OptionSellers.com clients were required to open accounts at INTL FC Stone and provide OptionSellers.com with trading discretionary trading authority. Tampa-based OptionSellers.com is a registered commodity trading advisor that offers clients individually managed portfolios.
According to OptionSellers.com’s website, prior to being taken down on November 16, 2018, it conveyed to its customers that “our goal is to take an aggressive vehicle and manage it conservatively.” Unfortunately for its investors, OptionSellers.com traded “naked” options on various commodities. James Cordier, President and Head Trader at OptionSellers.com, has been an outspoken proponent of using naked options to trade in the volatile energy market. In numerous interviews and articles, as well as his own book, Cordier, touted the potential rewards and promised consistent results.
On November 15, 2018, OptionSellers.com experienced a “catastrophic loss event.” In addition to investors completely losing their principal investment, INTL FC Stone, the brokerage that cleared the firm’s trades, has issued margin calls to many of OptionSellers.com’s customers. This margin call requires investors to deposit additional collateral in the accounts. Therefore, not only did these investors lose their entire principal, but now they will be required to come up with additional sums of money to address the negative equity in their INTL FC Stone accounts.
If you are an OptionSellers.com investor who invested in their natural gas plan, Peiffer Wolf Carr & Kane are actively investigating claims and representing clients against James Cordier, Rosemary Veasey, Matthew Donovan, Michael Gross, Alicia Zedella, and INTL FC Stone. Contact Us Today by calling 504-523-2434 or by filling out an online Contact Form for a FREE Consultation. We Fight for Investors.
According to Bloomberg, an option gives someone the right, but not the obligation, to buy or sell a commodity or security within a predetermined time period. Options are said to be naked when they’re unhedged. If a market moves violently against a naked short options position, it raises the prospect of almost unlimited risk.
On November 15, OptionSellers.com emailed its investors with a message entitled “Catastrophic Loss Event.” Within this email correspondence, OptionSellers.com delivered the worst kind of message: Not only had it lost their investors’ money, but those same investors would also owe more money to INTL FC Stone for a margin call. As represented by OptionSellers.com, they lost their investors’ money because of a “short call position in natural gas” that “overwhelmed all risk measures in place.” To make matters worse, OptionSellers.com informed investors that they need to come out-of-pocket by paying INTL FC Stone to bring their account balances back to zero.
“People like to sell options rather than buying options because the odds of making money are better, said Jack Scoville, vice president at Price Futures Group in Chicago. However, as we saw with natural gas, that’s not always the case. You can get into a situation where the market is getting away from you pretty quickly.”
The Catastrophic Loss Event that caused these losses is known as a “short squeeze.” Specifically, there was a “short squeeze” in natural gas and crude oil. Participants in the market “covered” short positions, causing a spike in the price of natural gas and crude oil. At this moment, OptionSellers.com had a large short call position. Thus, OptionSellers.com didn’t hedge investor assets and investors experienced a complete loss. This type of strategy is one of the riskiest because it exposes an investor to an unlimited amount of risk.
Peiffer Wolf Carr & Kane is currently investigating claims for anyone who has invested with OptionSellers.com. We are currently representing clients against James Cordier, Rosemary Veasey, Matthew Donovan, Michael Gross, Alicia Zedella, and INTL FC Stone. Contact Us Today by calling 504-523-2434 or by filling out an online Contact Form for a FREE Consultation.
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