Investors and traders thought the video was parody, at first.
“Real talk: between the domain name, headline, and the fact that he released via YouTube, I thought this was a joke,” tweeted Christie Hamilton — a portfolio manager for Children’s Health in Dallas, Texas — late Friday.
In the video, the head of OptionSellers.com — a commodity-trading advisor — sits at a boardroom table in a suit and tie, wearing cufflinks and a Rolex-resembling watch.
“Needless to say, the events of this past week have been incredibly devastating for our clients,” firm founder James Cordier told the camera in his ten-minute apology video, posted November 16. “To my client in Marseille, my wife and I were certainly looking forward to joining you in the French Riviera. It sounded so beautiful.”
OptionSellers.com managed money for 290 individuals, the video said, and specialized in its namesake technique of selling options to produce income. The firm lost all of its capital in last week’s volatile energy markets and, in some cases, left clients on the hook to settle trade balances, according to screenshots posted on Twitter and the Wall Street Journal.
“I am so sorry for not managing our ship and keeping her afloat,” Cordier said, fighting back tears. His firm could not be reached for comment.
But his evident pain garnered little sympathy in the industry. A number of financial players on Twitter suggested that OptionSellers.com employed an especially risky options strategy without proper hedges, making a collapse inevitable.
One macro hedge fund founder faulted both Cordier and his investors for the outcome. “The nature of the strategy is that you make a little bit of money until you blow up,” the manager said late Wednesday on the condition of anonymity. “The probability of losing it all is fairly significant. With derivative contracts — if you don’t understand them — you really need to give money to someone you trust, and to couple of them. Have some checks and balances.”
OptionSellers.com “basically took advantage of guys who didn’t know any better,” he continued. “I instantly thought of my grandmother, my grandfather. I honestly was thrown when I heard about it.”
[II Deep Dive: “I Blew Up the World”]
Optionsellers.com took down the YouTube video as well as most of its website content in recent days, but others have reposted the apology. One of them had 20,000 views as of Tuesday afternoon, and another 15,000.
The video went viral over the weekend, one trader told Institutional Investor. “It’s all anyone in the market can talk about.”