James Cordier’s hedge fund lost $150m from selling options. His investors received an email stating they had lost all their money and owed more to cover a margin call.
He then recorded a cringe-worthy apology video where he apologized for ten minutes about how bad he felt.
You must learn about the OptionSellers blow up and James Cordier’s mistakes if you trade options to avoid making the same mistakes.
Who is James Cordier?
James Cordier is an ex hedge fund manager who managed around 290 people’s money.
He was known as an options trading master, and many people have purchased his book, The Complete Guide to Option Selling: How Selling Options Can Lead to Stellar Returns in Bull and Bear Markets.
However, his knowledge of options trading didn’t stop him from blowing up his hedge fund.
James Cordier’s net worth was significant until he took too much risk trading options.
Why Did OptionSellers Blow Up?
James Cordier piled the OptionSellers fund into a short call position on natural gas futures and a short put position on crude oil.
He was overleveraging into these positions and taking on a ton of risk.
Additionally, he was not hedging the portfolio with any shares or long calls, meaning the position on natural gas came with unlimited risk potential to the upside.
The chart above displays the weekly natural gas futures chart in late 2018 when the fund blew up.
You can see the monstrous green candles on the right side of the chart, signaling exactly where James Cordier was margin called on natural gas.
The image above shows the weekly chart of crude oil. James Cordier sold puts on oil, and you can see the series of red candles that wrecked his overleveraged position.
Therefore, James Cordier lost money on natural gas and crude oil, betting the exact opposite of what happened.
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