Hedge fund manager gets all his clients money liquidated

[Anonymous No.11843670]

So the background of this is that he was selling Natural Gas call options short, then NAT GAS jumps 20%, he gets all his 150M$ fund liquidated in 10 minutes, loses all his clients money, then cries and appologizes.

Boomers tell us bitcoin is a fraud, LOL:
https://www.youtube.com/watch?v=VNYNMM0hXXY&t=1s

[Anonymous No.11843737]

>>11843670
>Smart man in suit shorts natgas into winter
>Boomer defaults on second airplane
Hey bud, can I borrow 5k til next month? I promise I'm good for it

[Anonymous No.11843766]

>>11843670

[Anonymous No.11843772]

>>11843670
BOOHOOHOO

[Anonymous No.11843780]

>>11843670
based options gambler dabbing on gullible boomers

[Anonymous No.11843805]

>>11843766
Kekd pretty good at that one. SAVED.

[Anonymous No.11843816]

>>11843670
Because this dude leveraged his clients' money, not only they lost money, they also OWE money.

This has to be one of the greatest JUSTing in the history of Wall Street

[Anonymous No.11843834]

>>11843816
>leveraged his clients' money

WEW
E
W

[Anonymous No.11843835]

>>11843816

Small compared to others, but still a reminder to people never to trust all of their money to traders or crypto.

[Anonymous No.11843905]

>>11843816
how can people call bitmex scam? if you get liqd there at least you don't owe any money

[Anonymous No.11843956]

I don't follow the natural gas market but why would you go short in the winter? Seems like it would increase in winter because of heating.

[Anonymous No.11843959]

>>11843905

It's a scam to the point that they give poor people just enough leverage that they can't handle a hiccup without being liquidated.

So if you buy a coin with cash, for example, and it goes down, you can hold on to it for a while in the hope of it going back up. But if you take advantage of their handy 100x leverage, they keep your money AND they take your coin.

As far as these people owing money, when you borrow money to trade stocks or options, you have to pay back that loan whether you made or lost money on your gamble.

[Anonymous No.11843963]

>>11843670
>literally writes a book about diversifying
>fails to diversify and loses all his client's money
The fucking absolute state of boomers..

[Anonymous No.11844001]

>>11843963

Someone posted this in the other thread. Nothing says "trust me" like trying to explain how people "misunderstand" the concept of unlimited risk.

[Anonymous No.11844007]

>>11843959
well you can also eat enough salt to die so what? nobody makes you use more than 1x leverage

[Anonymous No.11844231]

>>11844007

Of course, people are always responsible for the consequences of their own decisions. But in a way it's predatory, much in the way that giving a credit card to a college freshman or conning them into taking student loans is.

In this case, people listen to everyone talking about all the great gains they can make using leverage, but they don't consider the flipside of the equation.

[Anonymous No.11844352]

>>11844001
why would you ever put your money in a situation where you could potentially lose it all, just like that?

[Anonymous No.11844366]

>>11844352
AND OWE MONEY???

[Anonymous No.11844376]

>>11844352

Because you think you're smarter than everyone else. There's a lot of truth to the idea that your first big loss is the best financial education you will have. With any luck, it happens early in your financial life, because the longer it takes, the more you are willing to gamble.

[Anonymous No.11844390]

>>11843670
JUSTED

[Anonymous No.11844503]

Does 4chan still do banner submissions? Spent like 9000 hours in mspaint, but if someone with photoshop wants to make a better one I think this is a pretty good template/starting point.

[Anonymous No.11844524]

>>11843670
At 6:40 I legitimately thought that he was going to break out into song.

[Anonymous No.11844532]

>>11844503

I like this. I wish they would use it, though you would probably need to turn him into a cartoon first so he doesn't sue for using his "image"

[Anonymous No.11844578]

>>11843670
Do you think he's really gonna repay Valerian Rex with a sandwich?

[Anonymous No.11844597]

>>11844578

Hey it's a CUBAN sandwich. That's got to be worth something. Maybe he can share the BBQ sauce too.

[Anonymous No.11844618]

>>11844231
yeah anyway my point was there's no margin call so whatever amount you put on the line you only lose so much

[Anonymous No.11844634]

>rogue wave

[Anonymous No.11844637]

>>11844618

The advantage of having bad credit, I guess

[Anonymous No.11844668]

We lost ALL your money - that'll be $93,000 for our services.

[Anonymous No.11844720]

>>11844668
You'd think they would at least wave the final account management fee

[Anonymous No.11844723]

>>11844503
unironically based

[Anonymous No.11844750]

>this corny as fuck boat metaphor

kek, do boomers really do this?

[Anonymous No.11844823]

PRESS “ty” to SAY THANKS FOR THE BBQ SAYCE

[Anonymous No.11844979]

>>11844823
ty

[Anonymous No.11844999]

this has to be a deep fake though
who moves as little as he does during 10 minutes?
his face seems to be almost always in the same position

[Anonymous No.11845019]

>>11844999

He's deciding whether to shoot himself or to jump off a building.

[Anonymous No.11845041]

>>11844503
you need to add in the cuban sandwich

>>11843670
bitcoin is a fraud, this moron just gambled options on natural gas and basically doubled down until he lost it all.

[Anonymous No.11845101]

>>11844823
ty

[Anonymous No.11845165]

>>11845041
idk seems cluttered, wish I still had photoshop and that I wasn't so paranoid about downloading a pre-cracked one or a keygen with a rootkit built in

[Anonymous No.11845173]

>>11844999
>who moves as little as he does during 10 minutes?
he's clearly xanned the fuck out

[Anonymous No.11845219]

>>11845165

[Anonymous No.11845245]

>>11844524
Someone should make a remix
James Cordier - Rogue Wave

[Anonymous No.11845421]

>>11844618
That is because the system is designed so that the EXCHANGE doesn't lose money and it doesn't trust you to pay beyond what they hold.

Bitmex manipulates the market so it can't lose. However there is no situation where lending them results in them losing money. If they let 10,000 people go 100X Long and there is nobody short when BTC spikes 2K you just don't get paid. They aren't in debt to you. So while you can't go into debt neither than they. Shorts and longs don't have to match up and they can lend infinitely because the worst case scenario is that they gain nothing.

[Anonymous No.11845444]

>20% jump = liquidation of all funds

absolute state of hedge funds. this must be some kind of a joke

[Anonymous No.11845514]

>>11843963
If your fund focuses on a niche market then it's not your job to diversify your clients' money. They should only be putting a small % of their net worth into your fund. Plenty of companies don't diversify their shareholders' funds. That's why people usually hold many different stocks. The same goes for narrow funds.

[Anonymous No.11845536]

>>11845219

The sandwich is too anti-feminist, and won't be fully understood by people who don't know the whole story.

[Anonymous No.11845644]

>shorts gas right as winter is starting
https://www.youtube.com/watch?v=3w5D9yJUMOc

[Anonymous No.11845824]

>>11844999
You have to give the guy credit he faced up to his disastrous decision and apologized publicly. If this were crypto the guy would have skipped town with everyone's money
>>11844999
>who moves as little
Someone who just shit their pants in terror

[Anonymous No.11845878]

>>11845644
>rogue waves
https://www.youtube.com/watch?v=sor5KTqNdxk

[Anonymous No.11846420]

>>11844503
pink wojak his face

[Anonymous No.11846934]

>>11844503
>>11844532
>>11846420
>Risk: infinite
>Stop loss: none
New biz mascot confirmed.

[Anonymous No.11847013]

>>11846934

[Anonymous No.11847023]

>>11847013
Last one

[Anonymous No.11847081]

>>11846934
>>11847013

[Anonymous No.11847104]

>>11846934

Just a technicality, buy you should change the one line to:

Risk: Unlimited.

Unlimited risk is an actual term.

[Anonymous No.11847166]

>>11843670
No stop loss?

[Anonymous No.11847183]

>>11847166

When selling options, it's technically called a buy-stop; but no

[Anonymous No.11847189]

Risk.
Finance

[Anonymous No.11847231]

>>11847104

[Anonymous No.11847250]

surely shorting with other peoples money is bad news

[Anonymous No.11847291]

>>11845444
He had a 5x leveraged call option contract that filled when the price spiked and he got wiped out i think.

[Anonymous No.11847313]

>>11843670
>letting other people invest for you
c*cks

[Anonymous No.11847340]

>>11843670
>father sailed an 800 footer on the great lakes

[Anonymous No.11847347]

>>11843816
>>11843834
Wait, so his clients owe money too?

[Anonymous No.11847353]

>>11847347
Yep!

[Anonymous No.11847376]

So how long before he offs himself? He should probably be put on suicide watch.

[Anonymous No.11847473]

>>11847347

One of them had nearly half a million dollars with him. 3 days later, it's all gone and he owes the clearing house $150,000.

[Anonymous No.11847495]

I want a side by side picture with the guy who got paid on this.

[Anonymous No.11847671]

>>11847495

It was probably several people. For him to have lost that much, he would have been selling a boat load of options.

In that sense, he was acting like a market maker; so they were probably purchased by hundreds (if not thousands) of retail investors, all who got a little profit out of it.

If he was a REAL market maker, he wouldn't have had this problem. He would have executed a conversion which would have been considered a "lock" (profit already locked in.

Retail investors can't do it because commissions and other fees fuck up the math; but if he had, he would have balanced it this way....

1. Sell 1 call (which is what he was wanting to do)
2. Buy the underlying stock or security
3. Buy a put with the same strike price as the call you're selling

Or, in shorthand .... ( +u +p - c)

In fact, when someone sells a call, the market maker automatically does this, because they make their profit no matter what happens to the stock price or no matter whether the call is profitable or not.

[Anonymous No.11847693]

>>11847671
Cool thanks for that bro

[Anonymous No.11847744]

>>11847693

In the last few years I've been brushing up on my options skills. That was something I read in the top book, written by a former floor trader at CBOE.

[Anonymous No.11847746]

>>11847671
Also, what were the odds of an outcome like this? Was he absolutely gambling or was it like a 10,000 to 1 shot?

[Anonymous No.11847755]

>>11843670
>clients are family
>i owe you a cuban sandwich
>french riviera so beautiful
>audio visual guy said short
>rogue wave
>thank you so much for the barbeque sauce

[Anonymous No.11847757]

>>11843670
>Boomers tell us bitcoin is a fraud,
Getting paid to manage money or study the market or any of that shit is also a fraud because no one knows anything, and if you ever beat SPY, it was just luck

[Anonymous No.11847776]

>>11847473
Wouldn't the client's be absolved of liability though? They weren't the ones taking out the options contracts.

[Anonymous No.11847784]

>>11847746

Before 2008, most people (probably myself included) would have considered it a very rare possibility. But after 2008, all bets were off and you had to think about it.

This happened over the course of three days. More than likely, he saw the loss on day 1 and thought "well, it will reverse tomorrow, no need to panic". By day 2 he was in "oh shit" mode, and by day 3 he was wiped out.

Psychologically it is a very tough spot to be in, especially with big money (a problem I DON'T have to deal with, by the way).

It's the same logic that whispers to you to double down on a stock you hold that has crashed in the hopes of cutting your average price and getting out with your neck; or when you have a run of good luck and think you know what you're doing.

I've had it both ways. Two true stories...

1. I research and buy a stock in a company. A few days later there is a buyout rumor and the stock goes up 80%. I get out with a very quick tidy profit.

2. I research a stock, I read the reports, I do all the math, I buy the stock... I kid you not, the next fucking day they declare bankruptcy out of the blue and I'm in queer street.

The bottom line... shit sometimes happens. You just have to be prepared for it, and be willing to cut off a hand to save the body when necessary.

[Anonymous No.11847786]

>>11847671
>1. Sell 1 call (which is what he was wanting to do)
>2. Buy the underlying stock or security
>3. Buy a put with the same strike price as the call you're selling
I don't get it, doesn't that cancel out everything you could have made? If you sell a call and buy a put at the same strike price, assuming the premiums are the same, you make zero money whichever way the underlying goes.

[Anonymous No.11847823]

>>11847473
>One of them had nearly half a million dollars with him
Well it was a 150M fund with 292 clients so the average client was higher than a half million.

[Anonymous No.11847826]

>>11847786

Yes. I don't know if you're a star trek fan, but if you are, think of the episode where data is playing that game against the genius and keeps losing. In the end he plays to tie and just fucks the guy over.

It's the same thing here. Market makers are in business to provide share liquidity. They will buy when someone wants to sell, and they will sell when someone wants to buy. That's their entire function.

So to them, breaking even is the goal because even at breaking even they make money through the fees and commissions they charge.

So the math in this case .....

+u+p-c

Buy stock
Buy put
Sell call.

The price goes up...
... the call they sold gets exercised, the shares are handed over, the put expires worthless.

The price goes down...
... the call expires worthless, the put makes the profit, and cancels out the loss of the underlying shares.

Price remains the same...
... the call and put both expire worthless, they sell the shares for the price they bought.

No matter what happens, they break even on the transaction. But this only works for market makers because they pay no commissions on their transactions, but they customers they deal with do.

[Anonymous No.11847851]

>>11847776
not if they sign a contract allowing him to do that

[Anonymous No.11847859]

>>11847786

But in the case of this guy, if he was going to sell calls, he should have bought an equal number of calls at a higher strike price.

It would have limited his potential profit, but it would have also limited his potential loss.

But going into a trade with a fixed gain (the premium on the call you sold) and an unlimited potential loss is just crazy.

[Anonymous No.11847871]

>>11847851

Ya, it sounds like his relationship was as the agent for their account. So he decides what to trade, but the accounts were still in the name of the client.

So for all his sorry over losing his hedge fund, he still has his money.

[Anonymous No.11847883]

>>11847859
>>11847826
Ah I see, it's a commissions game. That makes sense.

Yes, I remember that episode of TNG.

good post anon, you're going to make it

[Anonymous No.11847912]

We should make bets on whether or not this guy gets killed by one of his clients in the next few months...

[Anonymous No.11847949]

>>11847912

I think he's more likely to kill himself. I'm surprised he hasn't already. He knows he's going to be sued; and (if he did anything illegal) charged.

The guy was a dumb ass but I think his heart was in the right place. And now he's having an existential crisis because his entire self-definition has been taken away.

He knows he fucked up, he knows there's no way to make it up, he knows he will either be broke or in jail; and his entire identity is shattered.

[Anonymous No.11848035]

how do i get boomers to give me hundreds of millions of dollars to gamble with