How much OptionSellers.com charged for their services or profit? How much is your approx margin debit, if you don't mind answering?
Thanks PJB1994. Btw, I was also impressed by OptionSellers Track Record earlier, and was planning to enroll, however I was not HighNetWorth Individual, so I did NOT take this further. Also, i was impressed with their books, material, and overall videos they published, and thought they knew in/out of trading world. If they just charge $69 transaction fees, which means the only incentive they have, is doing multiple transactions in your account, for them to make more money. Not like hedge funds, where they take margin from your profit share.
I also checked them out 8 years or so ago under the name of Liberty Capital and was very impressed. The year prior they had a gain of 60% even though their stated goal was 20% to 25%. Thus, it is likely that their longer term clients have come out with full capital recovery and additional profits overall. I understood exactly what they were doing but I was comfortable considering going with them (in the future when I could afford it), because of their commitment to cutting losses. They said that if a position ever got to the point that their open loss was equal to the the full potential profit on the trade then they would cut it loose and that would happen slowly because of long option expiration time and large strike price distance from current levels. I understand options so this made sense to me. At that time they promoted 12 positions with 3 expiring every quarter all in uncorrelated markets so the risk seemed contained. It was a matter of either making X or losing X on each trade with a very high percentage of winners. It seemed like a fairly conservative way to make a very high return. They stressed an extensive study of fundamentals in each of their markets so they understood where the price was not likely to go and that is the price level that they sold their options. I fully understand why PJB1994 made the investment and the flak that some have given him is unjustified. And it worked for a couple of decades until I guess he just violated his exit rules one time and this is the time that the price when far beyond where he thought it could. And it prove fatal. So Sad.
Thanks, Illini Trader. I actually came to this site to get some information (some have been great) and to share my first-hand experience for others' benefit. I have been surprised by some of those who feel compelled to judge. Thanks for understanding. I'm wondering if the people who were his clients longer term are even worse off than clients (like me) who were relatively new. Everyone's account was completely wiped out and everyone was left with a debit balance. Unless people took out their profits along the way, I'm thinking they not only lost their entire investment but all the profits ever made and are potentially left with even larger debits than mine. Here's an excerpt from one of their update memos: What Happened to My Account? Your account was caught in an extraordinary bout of volatility in the energy markets. In particular, natural gas prices experienced a parabolic move over the past 3 trading sessions. We had a short call position here that was on the wrong side of this. The magnitude of this move was so fast and intense that it overwhelmed all risk measures in place. It was like nothing we’ve ever seen. It was featured on page B1 and B12 of today’s Wall Street Journal. For anyone wishing to learn more about the actual market conditions causing this, I recommend reading both articles. It seems there are other traders and hedge funds across the country that have run into difficulty resulting from the same move. Regardless, the move was so intense that losses multiplied exponentially in a very short period of time. While we exited using all the risk measures we’ve always used, it was not enough. The event resulted in a catastrophic loss to the portfolio. Your account now likely not only has a zero balance – the balance is likely slightly debit. What is a Debit Balance? Debit balance means the account is less than zero (negative balance) and that you may owe money to bring the account back to zero. Futures are an automatically leveraged product. Which means that it is possible to lose more than you initially put in. While I have never seen this happen – or even come close to happening since inception of managing these portfolios, I’m afraid it did happen as a result of this event. Have I lost all the money in my account, then? Yes What do I do about this Debit Balance? You likely received a debit call notice from FC Stone this morning via email. You may receive it in the mail as well. This is a call to add funds to bring the balance back up to zero. Instructions for paying the balance are on the notice. Any questions on debit balances can be directed directly to FC Stone at the number on the notice. Stone requests the funds asap but if it takes a few days, that is OK. What happens if I don’t pay the balance? We recommend balances be paid. If it is not paid, it becomes like any other unpaid bill.
I don't understand how you could have a higher win percentage on a 1:1 trade. This would be like the holy grain. It seems to me that the 1:1 is an illusion. Sure, you can say that this time they didn't honor their stops, but I imagine there were many other times where the X loss would hit, but they didn't exit, and it came back. Many traders notice how many times the market comes back so they are reluctant to exit and take the loss, but then of course the one time they don't, the loss ends up being 10 times bigger or more than it should have been. Perhaps they thought they could get out, but by the time they wanted to get out, they simply couldn't at anywhere close to their price. Its all still speculation though. Do we even know if they tried to get out? It sounds like they kept holding these positions hoping NG would drop in price but the margin calls came before the rebound. Perhaps there just wasn't enough liquidity either to get out for their 290 clients, even if they wanted to. I would be very curious to see how they managed their losing trades and how often these happened.
NG closed the week Nov 9th right at highs not seen in over 4 years at 3.724 so the short call position was probably in a 1X loss position even then. Nov 12 broke strongly into new high territory closing close to its daily high at 3.935. That world have most certainly triggered his 1X stop loss or well beyond. Then on Nov 13 NG rose steadily closing at 4.072 with plenty of opportunity to close the position during the option trading hours at a non fatal loss. Then on Nov 14 he woke up vomiting as he saw NG move from 4.11 at 5:00 AM to 4.93 shortly after 7:00 AM New York Time. He had two full days to take the loss and save his clients. The parablolic move came in two hours on the 14th before the regular option markets opened. And when they did there was so much volatility premium built into the call prices that he was screwed. He chose to jump in front of a freight train hoping it would stop. IF he had only followed his own rules he would still be in business.