From Success to Ruin; What Went Wrong in Captain Condor's $50 Million Trading Disaster!

the news that came out on Captain Condor over the weekend and his organization blowing up. This is just another trade alert service I guess in this case and or or hedge fund and or trader that's blown up and we want to talk about that cuz I don't want to see that happen to any of you guys. Before we get rolling here, just a reminder to please like and share our videos.

Your support helps us to continue to bring you the wonderful content that we share with you uh each and every week. The headline is I experienced a catastrophic financial loss, right? How options trader Captain Condor led his followers to a $50 million wipeout.

This article, I'm not going to read it to you. It has some good things and bad things in it. Um there were some things maybe I agree with and some that I don't.

I've been doing this 20 years and I've probably had to see at least like five big players go out and countless numbers of small players. >> Yeah. I remember when I first got into options 2009 2008 around 2010 I'd uh run across it was a big fund that was selling neaked options in futures market in commodities.

>> I don't know if you remember that guy I forget. I think it was just called option selling or something. And he didn't do the uh bet sizing maneuver that this guy did, but he was doing it in futures one because it had the span margin, >> right?

Which people don't realize it's it's dynamic margin. It's not fixed margin. And so, yeah, you may get quote unquote lower margin than say a cash product, but it can blow up against you and be four or five times more than the cash margin.

And then you get your margin called out and you're you're game over. But he did this for a while. He had a fund was really big and I don't remember which product it was, but it may have been natural gas or maybe it was gold.

It just one day he was posting all these great returns trying to market and raise more money. The next day shut the doors. >> It was over.

>> But the irony is the bigger you get actually the harder you become the target. You become what the other side of that trade people come after. I mean that's not something we have to worry about.

But yeah to John's point when I sent this article to him I'm just in, you know, in shock that anybody in today's world we should have better education out there. Certainly when I started and when John started it there's more available um and it's not that hard to find reasonable education. I mean, obviously we feel like we're more complex and in depth and a little different style, but people should at least know better, right?

So, I was shocked that there were still people trading iron condors. A >> that's not just part of their first month of trading, right? And that B that there was a fund.

This guy was charging a thousand a month and had 5,500 subscribers. So, he's making a fortune just on that. And then they were all putting all their life savings in his trades and he was doing a martingale strategy.

Not sorry if I don't want to step on you here but no go for it. >> You increase your size on losses which is lunacy. >> Well increasing some on losses isn't lunacy but increasing it in that manner is lunacy >> in that manner.

Yeah in that manner. comment I'd made to John was is, you know, markets change, the times change, context of the markets change, but people just don't change, right? >> They they really don't, right?

>> And it's it's so many lessons. I mean, that's a psychology lesson in there, but it just I was just couldn't believe it, you know, and I was like, well, there you go. It's it's, you know, happening.

And of course, zero DT just made it worse, right? because you just have more spins at the wheel or more more rolls >> rolls of the dice >> rolls of the dice. So anyway, I just wanted to say that you know there just it was surprising to me but you know maybe I'm at the other end of the spectrum and everybody in our membership is certainly on the other end of the spectrum of you know not being a beginner and just and not even understanding how options work and that uh um these kinds of strategies are just they're not built to win, they're built to lose.

>> Yeah. in the end >> and right well it's just like and the other thing too I want to point out is this guy was apparently I I've never heard of him but very prevalent on the internet and his position sizes were huge he was out doing major head funds like JP Morgan as far as options volume >> yeah that's what I was saying like in the end I read a little bit further on this and this may mention this in the article that you know the market makers have to take this other side of it he was obviously he lost on the call side so he's selling all verticals as part of the iron condor and they were bringing in other banks to take the trade and the banks were willingly taking it. They're like, "Are you nuts?

You you're collecting I don't know exactly what the math is. I think they were trying to get >> Yeah. $150 >> aside, you know, maybe on the call side and they were down to 85 cents and not realizing that just simple riskreward has collapsed on you.

Not to mention that it was Christmas Eve half day trading. It was just it was it was classic everything working against you. His size was so big that other banks and other institutional players were willing to take the other side of his bet.

He became a target. >> Yeah. I don't think that necessarily had anything to do with it necessarily, but yeah.

>> Well, that last day Yeah. I mean, the overall strategy, yeah, no doubt. I mean, it was bound to happen, but the last day it was just to not realize.

I mean, you're doing $50 million vertical spreads on a half day Christmas Eve and they're soaking up that order on you. It's not going to work out for you. This strategy is going to fail.

But when you get to that point, it's like they're taking the other side of your trade and then they're buying the ES futures to drive the price up >> to make because they have to they have to take the other side. Yeah. >> They take the other side, but they're also probably writing it harder than they normally would, right?

like let's take this so we know that he's >> gonna be in the money and a full loser. So anyway, that's kind of beside the the broader point. But >> again, just not having awareness of how markets work, the plumbing, you know, and options and everything, all the participants and he had a trade alert service, right?

So, just a point I want to bring out is just because somebody's dealing with a lot of money and just because they've had some sort of a track record of winning and just because he's got a lot of followers doesn't mean he knows what the hell he's doing. So, I think as traders we kind of get into this thing like, oh, um, look at all the people following him. He must know what he's doing.

>> Yeah, >> it's a good point. Yeah. I mean, you kind of take pride in the places like we have that's just more of a niche >> um tight community and not just some place where there's 5,000 subscribers and we're just throwing spaghetti on the wall.

>> I mean, look, I could do a trade alert service and get 5,000 subscribers. I >> Right. >> I mean, but I think anybody who would follow me is a fool.

So, why do I want fools following me? It's like we'll get into this deeper as we go along, but I want to talk about this cuz I don't want anybody here getting into that. >> That doesn't mean they won't, but I can do the best I can to stop them.