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.

Download the free Iron Condor Course here.

Later on I will upload a new video that shows how to enter a Iron Condor into OTrader. OTrader can manage any combination of option strategies including the Iron Condor.

If you have questions let me know.

I just had a new user ask how to enter an option trade into OTrader so I made this video to show him (you) how it is done.

It has not been edited or scripted just a straight out recording of your phone conversation.

As always if you have any questions let me know.

Over the coming days I will cover:

• Writing options – Call and Puts
• Spreads including Bull Call Spreads, Bull Put Spreads, Bear Call Spreads and Bear Put Spreads
• Combinations including Long Strangles, Short Strangles, Long Straddles and Short Straddles.

In each strategy I will cover how time decay and volatility affects the strategy.

To start I will go over the basics of how volatility works, how time decay affects you, what effect dividends will have and how an interest rate change can affect your position.

Once the strategies and basics are covered I will go over some advanced options parameters such as Deltas, Option pricing and Options Probability Calculators.

Finally I will finish of with my entire Iron Condor Strategy document.

As always if you have any questions along the way let me know.

Writing covered calls can provide you with an ongoing stream of income from the option premium. This is particularly important when stocks do not pay dividends or pay very small dividends.

The call option premium can also substantially increase total returns in flat or slower growth stock markets.

#2 Income paid up-front

The income from writing covered calls in credited to your account the next day, creating immediate cash flow that can be reinvested, withdrawn from cash management accounts or used to pay interest on margin loans.

Since the call option premium is paid up front it can be reinvested to enhance the total return of your portfolio.

#3 Predetermined Return

In a rising market, the immediate return from call writing can be evaluated prior to initiating the investment position. You will know what the call writing income will be and the maximum additional capital appreciation you may expect from your shares.

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#4 Risk Reduction

If a stock declines in price,(Not that they ever do that…) the call writing income will help to offset some or all of the capital loss. Writing covered calls will provide some downside protection when stock decline in value.

#5 Cash Dividends

As a writer of covered calls you will continue to be entitled to cash dividends so long as you own the shares. Beware dividends can lead to early exercise though.

#6 Novation

Exchange-listed option contracts like shares, are interchangeable with another contract with exactly the same expire month and strike price. This is known as ‘novation’. This enables the covered call option to be initiated through a ‘sell to open’ order, but also to close out the position if desired through a ‘buy to close’ order.

Got a question about covered calls? Let me know.