Smooth Sailing With Options

A cautionary tale.  I have this book in my collection, “The Complete Guide to Option Selling” by James Cordier.  I recommend it in my book, “Smooth Sailing”.  Still do, in that it does teach the ins and outs of option selling.  However…
James got carried away.  He collected about 300 clients and some $150 million and was selling calls on natural gas, far out of the money at like .2 or .1 delta, so 80 or 90% POS.  All well and good, right?  The premium was rolling in.  But he was selling them on margin.  Borrowed money.  Leverage.  And when natural gas spiked, those margins were called, and poof.  $150 million went up in smoke.  If he had bought the stock and sold those calls like we do, secured calls, it would have not happened.  But he got greedy.
This happened in 2018, and somehow I just heard about it.  On page 33 of my book I warn twice NOT to ever use any margin.  I guess instead of my reading his book, maybe he should have read mine.

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