MF Global is missing $633 million from their client accounts. The company has filed for Bankruptcy protection, and is being dismantled.

Currently, investigators are trying to take the company books apart and figure out where all of the funds are at. At the same time, the staff of over 1000 workers at the brokerage are being laid off.

http://money.cnn.com/2011/11/11/news/companies/mf_global_layoffs/

You can blame a lot of failures on the economy and the difficulties that have ensued. However, this failure is purely bad management.

http://en.wikipedia.org/wiki/MF_Global

A firm originally founded in 1783, it grew over time, and then evolved into the Man Group.

Eventually, the brokerage firm was spun off and founded as a separate company in 2007 during an IPO as MF Global. With the second largest IPO in 2007.

http://www.nyse.com/press/1184840344433.html

Now, with $42 billion in assets, and equity of $1.4 billion, it is a failed enterprise.

Some highlights are:
The Wall Street Journal reported that MF Global would seek Chapter 11 bankruptcy protection after investing $6 billion in sovereign bonds issued by European countries.

On October 25, 2011 MF Global reported a $191.6 million quarterly loss as a result of trading on European government bonds.

According to the CME Group Inc., MF Global broke rules on keeping customer money separate from its own trading accounts.

The MF Global bankruptcy was the the largest Wall Street firm to collapse since the Lehman Brothers incident in September 2008.

The biggest issue in my mind is; “Who do you trust?”

This was not a home town broker who bet big and failed. This was a large to mid-size player (depending on how you measure), that bet big and failed. A stock traded on the NYSE, and audited by PriceWaterhouseCoopers. Even if the players get their money back from the assets, it will take months (years?) to clear this mess up.

How long would your funds be tied up in court?

Could you withstand the financial blow if your investments were tied up in this type of action?

Do you trade or park all of your assets with one firm?

When we thought of diversification, we rarely thought of not using a single bank, brokerage, currency or even country. Now, in any weekend, you can wake up to the folly of a CEO having lost control of his organization and your money. You can go from a secure investment program to financial ruin in a weekend.

You have to maintain control of your investments. The facade that the major players present should not be trusted. When you are looking at the long term, remember the basics, diversity and proper risk management!

Depending on the size of your net worth, you need to ensure no single entity can bring you to financial ruin. Pain, maybe, but nobody should be able to ruin your future.

Remember, they are not watching out for you! That is your job. Only you can assume the risk, and the reward of your financial life.

This video shows how to enter and manage an Iron Condor trade.

If you are looking for videos on how to use OTrader with covered calls then go to the Covered Call Library. Each time we make a new covered call video I will upload it to this page.

Here is another video that shows what to do when you get assigned (exercised) on a short option trade or when an option trade expires worthless.

I have had a few questions lately about to roll up or roll down covered calls. This quick video will show you how to roll up a covered call. You can use the same method to roll down as well.