[Lessons from the Options Wheel Case: James Cordier’s 2018 Margin Call Event | My Perspective]

【Answer 1】 I. Recap of James Cordier’s 2018 Margin Call Event 1. Public Perception of James Cordier’s Margin Call Event The image above is taken from James Cordier’s apology video posted on YouTube in 2018. Cordier founded Optionseller.com and operated a hedge fund—under the corporate entity of Optionseller.com—that managed (i.e., executed trades on behalf of) numerous client accounts. Cordier was the controlling person behind Optionseller.com. From November 12 to November 14, 2018, U.S. natural gas futures prices surged sharply; on one day alone, intraday natural gas futures rose as much as 22%. The Optionseller.com hedge fund held large short call positions in natural gas futures options via a Sell Strangle strategy. As natural gas futures prices skyrocketed, the hedge fund incurred rapid losses, and its available cash balance became insufficient to meet margin requirements or cover mounting losses. The fund collapsed—and suffered an actual margin shortfall (i.e., negative equity). James Cordier’s margin call event wiped out the entire net asset value—$150 million—of 290 high-net-worth clients (mostly retirees) under his management, and left clients owing $4–5 million in deficit balances. Subsequently, Cordier’s hedge fund sent margin call notices to its clients, as follows: ---------------------------------------------------------------------------------------------------------- I am writing to give you an update on the situation here with your account. I write to inform you of the latest developments regarding your account. We have spent the week unwinding our short natural gas call position as expediently as possible. This week, we have been liquidating our short natural gas call position as quickly as possible. Today—which was to be the final day of liquidation—the market flared as prices appear to have been caught in a "short squeeze."

[Global Markets Weekly Briefing: Week Ending October 31, 2026]

【Answer 2】 Tin closed at USD 48,440 per tonne, down 4.58% over five days—the weakest performer of the week. After substantial prior gains, profit-taking emerged amid declining risk appetite. Nickel closed at USD 15,220 per tonne, down 4.07% over five days; the International Nickel Study Group revised its 2026 global nickel supply-demand outlook to a surplus of 19,000 tonnes, while Indonesia’s announcement that it would not restrict nickel ore production further reinforced expectations of a looser market. Domestically, SHFE copper main contract closed at RMB 107,250 per tonne, down 0.86% over five days—broadly tracking overseas price movements. Technically, copper has repeatedly tested the USD 14,000/tonne level; resistance is clearly visible near USD 14,500. Zinc broke above USD 3,800 but requires confirmation of sustained strength above that level. Tin fell below the psychological USD 50,000/tonne threshold; USD 48,000 now serves as near-term support. Overall, macro factors continue to exert greater influence on base metal pricing than individual fundamentals; the direction of the U.S. dollar and real interest rates determines sector-wide sensitivity, while inter-commodity differentials stem primarily from inventory levels and supply expectations. IV. Energy Markets WTI crude oil closed Friday at USD 102.95 per barrel, down 0.31% over five days; Brent front-month futures closed at USD 113.40 per barrel, down 2.84% over five days (based on January contract). Crude oil prices rallied midweek then retreated: supply risks pushed Brent briefly toward USD 117, while WTI dipped below the USD 100/bbl psychological level Thursday before rebounding sharply; prices rose again Friday—but overall, the front-month contract posted a modest weekly decline. Bullish and bearish drivers remain intertwined. On the supply-risk side, constrained navigation through key Middle Eastern shipping lanes and operational adjustments at regional energy infrastructure continue to inject risk premium into prices. Fundamentals also provide support: U.S. commercial crude inventories declined for four consecutive weeks to 412.5 million barrels—about 3% below the five-year average; the producer coalition maintained its November output quota unchanged at 31.01 million barrels per day. Counterbalancing factors are equally clear: the U.S. announced an exchange of over 40 million barrels from its Strategic Petroleum Reserve (SPR), while Europe plans to release 42 million barrels of petroleum reserves over the next three months—policy tools are now actively intervening on the supply side; meanwhile, elevated prices are beginning to squeeze refinery margins and dampen demand. NYMEX natural gas front-month contract closed Friday at USD 2.883 per million British thermal units (MMBtu), down 9.20% over five days—the third consecutive weekly decline. U.S. natural gas inventories rose to 3,724 billion cubic feet (Bcf), 1.0% above the five-year average; production remains near record highs of ~11.3 Bcf/day; heating demand forecasts for early-to-mid November are relatively weak; and managed-money net short positions have reached historic extremes. Technically, WTI finds critical support at the USD 100/bbl psychological level, while resistance lies between USD 103 and USD 104.70; natural gas finds near-term support at USD 2.75/MMBtu. Overall, crude oil’s pricing focus has shifted from supply deficits to the sustainability of risk premiums—policy-driven reserve releases and demand destruction now cap upside potential; natural gas continues its downward search for a floor amid persistently oversupplied fundamentals. V. Precious Metals COMEX gold closed Friday at USD 3,884.90 per ounce, down 3.07% over five days; London spot gold closed at USD 3,875.06 per ounce, down 3.02% over five days. COMEX silver closed at USD 49.135 per ounce, down 8.92% over five days; London spot silver closed at USD 49.127 per ounce, down 8.84% over five days.

Hedge Funds Boost Natural Gas Short Positions to Most on Record

6 days ago

Hedge funds set a record short position on US natural gas, anticipating lower demand from a warm winter. Benchmark futures plunged 18% as traders expect mild weather to suppress consumption.

bloomberg

Hedge Funds Boost Natural Gas Short Positions to Most on Record

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