Media reports and a YouTube video of the fund's founder sobbing and apologizing for his blow up made the rounds after an unprecedented spike in natural gas futures.
The hedge fund's founder, James Cordier, had been a long time advocate for selling naked options to trade. He wrote a book about it and even touted selling naked options as an investment strategy on Seeking Alpha. Of course, like anybody shorting volatility, an extremely popular strategy over the last decade, options writers hope to scrape up a premium while the underlying stays calm and parked. In this case, Cordier got a lesson on why managing that risk is important - and exactly what can happen when unexpected volatility strikes.