The encyclopedia · Trading & Investing · Financial decision · 2018
OptionSellers.com lost $150M on naked natural gas options — and apologized on YouTube
James Cordier's firm sold unhedged naked options on natural gas. When prices spiked, clients lost $150M and Cordier posted a tearful apology.
OptionSellers.com · 2018-11
What happened
OptionSellers.com was a Tampa-based commodity trading firm founded by James S. Cordier, a former energy trader and author of 'The Complete Guide to Option Selling.' The firm specialized in selling naked options on natural gas and other commodities.
The strategy involved collecting premiums by selling options without hedging — a bet that worked well in calm markets. In November 2018, natural gas prices spiked unexpectedly, causing catastrophic losses on the unhedged short options positions. The firm lost approximately $150 million of its clients' money in a single week.
Cordier posted a tearful apology video on YouTube taking full responsibility. OptionSellers.com filed for Chapter 7 bankruptcy liquidation, reporting $150 million in liabilities against only $1.5 million in assets. Hundreds of investors, many retirees, lost their life savings.
The case became a viral cautionary tale about the dangers of unhedged options strategies. Cordier's YouTube apology was widely mocked on Wall Street, and the firm was featured in investigations by the AP and Institutional Investor.
Why it happened
- OptionSellers.com sold naked options on natural gas — collecting premiums without hedging, a strategy that works until the market moves against you.
- When natural gas prices spiked in November 2018, the unhedged short options positions collapsed instantly, wiping out $150M in client funds in a week.
- Cordier had no risk management for a tail event in natural gas — a famously volatile commodity where price spikes are common and predictable in hindsight.
The lesson
Selling naked options on a volatile commodity is not a strategy — it is picking up pennies in front of a steamroller. When the roller moves, you lose everything.
Sources
- Wikipedia — List of trading losses
- AP News — How man went from high roller to YouTube apology
- Institutional Investor — Remember Wall Street's Viral Laughingstock, OptionSeller.com?
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