I personally like that option just like in forex, because just like you argue yourself it allows to keep a minimum amount of money on account and reduce counterparty risk as much as possible. But to a greedy and dumb it offers a way to kill themselves. Just like a rope and some soap.
I'm not sure who's more negligent here, the idiot who placed the trade, or Etrade for offering shorts.
Hard to imagine a broker with good risk models offering shorts on a micro cap biotech.
"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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Yes that was the point. If there is no ask offers how do you sell. Stops cannot work. What I learned about the flash crash was it was more question about the delays not missing offers which lead to a situations without trading... I may be wrong...
BUT of course I understand and agree with you the liquid stock index futures are MORE safe than pure stocks.
What comes to managing risk is what I said earlier that there is NO other way to fix than try to hedge IF you are lucky to find something tradeable. The interesting question is for example that what are our options for a hedge in the case of invalid ES futures ? Should discussed in another thread I think (OT here).
Every market and instrument can go invalid and you can be totally trapped if there is no willing to buy or sell. During that time the markets can prepare for a big gap and when it again resumes you may be in deep trouble.
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No feelings in my book. This guy shorted a $2 stock (could you even short a $2 stock in E-trade, and if so get a hold of that much?) he clearly does not know how to figure out his risk management when shorting so much of a $2 stock. He should have never shorted so much on a penny stock and now begging for money. He should man up and find a part time job, McDonalds I am sure will hire him. I do not think it would take more than 4 years of working part time to cover the bill. He is a joke.
As a broker, I would say this: We expect the trader to use some common sense when it comes to risk, and follow through when it comes to risk management. Specifically in futures, if you use high leverage, short options, etc. then pay attention and realize that the "Black Swan" will happen to you. It's not if, it's when. Your attention to details combined with the quality of your risk management, and your risk appetite will determine the impact on your account.
Do not under any circumstances leave positions unattended.
Do not underestimate the leverage your carry with your futures, or short options.
Prepare for the one off events and PLEASE do not pay much attnetion to arguments based on past events.
Anything can and will happen.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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