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I’m just now hearing about this. Terrible for the firm and the clients who lost all their money. In that video I saw a man shell shocked and stripped of everything. But you don’t get to this point without some ethical lapses in risk management. If Mr. Cordier feels bad now, wait until the attorneys for his “family members” (former clients) are suing him for negligence. I have no idea if they’ll be successful, but the lawsuits are coming, and Mr. Cordier is probably going to be spending more time the next few years being deposed than running an investment fund.
This has happened so many times before in the markets and it will keep happening. History repeats itself, always.
James Cordier's book was why i shorted commodities futures options.
It has been working for the past 2 years and I was lucky to close out my short NG calls in the first week of November cuz i thought, "winter is coming".
What if I wasn't "lucky" for another commodity i shorted?
I'm heavily short on coffee and cocoa calls... I'd probably unwind those positions.
Lacking confidence at the moment... Anyone else thinks shorting commodities options isn't really such a good idea?
I still think that it is a good idea to sell options.
The main reason is that I think I understand what went wrong. Cordier sold calls in a weather market , and he did not get out when it was obvious that his trading idea did not work this year (see details in a former post). The fundamentals were different to many other years in so far, as Supply & Demand were extremely tight. This obviously brings the risk that a cold blast - which is hard to predict - results in a major move of Natural Gas prices.
It is not the first time that a large firm gets problems trading short options or spreads for Natural Gas in winter (NGZ, NGF, NGG, and NGH contracts).
Regarding coffee I prefer holding strangles in the March contract, regarding cocoa I am waiting for lower prices to again sell puts.
Best regards, Myrrdin
PS: I do not know what you call "heavily short". I sleep well holding positions (more or less) independent from each other with a volume of 1 to 3 % of the account.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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I think they may have either taken it down or restricted access. If you forward to 7:58 of this video though somebody has embedded it into their video! For anybody hoping to get a better insight into what happened - there's nothing here - it's just a very somber and depressing apology.
I found this interesting article relating crude and nat gas moves. Its a speculative theory, but an interesting read. heisenbergreport.com/2018/11/13/trader-crude-nat-gas-moves-due-to-1-800-get-me-out-moment-for-a-large-hedge-fund/
Yeah, heavily short is subjective and relative. Been doing well in those markets so i've been greedy and am over what would be my usual trade size for each commodity. I will need to assess my risk management.
That watch might be all he has left. It really is heartbreaking to invest all of your life into something that you really really love only to find out decades later that you're not good at it. He was a man broken on his apology video. I just hope he doesn't do something stupid.
