Nat Gas - part 2

The outfit Optionsellers.com got blown out of the water this month and closed due to unhedged Nat Gas futures positions via naked short calls. That happens to be almost the same trade I had on.  I had a trivial wound from that trade but it certainly was not fatal.  This type of trade is so upside down in risk-return that risk control is the only thing between the seller and Armageddon.  Those guys found Armageddon. They not only lost all the client's money but left them with a 25% debit balance owed to FC stone re the margin calls. Ouch.  I'd put the leaders on suicide watch at this point. I talked to them once a few years ago and didn't like the sound of the offer and didn't trust the principals.  Here is my trade:

I sold calls around 3.20 and exited at about 3.60 based on rules; the horizontal line was the strike and the vertical was the tenure (I thought there was no way (ha) that I'd be anywhere the strike in that timeframe). Optionsellers, on the other hand, got taken all the way and, as I understand it, could not find counterparties to close trades when vol hit 90. Man that has got to hurt.  My strategy is still intact  -- and now warier than it was before -- but at least I didn't die.  On the other hand, my guess is that the probability that over a long enough time frame that I'll get hurt is closer to 1 than it is zero so I'll probably wind down this kind of trading shortly even though the annualized returns are still hovering around 15% even after my wound.  Fanatical risk control saved me on this one, something I have been practicing for over 10 years, but even that won't be enough if I take a really hard hit at the wrong time some day.