before transferring a position from one LLC to another. It is a total valid thing to do because you are making the trade available to the market, yet if the contract is thin, you have a chance to buy the contract that others do not want. Whether or not your motives are pure...I leave that to the ultimate judge, which is not me. Just do the right thing. Plus you have attorneys that can create a cease and desist order to stop trading which is what should be done. Otherwise this appears like a way to move illiquid assets from one entity into another and requires some skill in option trading.