James Cordier is a name that resonates strongly in the world of finance, especially for those familiar with options trading. Known for his expertise in commodities and options trading, Cordier is a controversial figure whose career was profoundly impacted by a major financial event in 2018. This article delves into who James Cordier is, his role in OptionsSellers.com, and the lessons investors can learn from his rise and fall.
Who Is James Cordier?
James Cordier is an American options trader who gained prominence as the founder and principal of OptionsSellers.com, a Florida-based investment firm specializing in commodities options trading. With decades of experience in the finance industry, Cordier presented himself as a sophisticated trader capable of delivering steady returns to his clients by implementing advanced trading strategies.
He often emphasized a conservative approach to options trading, focusing on selling options rather than buying them, which is considered less risky when done properly. Cordier was also an author, co-writing a book titled The Complete Guide to Option Selling: How Selling Options Can Lead to Stellar Returns in Bull and Bear Markets. This book cemented his reputation as a thought leader in the niche of options trading.
However, despite his initial success, James Cordier’s career took a dramatic turn in 2018, leaving many of his clients in financial ruin.
What Happened in 2018?
In 2018, James Cordier and his company, OptionsSellers.com, were at the centre of a massive financial disaster. The firm, which managed millions of dollars on behalf of high-net-worth clients, collapsed following an unexpected and severe loss in the energy markets.
The incident was triggered by a sudden spike in natural gas prices, which resulted in a margin call that the firm couldn’t meet. OptionsSellers.com had been selling naked options, which exposed its clients to unlimited risk. When the market moved sharply against their positions, the losses quickly escalated, wiping out approximately $150 million in client accounts.
The event was devastating for Cordier’s clients, many of whom lost their life savings. It also tarnished Cordier’s reputation as a savvy and reliable financial advisor.
The Role of OptionsSellers.com
What Is Options Trading?
Options trading is a type of financial strategy that involves buying and selling options contracts. An option is a financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset (such as stocks or commodities) at a predetermined price within a specified time frame.
There are two main types of options: call options (which allow the buyer to purchase an asset) and put options (which allow the buyer to sell an asset). Traders can either buy options, which limits their risk to the cost of the contract or sell options, which can carry higher risks but also offer the potential for steady income.
Cordier’s firm focused on selling options rather than buying them, a strategy that works well when markets are stable but can be disastrous when volatility spikes.
How Did OptionsSellers.com Work?
OptionsSellers.com targeted high-net-worth individuals who were looking for steady returns. The firm’s strategy was to sell options on commodities like crude oil, natural gas, and agricultural products. Selling options allowed the firm to collect premiums from buyers, which could generate consistent income as long as the market remained within predictable ranges.
The firm claimed to employ sophisticated risk management techniques to protect client portfolios, but it became clear in 2018 that its strategies were far riskier than advertised. By selling “naked options” (options that aren’t backed by ownership of the underlying asset), the firm exposed itself and its clients to potentially unlimited losses.
Why Did It Fail?
OptionsSellers.com failed because of its aggressive strategy and failure to properly hedge its positions. In November 2018, an unexpected and sharp rise in natural gas prices caused the firm’s open positions to incur massive losses.
The rapid movement in the energy markets triggered a margin call, a demand from brokers for additional funds to cover losses. When OptionsSellers.com couldn’t meet this demand, its clients’ accounts were liquidated to cover the losses, resulting in financial devastation for many investors.
James Cordier’s Apology Video
In the aftermath of the collapse, James Cordier released an infamous apology video that went viral within the financial community. In the video, Cordier, appearing visibly distraught, addressed his clients and took responsibility for the losses.
The video was both a heartfelt apology and a defence of his actions. He described the events that led to the losses as a “rogue wave” in the market, something unpredictable and beyond his control. While some viewers sympathized with his apparent remorse, many criticized him for downplaying the risks and failing to protect his clients’ investments.
The apology video became a symbol of the downfall of OptionsSellers.com, and it remains a stark reminder of the risks involved in speculative trading strategies.
What Can Investors Learn from James Cordier?
The collapse of OptionsSellers.com offers several important lessons for investors:
- Understand the Risks: Investors should always be aware of the risks associated with any financial strategy. While selling options can be profitable, it also carries significant risks, especially when done without proper hedging.
- Diversify Investments: Putting all your money into a single investment strategy or firm can be dangerous. Diversification can help reduce the impact of losses in one area of your portfolio.
- Do Your Due Diligence: Before entrusting your money to a financial advisor or firm, it’s crucial to research their strategies, track record, and risk management practices.
- Be Wary of High Returns: If an investment strategy promises consistent high returns with minimal risk, it’s a red flag. All investments carry some degree of risk, and higher returns often come with higher risks.
Where Is James Cordier Now?
After the collapse of OptionsSellers.com, James Cordier largely disappeared from the public eye. The fallout from the firm’s failure was severe, and Cordier’s professional reputation was permanently damaged.
Does He Still Work in Finance?
As of now, there is no public record of James Cordier returning to the finance industry. Given the extent of the losses and the damage to his reputation, it’s unlikely that he will regain a significant role in the financial sector.
Did He Face Legal Action?
Cordier and OptionsSellers.com faced legal scrutiny following the collapse, with some clients pursuing lawsuits to recover their losses. However, because the firm’s clients had signed agreements acknowledging the risks involved in options trading, many of these lawsuits were unsuccessful.
What Is His Legacy?
James Cordier’s legacy is a cautionary tale for investors and financial professionals alike. While he was once seen as a pioneer in options trading, his downfall serves as a reminder of the dangers of speculative trading and the importance of transparency and risk management.
Thoughts on James Cordier
James Cordier’s story is a complex one. On one hand, he was a skilled trader with decades of experience and a passion for teaching others about options trading. On the other hand, his failure to adequately manage risk and protect his clients led to financial disaster.
For those in the finance world, Cordier’s story is a sobering reminder of the importance of ethics, transparency, and the need to prioritize clients’ interests over personal gain.
The Bottom Line
James Cordier’s rise and fall highlight the potential rewards and risks of options trading. While his strategies initially brought success, the lack of proper risk management ultimately led to catastrophic losses. For investors, the story of James Cordier and OptionsSellers.com serves as a valuable lesson in due diligence, diversification, and the importance of understanding the risks involved in any financial strategy.
Investing always carries some level of risk, but with the right knowledge and a cautious approach, you can make informed decisions and protect your financial future.
