Markets natural gas oil Blows Up As Crude, Natural Gas Turmoil ‘Capsizes’ Clients

"The tough part is finding somebody that knows how to do it  - right."

It looks like some folks ended up being collateral damage this week when a forced unwind in a long WTI/short nat gas bet threw – sorry – gas on a raging fire both with regard to the selloff in crude and the surge in natural gas.

That apparent liquidation moment conspired with hedging dynamics (from dealers who sold puts to producers) to exacerbate the price action in crude and before you knew it, things spun out of control.

Read the whole story

Death Blow! WTI, Nat Gas Bet Gone Awry Is ‘Patient Zero Stress Point’

Trader: Crude, Nat Gas Moves Due To 1-800-GET-ME-OUT Moment For A Large Hedge Fund

Goldman Blames Oil Collapse On Momentum Chasers And Gamma Effects

As alluded to above, it looks like there were some civilian casualties (figuratively speaking of course).

“It’s pretty unbelievable”, WSJ’s Gunjan Banerji marvels, in reference to the following two snippets from an Q&A for clients who apparently just lost all of their money and then some.


“It’s short vol. gone really, really wrong again”, Banerji mused, in the same series of tweets, which also finds her spelling out in simple terms what those screengrabs say, which is that “ appears to have lost all client money on short options strategies on energy markets.” can’t be reached anymore, but here’s an archived version of the pitch – we’ve underlined the two most important sentences.


Yes, “the tough part is finding somebody that knows how to do it  – right.”

You can write your own jokes. Obviously, there are many.

I’m not going to try and sort out exactly what happened here because it’s spelled out in the first underlined sentence of that sales pitch.

“Nat gas short options blowup”,  tweeted on Saturday evening, before recalling how he had “a chuckle at the tagline on their site a while back – ‘77% of options expire worthless’ – not so useful if you go insolvent before expiry!”

Correct. And although Pravit goes on to remind everyone that “there’s nothing inherently bad about selling vol if you risk manage and size appropriately”, he also asks the obvious question, which is this:

I will say though – what on earth were these people doing selling naked calls on the most volatile futures contract on the planet for mom and pop?!

The bottom line is that “these people” apparently got their clients on the wrong side of things headed into this week’s rather dramatic action that saw crude plunge and nat gas explode to the upside. You can read the full story on what happened in the linked posts above, but a simple visualization of the blowout in the nat gas/crude ratio (right-hand side of the chart) gives you an idea of how this went wrong.



In case you’re wondering how James Cordier – founder, president and head trader of – is feeling about things, here is his bizarre 10-minute message to “clients”….


7 comments on “ Blows Up As Crude, Natural Gas Turmoil ‘Capsizes’ Clients

  1. What was the catalyst for a NAT GAS spike?

    • There are theories that a bond whale(s), or PG&E were forced to unwind massive amounts of futures. Maybe the whale is just Goldman, par for the course…

      What’s becoming very worrisome to me is these volume black swans seem to becoming frighteningly more common. The vol spike in Feb, the FB disappoint, Yuan spike in October, the Gas spike, GE wipeout, the oil decline. All flavors of high sigma events. Even Macrotourist has a post about positioning for a treasury high sigma,,.

      Someone should call the suicide hotline for Mr. Cortier… he looks ready to buy $rope…

      • I don’t mention GS, the “Iron Bank” lightly. It’s also possible the 1MDB fiasco, which despite the FTs hagiographic reports, is just another day at GS, and the Malaysian Sov fund debacle is unwinding all sorts of positions to save the cartel on Wall Street… Kevin Muir’s vol bond hedge may come in handy as this under-covered shitshow unravels.

        Greece will be paying GS ~600 million eu until 2036! Nice bonus for all that misery. Malaysia may be the next sucker, it appears.

  2. Lance Manly

    I like the nautical aspect of the Joseph Hazelwood of the options market. Looks like he is headed to his cabin to finish off the Balvenie.

    • I miss Balvenie. But I can say from personal experience that the best thing for him to do right now is most assuredly NOT to hole up in the cabin and drink. lol

  3. I tried FC Stone for currency trading about a decade ago. They lost 99% of the money I put in within a year.

  4. I spoke with these lawyers who are apparently traders themselves and are leading the charge against OptionSellers and FC Stone:

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