I recently wrote this up for my friends who asked me how I do what I do. I figured I'd share it here. This is freely available to anyone who wants it, though please credit me if you simply copy/paste. Nothing here is novel, and can be done by anyone. I am not a financial professional, and the example given below is only Abbvie because I forgot that Abbott Labs was alphabetically the first in the S&P 500 when picking an example.

First, let’s come right out and say that if you do not have the time to do this, or do not find it enjoyable, just buy low-cost index funds that track either the total market or the S&P 500.
Second, let’s make an important distinction:
Investing – This is the act of purchasing assets for less than their intrinsic value. This PDF will focus on how to determine the intrinsic value of an asset that produces income. Note that for most assets, this is simply how much money you can extract from the asset over the period of time that you hold it for. There’s no other value than money in investing. Causes and emotions are what philanthropy is for.
Speculating – This is, at its core, the act of taking supply of an asset from the present to the future (by hoarding it). If there is more demand, lower supply, or both, this pays the speculator to take the asset from a period of low value to one of high value. It is not gambling, but is very difficult to do, since it entails taking on timing risk. It is not illegal, immoral, or impossible, but I have no special insight into it. I’ll leave it there.
Gambling – This looks a lot like speculation, but without any particular reason to believe the asset will be more valuable in the future. Speculators at least estimate the value of an asset to investors, as they are ultimately the end market for an asset. Do not gamble. Full stop.
Determining the intrinsic value of an asset
The value of an asset is simply the present value of all future income that asset can provide you. Since a dollar in five years is naturally less valuable than a dollar today, you have to discount future income against the opportunity cost of forgoing the dollars you invest today. When we get to the Present Value equation, this is represented by interest. It can also be thought of as the opportunity cost of investing in the asset instead of some other asset or simply consuming the dollars instead.
Here’s the actual math. Note that it’s not super hard, and while I will explain it, there are dozens of free websites that will quickly let you calculate this. The key phrase to Google would be “present value of a growing annuity calculator.”
PV = (C / i - G) * {1 – [(1 + G)/(1 + i)]^n}
PV = present value
C = cash flow per period
n = number of payments
i = interest rate
G = growth rate
The value for PV is your estimation of what the asset is worth today. If this ends up far higher than the market price, you are probably purchasing dollars for quarters. Avoid edge cases, as you are guessing about both the interest and growth rate.
C is the cash flow per period. If you have a high degree of confidence in the culture of the company and it has a long history of being good stewards of retained earnings, you can use the earnings per share (EPS). I usually use the dividend. It is impossible to fake or financially engineer a dividend, and requires less looking through financial documents to make sure it’s what it appears to be. But for, say, Apple or Microsoft or Chevron, feel free to use the EPS.
The number of payments is how many payments you expect while holding the asset. Dividends in American companies are typically quarterly (though some pay monthly or every six months, so check on that), so every multiple of four would represent one year if you choose to do it that way. If n = 16, then you’re expecting to hold the asset for 4 years. You can also put in a year’s worth of dividends and keep n = years rather than quarters.
I typically do n = 30, since 30 years is both a long time horizon that is realistic, and coincides when I will hit “retirement age.” You will have to decide how far ahead you’re planning. For most people, they are net purchasers of investments while working and net sellers while retired, so keep that in mind. Note that using years instead of quarters will lessen the amount of compounding, and will provide some cushion in case you’re wrong.
Interest is one of the two variables you have to guess at. Typically, one would put what you expect the actual long-run interest rate to average for this investment. Unfortunately, this is really difficult. Instead, I use a rate that represents my opportunity cost. There are any number of relatively safe ways to get a 5% yield on money invested, so I generally use i = 5% to represent that this asset has to perform better than a utility or telecom or real estate investment trust. Feel free to use what you feel is most appropriate for you. A higher interest rate will lower the value of the asset, so high-balling this number will provide some cushion in case you’re wrong.
The second variable you have to guess at is the growth rate. If you’re looking at the dividend, you want to know how fast to expect it to grow over time. If you’re using the EPS for C, then you want to see how quickly the total earnings are growing per share. This is extremely difficult to predict. I recommend taking the 5-year growth rate and halving it. Dividends will also be more predictable here, as most companies pay out far less than they make, which means even if EPS grows slowly, the dividend can still grow quickly for many years after a boom is over for the company. Note that lowering your estimate for G will lower the value of the asset, so low-balling this number will provide some cushion in case you’re wrong.
OK, so let’s walk through an example. I’ll use Abbvie, a biotech/pharmaceutical company. It has a quarterly dividend for the coming year of $1.30/share. Its dividend has an 18.5% growth rate over the last 5 years, and has grown it for the last 7 (it’s only been around for 8 years).
I assumed a growth rate (G) of 7%. I used $5.20 as the starting dividend this coming year and used years for my n = 30. As always, I used i = 5%.
This gave me an estimated present value of 1 share of Abbvie at $197.94. As of writing this, Abbvie shares are trading on the market at $103.43. This looks like a screaming buy, but first let’s look at why I have a high degree of confidence.
Note how the interest was higher than the going rate – I used my “low-risk alternative” as an opportunity cost. Abbvie has an extremely high rate of growth for its dividend, so I took less than half of its current rate. I also calculated annually rather than quarterly, which reduces the impact of high rates of growth. That’s three places in the equation where I consciously lowered the estimated value of a share of Abbvie, and it still came out as a strong buy – spending less about 50c for a dollar!
I do this because even if I’m wrong in some or all of my predictions, I now have quite a bit of room to be wrong and still make money. It’s like how you don’t walk next to a steep cliff, right? You should know how to walk where you want to, but there’s always the small chance something could cause you to slip or put a foot wrong. But if your plan is always to be 5 feet away from the edge of the cliff, the odds are that you’ll not go over the edge even if you fall down.
Many people feel this is over cautious. But let my portfolio speak for itself. I’ve beaten the S&P 500 index fund every year except one since 2008. My brokerage only keeps digital records back to Dec 2015, but the S&P 500 returned 101% since then – with dividends reinvested. My own portfolio has returned 256%.
So caution is still very high reward. In fact, if you just don’t lose, you’ll do better than the vast majority of professional money managers (about 85% of whom cannot even match the index funds).
Due diligence still has to occur
Now, we can’t just go straight out and buy Abbvie – though it’s a high profile company that receives lots of investor and regulator scrutiny so it’s less likely to have a landmine than most. Just to make sure, you’ll want to do the following before buying shares in this company:
-Check the debt load. If the debt is very high, has very high interest rates, or has a lot of it maturing very soon, then this is a yellow flag. It doesn’t mean don’t buy, but make sure you understand the structure of the company’s debt and make sure it won’t impair the company’s earnings going forward. This information is found on the balance sheet. Abbvie has $97.287 billion in long-term liabilities such as debt, pension liability, and deferred taxes. That’s a lot compared to their assets, but they also are owed some money, so it nets out about $90 billion.
-What’s the book value? Book value is fairly low at $8.65/share. This is pretty much the assets minus the liabilities. Abbvie is in a knowledge industry, however, so you shouldn’t expect their main assets to be physical capital that can be sold. It’s mostly organizational or human capital from their workforce, so this isn’t worrying. If Abbvie was, say, a retailer with stores and land and inventory, you’d want this to be much, much higher for the share price. There’s no easy way to judge this one, unfortunately, but it’s good to look it up and you’ll eventually get a feel for it. No red flags here.
-What are the catastrophic risks that even you or I could think of? For a company in the pharmaceutical space, the obvious answer is regulatory and political risk. Regulatory risk is just want it sounds like – more regulation which can be either costly to comply with or lower profits. This does have an upside, which is that it makes it harder for new competitors to enter a market, so I tend to be rather sanguine about regulatory risk. Political risk is much more severe. This is when politicians decide to either confiscate a company, target it specifically rather than the industry it’s in, or other ways in which the government is involved with taking rather than regulating. In Anglo countries (US/UK/Canada/Australia), the rule of law is typically strong enough that this doesn’t happen much, as there is usually some kind of due process. Places like China, Argentina, Russia, and the EU are much more likely to nationalize or otherwise capriciously penalize a company due to the prevailing political winds. Abbvie has a global footprint, but that also means it’s diversified against such risk. It’s headquartered in the US, so it’s unlikely someone will simply take the entire company.
-Payout ratio? Abbvie has a fairly high payout ratio (80% for the last completed fiscal year of 2019), as they have been aggressively growing the dividend. That’s another good reason to input a much lower G than the last few years. That being said, Abbvie has been around for 8 years (it was spun off of Abbott Labs) and has grown its dividend for the last 7 years and has announced it will this coming year as well. The payout ratio is pretty high, but not worrisome. It suggests a fairly mature company that’s now returning cash to shareholders. I’d say this is not nothing, but less than a yellow flag for me. Any company with 95%+ payout ratio is much more vulnerable to a dividend cut.
-Credit rating? S&P gives Abbvie a BBB+ grade for its unsecured debt. This is a slight downgrade because their balance sheet is currently digesting a big acquisition from early 2020 (Allergan). Moody’s gives it a Baa2 rating for unsecured debt. These are both good, solid, investment-grade credit ratings (if you were buying the bonds of Abbvie). This looks great.
-Does it need a genius? Some companies run on all cylinders because they have a genius at the helm – often a founder. But what you want is a company any dummy can run, because sooner or later any dummy will. Don’t plan to invest long-term in companies that require skilled management. Abbvie is fairly diversified and has an OK pipeline of research. They also can buy little biotech companies that invent something but can’t navigate the regulations to bring it to market. So pondering giants are actually a good thing. Means they’re hard to break.
So, given that there was nothing obviously treacherous in our basic due diligence, and the extreme discount at which our example is selling for, this would be one you might want to buy! This is what I do for all the companies I invest in.
Notice that there is no story, no excitement, no narrative, no counting on good or bad management. Emotion has no place in investing. You also will notice that we took every opportunity to reduce the risk of losing your capital by always sandbagging the estimated value of the company. You never want to pick up nickels in front of a steamroller. You want the investment to be so obvious it hits you in the face like a baseball bat. If you’re ever on the fence, don’t do it. You don’t have to hit home runs – just don’t strike out.
You can be even more conservative in your estimates than I am. If, for instance, you used 5% growth rate for Abbvie’s dividend, you’d still get a present value of $148.57/share vs the current market price of $103.43. Similarly, you could use a higher interest rate, which would also lower the estimated present value.
You may have to do this calculation with more companies to find one to buy, but even in a very expensive market like today’s, there is always an opportunity. You don’t even have to look at little companies. There’s around 500 companies in the S&P – just start with “A” and work your way through all of them.
A quick note about further reading: I very strongly urge most people to actually read as little as possible on this subject once they get the basics. That’s not because there’s not more to learn, but because I would sadly say the majority of what I see and hear is actively bad advice. But if you do want to keep up with financial news and books and chat boards, the best thing to do is find out what the historical returns of the person giving advice are.
Since WWII, the long-run return on the S&P 500 has generally been just a bit shy of 10% per year. If someone can’t beat that, year-in-and-year-out, then their advice is worthless. As in, you don’t want to accidentally absorb it. This is, unfortunately, true for most professionals. Over the last 15 years, 92.2% of actively managed funds have underperformed a simple S&P 500 index fund (and they charge you fees for the privilege). Beware anyone selling something. The advice here is given freely
That’s why I made a point of mentioning that I have and regularly outperform the standard fund almost every year. Granted, I don’t have many of the regulatory restrictions a public fund would have, but it shows how useful the advice I’m giving here is. You don’t need anything fancy. You don’t need anything high risk. I’ve done this through two deep recessions and the longest bull market in history.
If you want to learn more about investing in general and where I learned how to do this, you can read Benjamin Graham’s The Intelligent Investor. It was written in the 1930s, so much of the technical information is out of date. Skip over that and just read it for the concepts.
Even easier reading is to go online to Berkshire Hathaway’s website and pull Warren Buffett and Charlie Munger’s annual letter to shareholders. Almost all of them have something useful in them and don’t make you do equations.
I am available for questions in the comments

DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1

TL:DR

This is Part 1 of my two part deep dive on DraftKings (Ticker: DKNG, I will refer to the company as “DK”)
This first part introduces you to (1) me, (2) the company, (3) my thesis on the company, and (4) digs into how they make money.
The second part (already released, you can read it here - but get through part 1 first :) ) will go in depth to explore the question “Can we 10x from here?”
DK is an exciting, disruptive company working to change how we experience watching sports and make it better.
I am not a financial advisor and this is not investment advice. These are just my opinions to help facilitate learning and discussion.

Hello, welcome to my first deep dive write up.
My name’s Mark and I’m an accountant with a passion for investing. About two years ago, I used to work as an auditor at a public accounting firm and have been behind the scenes at many different publicly traded and privately held companies in the U.S. My goal is to bring my unique perspective from that past experience, my current experience working in a new role at a large corporation, and my understanding of accounting to help break down some of the most exciting growth stocks on the market today.
I’m a long-term investor. I am focused on finding great companies and holding them for a long time. I’m willing to endure volatility, crazy price drops, and everything that comes with this approach as long as the facts that led me to originally invest and believe in that company have not changed. If you want to learn more about this approach. I recommend reading the book “100 Baggers” by Chris Mayer.
Introduction
I think it’s fitting that my first stock pick has to do with sports. Sports has been a part of my life since I could walk at the age of 2. First with baseball and soccer, and then later in my childhood with golf. I’ve always played American football and basketball for fun as well and have always been an avid fan of all the major sports in the US.
I started playing fantasy sports (mostly just fantasy football) about 6 years ago and have always enjoyed it. Traditionally, with fantasy football you draft a team at the beginning of the year and those are your players for the rest of the season. If you have a bad draft, oh well. You can try to improve your team with trades and free agent additions but it is tough. Leagues usually consist of 10-14 teams (each managed by an individual) and there’s obviously only one winner at the end of the season (about 4 months after the draft). This can lead to the managers of the lower performing teams losing interest as the season wanes on. I believe DraftKings’ (DK) founders saw this issue and saw an opportunity. Enter, daily fantasy sports. Now, with the DK platform you can draft a new team every week. Or if you want, every day. This allows fans of fantasy sports to engage at whichever point of the season they want and at varying financial stakes.
The Thesis Statement
For every stock pick I make, I want to provide a quick thesis statement that can serve as a reminder for why I’m buying and holding that stock for the long term. I’ll always aim to make it just a few sentences long so it can easily be remembered and internalized. This helps during times when the price may sporadically drop and you need to remember why you’re holding this position.
The thesis statement I have come up with for DK is as follows:
“DraftKings: The leader in allowing fans to engage financially with their favorite sports, teams, and players. Having money at stake makes the game a lot more interesting to watch. The era of daily fantasy sports games, online sports betting, and online betting (outside of sports), is just getting started and DK is as well positioned (or better positioned) than anyone to capitalize off of this trend.”
Notice how I said “allowing fans to engage financially” as the first sentence and not necessarily “allowing fans to gamble”. There’s a reason for that. According to US Federal Law, Daily Fantasy Sports (DFS) contests have specifically been exempted from the prohibitions of the Unlawful Internet Gambling Enforcement Act (UIGEA). DK has always been, and I believe will continue to be DFS contests 1st, sports betting 2nd, and other forms of gambling/entertainment 3rd. It is noteworthy that states at an individual level can still deem DFS contests illegal if they so wish, but as of this writing (11/26/20), 43 of the 50 US States allow DFS contests and DK, accordingly, is offering DFS contests in all 43 of those US States.
I’ll try to clarify the difference between DFS contests and sports betting real quick:
DFS Contest – Pay a pre-set entry fee to enter a contest. All entry fees go towards “The Pot”. “Draft” 9 players to be on your “Team” for 1 week. Enter your “Roster” into a contest with other players (could range from 1 other person to 1,000s of people, the DK user can choose). Whichever “Roster” amasses the most points for that week out of all contestants wins. The winner will get the highest payout, and depending on the nature of the contest, other top finishers will receive smaller payouts as well.
Sports Gambling – Team A is considered a 10 point favorite to defeat Team B. This means that Team A is expected, by the professional gambling line setters, to outscore Team B by 10 points. This is known as a point spread. You can bet on the underdog or the favorite. If you bet on the favorite, they have to win by more than 10 points for you to win the bet. If you bet on the underdog, you will win the bet as long as the underdog keeps the game within less than a 10 point defeat.
These are just a couple simple examples to help you see the difference. Sports Gambling (the 2nd priority of DK) is a very lucrative market just as the DFS contests are. However, in the US, Federal Laws and regulations are a lot stricter on Sports Gambling than they are on DFS. As of this writing (11/27/20), 22 states (including the District of Columbia) out of 51 possible allow sports gambling.
DK is still in the infancy stages of getting their sports gambling business going. In the 22 states where they could potentially operate, they currently have a sports gambling offering in 11 of those states. The sports gambling business model for DK can be broken into two main offerings – mobile sports betting, and retail sports betting. Mobile sports betting means you can place a sports bet online from the comfort of your own home, while retail sports betting means you must go to a casino and place a bet with the sportsbook in person. I personally believe mobile sports betting is the real potential cash cow for DK out of the two types of sports betting offerings due to the convenience and ease of access. DK is currently working on and encouraging customers to lobby their state lawmakers to legalize sports gambling in more states.
How DK makes money
At the very least, before you invest in a company, you better understand how they make money. In Chris Mayers’ excellent book, 100 Baggers, that I mentioned above, he continually references top line revenue growth as one of the main common indicators of a possible 100 Bagger. This isn’t to tell you that any stock I pick will be a 100 Bagger just because it has great top line revenue growth, but if I am looking at a growth stock to hold for the long term, revenue growth is one of the first things I look at.
For DK, their means of making money is quite simple. I already went into detail above about DFS Contests and Sports Gambling. In DK’s latest 10-Q filing with the SEC (filed 11/13/20), revenue is broken out into two main streams: Online Gaming and Gaming Software.
Online Gaming (82% of Total Revenue for 9 months ended 9/30/20):
Online gaming is the true core business of DK and includes the aforementioned DFS Contests, Sports Gambling and additional gambling (non-sports) opportunities. DK refers to their additional gambling (non-sports) as “iGaming” or “online casino”.
For the 9 months ended 9/30/20, Online Gaming revenue totaled $239M, up 30% YoY from $184M in the same prior year period. Keep in mind, that this is an increase that happened during a COVID-19 global pandemic that delayed and shortened many professional sports seasons.
Online gaming revenue is earned in a few ways that are slightly different, but very similar overall. In order to enter a DFS contest, a customer must pay an entry fee. DFS revenue is generated from these entry fees collected, net of prize payouts and customer incentives awarded to users. In order to place a sports bet (sports gambling), a customer places a wager with a DK Sportsbook. The DK Sportsbook sets odds for each wager that builds in a theoretical margin allowing DK to profit. Sports gambling revenue is generated from wagers collected from customers, net of payouts and incentives awarded to winning customers. The last form of online gaming revenue is earned in similar fashion to a land-based casino, offering online versions of casino games such as blackjack, roulette, and slot machines.
Gaming Software (18% of Total Revenue for 9 months ended 9/30/20):
While the Online Gaming revenue stream mentioned above is a Business to Consumer (B2C) model, the Gaming Software revenue stream is a Business to Business (B2B) model. The Gaming Software side of the business was born out of the acquisition of SBTech, a company from the Isle of Man (near the UK) founded in 2007 that has 12+ years of experience providing online sports betting platforms to clients all over the world. The acquisition occurred as part of the SPAC driven IPO in April of 2020 that combined “the old DK company” with SBTech so that they now are “the new DK company” listed as DKNG on the NASDAQ. SBTech is a far more important part of the story than just being 18% of today’s revenue. The reason for this is because DK will eventually (planned mid-late 2021) be migrating all of their DFS and gambling offerings onto SBTech’s online platforms. Currently, for DFS, DK uses their own proprietary platform but that will move to SBTech with the migration. Currently, for online gambling, DK uses Kambi, the same online gambling platform that services Penn Gaming (PENN), a DK rival. But that’s enough about the software migration for now, back to the Gaming Software revenue.
The Gaming Software revenue stream for DK is essentially a continuation of SBTechs’ B2B business model. DK contracts with business customers to provide sports and casino betting software solutions. DK typically enters two different type of arrangements with B2B customers when selling the gaming software:

Direct Customer Contract Revenue: In this type of transaction, the software is sold directly to a business (casino for example) that wants to use the software for their own gambling operations. This revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using DK’s software and is recognized in the periods in which those wagering and related activities conclude.
Reseller Arrangement Revenue: In this type of transaction, DK provides distributors with the right to resell DK’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses DK’s software.

As mentioned above, SBTech was an international company based in the Isle of Man before being acquired by DK. Thus, the majority of their business in their first 12 years of operating independently has always been international and outside of the United States. This has helped DK, which has historically been US focused, expand it’s international reach.
A perfect example of expanding this international reach occurred recently during October (technically Q4) in which DK’s B2B technology (powered by SBTech) helped enable the launch of “PalaceBet”, a new mobile and online sportsbook offering from Peermont, a South Africa based resort and casino company. The deal was headed by DK’s new Chief International Officer, Shay Berka, who previously spent 10 years working for SBTech as CFO and General Manager. Mr. Berka took on the role of DK’s Chief International Officer upon the merger in April earlier this year. I think this deal shows that DK has integrated SBTech and it’s business very well into the larger business as a whole. They are not wasting any time using their newly acquired resources to expand their reach and bring in new sources of revenue.
This is the end of my first article about DK. My goal is to drop Part 2 later this week. The focus of Part 2 will be an in depth answer of the question – “Can we 10x from here?”
Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1

TL:DR

This is Part 1 of my two part deep dive on DraftKings (Ticker: DKNG, I will refer to the company as “DK”)
This first part introduces you to (1) me, (2) the company, (3) my thesis on the company, and (4) digs into how they make money.
The second part (to be released later this week) will go in depth to explore the question “Can we 10x from here?”
DK is an exciting, disruptive company working to change how we experience watching sports and make it better.
I am not a financial advisor and this is not investment advice. These are just my opinions to help facilitate learning and discussion.

Direct Customer Contract Revenue: In this type of transaction, the software is sold directly to a business (casino for example) that wants to use the software for their own gambling operations. This revenue is generally calculated as a percentage of the wagering revenue generated by the business customer using DK’s software and is recognized in the periods in which those wagering and related activities conclude.
Reseller Arrangement Revenue: In this type of transaction, DK provides distributors with the right to resell DK’s software-as-a-service offering to their clients, using their own infrastructure. In reseller arrangements, revenue is generally calculated via a fixed monthly fee and an additional monthly fee which varies based on the number of gaming operators to whom each reseller sub-licenses DK’s software.

[MF] Slavey Shores

The title isn't final I really just don't know what to title the thing yet without spoiling the ending. Also I should say that every location can be found in this book on Google Earth so if you are feeling adventurous go ahead. Also if there are any grammatical errors please feel free to tell me, I only properly parsed through it once. Anyways the story is below.
“Low ground! Low ground!” the plane beamed constantly into my headphones. I had accrued over 1500 hours of flight time since I left the Air Force, yet no situation was as strange, and frankly terrifying as now. With the nearest airfield being 50 miles away, and losing approximately 1000 feet per minute I start recording my last message.
“There isn’t a point of me writing anything, it will almost certainly be incinerated when this plane explodes. Especially when the Black Box is likely recording everything I say right now. It’s been a journey guys, didn’t want it to end this way but God works in strange ways sometimes. Hailey I am confident you will raise our daughters to be the best they can. I just ask if you hear me now to do one thing. Tell them I love them. You never truly know when is your last day, and I think it’s important to remind those we leave behind our love for them. Being a very commercial pilot I have always felt like an absent father. I always knew that I had my priorities right, I would hate to send any of my daughter’s to bed hungry, but another part of me feels like I’ve missed out on a lifetime of memories. Well this concludes my rather sad and rather basic last message. At least on the bright side I’m flying solo so instead of 200 dead people only one has to be dealt with. Anyways Cal Harphorne out”
I cut my microphone. That speech I made with both engines failing, had cost me another 1000 feet in elevation. The ground was getting very close, and the thought of my consciousness simply disappearing on contact was eerily chilling to me. While not hysterical about my likely demise, I certainly wasn’t at peace with myself. That’s why when I saw a lake 2 miles to the North I decided to shoot my shot. I figured it’s better to try to attempt a water landing and more than likely die, then to crash into a forest and almost certainly die.
My rudders were practically the only means of maneuvering I still had. With both engines cut I had to glide this plane to not only a proper angle of descent, but also at a speed where my neck wouldn’t break on contact. When I approached the south end of the lake I was no more than 200 feet of the ground. Not wanting to die I desperately tried to recall everything my sergeant had told me when we briefly discussed emergency water landings in the Air Force. I being a wide-eyed recruit meant not every bit of information had stuck to my head, and I had yet to revere the words of my commander’s like I do now.
This was a life and death scenario however, and me messing up in the slightest meant falling off the tightrope that was my life. The water was now close enough where I could see fishes hopping out of the water. It was now or never. I rounded out the plane and flared it up so I had a good angle with the water. The second the plane hit the water it was a strange sort of harmony. All the annoying bells and whistles that I had been listening to over the past 30 minutes ceased, and I could only hear the thunderous roar of the plane hitting the water.
But just as fast as the cockpit computers failed, water started to breach in. I didn’t plan to stay for much longer and cracked the window and leapt out into the water. Before I did this however I made sure to grab my survival kit in the back, as without it I had a near 0 percent chance of being found. It was late August so I had no fear of freezing immediately, but being barely south of the 60th parallel hypothermia was certainly a very big and valid fear.
My survival skills while not amazing were certainly refined, but once I got to the shore this fact only made me more depressed. Berries upon berries lined the forests, almost all of them poisonous in some aspect. One variety I saw was known to contain copious amounts of neurotoxins. No roads, barely any food, not even a cave to sleep in, at first I felt I had simply traded a quick and painless death for a long and painful one.
A bright spot of this nightmare was that I had never seen the sky so clearly before. A clear sky of thousands of stars, meant with a sextant I was able to figure out my approximate location on the first night. I knew where I was yes, but the truth is at the same time I didn’t. The Earth is a big place, and it is very possible that my calculations were off enough to make any venture fruitless. I also possessed an atlas of North America that contained the coordinates of most cities with more than 5000 residents, along with the coordinates of more remote but significant locations.
This also meant that I had to alter my sleep schedule so I could be awake at the darkest times of the night. Being so far north and it being August meant that the days were very long. In fact, it never actually became night in the weeks I spent there. The sun wouldn’t dip more than 18 degrees below the horizon meaning that I was being constantly basked in different stages of twilight. But it’s not like any normal person would really be able to tell a difference between night-time and astronomical twilight.
After weeks of researching I was able to determine approximately what the nearest town to me was. The town of Slavey Shores was where I would head to once I prepared for the journey. Out of all the towns in 100 mile radius, it seemed to be the only one within 20 miles of me. Located on three islands in the middle of the Slave River, the town was just 17 miles to the west of me. It was also less than 25 miles southeast from the bustling city of Fort Smith just across the provincial border in the Northwest Territories.
For the first time in a while, I was actually confident in my survival chances. I had a chance to beat the odds, and come away in one piece. I spent my first week sleeping in the tent that was in my survival kit. The tent was very small but sufficient enough for permanent inhabitance. I pitched it on a limestone cliff overlooking the cliff. The cliff required you to pull up onto it from the forest floor, so I chose this spot specifically to better defend my food and belongings from the animals.
I spent the first day getting myself warm and dry, and the night finding out where I was. My food supplies would be exhausted quickly. Inside my survival kit was enough MRE’s to last about 5 days, and enough water bottles to last half of that time. Thankfully I had prepared for this eventual reality. In the kit was also a repeater along with several boxes of cartridges. Most of the flora of the region was either inedible or poisonous, but there was still an outstanding amount of fauna. Creatures of all roams of life roamed the forest in abundance including caribou.
I managed to kill one while down at the lake for water one day, It didn’t yet notice me from 100 feet away, so I took full advantage of the opportunity. When the creature lowered it’s head again to sip from the lake, I took a shot aiming for the heart. The bullet landed, and although it briefly tried to run away it fell and quickly died. With my butcher knife I was able to collect the pelt, antlers, and all the best cuts of meat. The rest of the carcass I simply pushed in to the lake and left for the eons.
After eating to the point of food-coma I cooked some into jerky for the future, and kept the rest of the meat on the rock outside. The chilly nights kept the meat fresh, so I was able to treat myself to a good breakfast the next morning. With an eagle egg I also stole the day before I made myself a little survivalist omelet. It tasted very queer, but as long as I could power the day on I simply didn’t care.
Everyday in which it was clear, I would travel to a hill on the east side of the lake and light a flare. It was the highest point my eyes could perceive, and probably the best chance for me to be spot by any aircraft. Despite air-travel being the lifeblood of the modern Arctic, my luck was ill. I didn’t spot too many planes in the remote piece of country I was in, and the ones I did were passenger planes all at cruising altitude. I hoped I could get a swift rescue by someone, a stray pilot, the government, anybody, but it seemed after a while I was going to have to rescue myself.
About on the 8th day while coming back from lighting a flare I saw a sight that crushed my heart. Like an idiot I forgot to properly ash the fire and sole ember caught onto the tent. When I came back it was already starting to catch, but thankfully I quickly dumped the contents of my canteen on it, extinguishing it. Although the tent was still functional, both the rain-fly and a good part of the top of the tent were burnt. If I was camping with my family it wouldn’t be a problem as if the weather was good I could simply remain and if it wasn’t leave or buy a new tent. I didn’t have any weather apps, car, or another abode so sadly the burnt tent was my only option.
The sky was very clear on this day, I couldn’t spot a single could in the sky.
But I knew eventually it would rain and in the process make me catch pneumonia or die of hypothermia. Plan B which was a pilgrimage to Slavey Shores seemed more than necessary at this point. To prepare I picked all the Saskatoon berries I could find and killed a doe which I would cook into jerky before. I also decided that instead of going a straight crow-fly route to the town, I would walk completely westward until I reached the shore of the river. That way I could have a fresh source of water as I walked northbound towards the city.
The night was the first I spent actually sleeping. I spent the last couple of days checking my math and absolutely making sure I knew where I was. I carved the incredibly long number that was my coordinates into the rock the night before. I had a very good memory so I wasn’t sure exactly why I did this, a part of me felt that I should leave some record of my existence here. But I prayed to God each night that no other human would have to be here, at least against their will. “59.6588876 Degrees North; 111.0435612 Degrees West. To Slavey Shores I head.” read the inscription, the last thing I would do before leaving the next morning.
With my skin kissed in what felt like never-ending twilight, I fell asleep and woke up sometime a little after sunrise the next day. I planned to leave the tent as I was confident that I could make the journey within a day. That was if I continued at a brisk and uninterrupted pace, which wasn’t guaranteed in a wild land like this. Brambles, animals, and even a limestone ridges posed a great threat. These things could not only make the trip a pain, but also kill and incapacitate me. That is why at first I wasn’t a huge fan of making the walk to this town. If I could get rescued and not have to traverse this untamed wilderness, I thought that would be the best course of action.
But after each fruitless flare lighting, and with the damage my tent incurred it was a necessity at this point. If I couldn’t make it to Slavey Shores I would never see my family again. All the prompts in my life story would remain unanswered, and with very little clues of what truly happened to me. I remember the black box, but I have already gone through this much trouble living to simply give up now. Everything in my survival kit that I deemed necessary; a small pan for boiling water, my knife to cut through brambles, and a lot more I kept. Other useless things like an expensive beer I chucked into the lake as it would weigh me down. That was after I drank the whole thing of course.
My idea before this whole fiasco was that once I got rescued I could enjoy a nice beer and celebrate, but this didn’t seem plausible in a scenario when I had to rescue myself.
With my pack as light as I could reasonably get it I took my first steps westbound. The town on the river was almost directly due west of me, the only deviation was maybe northwards 2 miles. I would go straight west however as if I didn’t I wouldn’t meet the river for another 3 miles as it veers westward. 3 miles may not seem like a lot but I’m sure it will seem like 10 with my empty canteen in hand.
So I walked dutifully onwards towards the town, the first mile or so was breezy. I hadn’t seen anything unusual or unexpected. The expected hazards, bears, brambles, ditches, and so much more was there, but nothing that couldn’t be avoided. Overall I was making good progress and I was able to go some 8 miles in just 5 hours. While it wasn’t the brisk 3 mph I hoped for, it was nothing the long day couldn’t console. Despite partaking in what was the ultimate workout of my life, my mood was very high.
I sung folk tunes all the way to town, dreaming of when I can hug my beloved daughters again. When my energy was low and I felt weak my desire to live kept me going, that and a handful of jerky and berries. Almost 6 ½ miles in I uncovered quite the surprise. While drinking from my canteen in a forest in which you could hear a pin drop my ear catches an interesting noise. What sounded like the roaring of water, chipping each rock in it’s path till it reached it’s mouth. Each step westward the noise became louder until I came upon a nice stream, cascading slowly down a valley to it’s mouth.
I say that as the valley it’s in has clear enough vantage to see the lake it dumps into. Curiously I decided to veer a little bit northward and check it out. It appeared to be twice the size as the plane I did my emergency landing on, but certainly nothing more than a lake. I decide to make a quick stop. I harvest some pine needles, stones, and some wood branches to make a fire at the lake’s edge. I am incredulously thirsty at this point, and my canteen is only ¼ of the way full. I swig what I have left of the water and fill it with lake water. I prefer not furiously pooping out of my butt for weeks so I boil it in my pan and continue on with my venture. I’m a little under half way there and at this point it is only a little after noon, maybe 12:30 or so. With my water filled I decide to abandon my straight-shot walk to the river and decided to walk in the direction of the town.
While not very likely I prefer to not have to traverse a country that when it’s dark may as well be space. A place where you can see the abundant stars and moon, but not your own fingers. Especially with how many chasms and ridges that dotted the terrain. Not to forget the wild cougars and wolves, who’s horridity has been forgotten mostly in my home state due to extirpation. I had to walk south-east ward slightly as I had walked myself onto a peninsula, but after I quickly was back on course. However this time I made sure to move westward but to go slightly north at the same time, roughly north-west-west.
Everything was very smooth until I reached the 14th mile of the journey. Before this point I had to mainly only travel through forest and intermittent meadows, maybe cross a creek or two. This final 3 miles proved a unique experience, one that I simply wasn’t expected. I had expected some degree of ridges and hills, but the final 3 miles approaching the town was overkill. Jagged mountains, and steep banks categorized this region best. It seemed as where-ever there wasn’t a pine tree there was a cliff, mountain, or ridge that had to be crossed.
This caused me to move at an incredibly laggard pace, I had spent as much time in the first 2 miles of this so-called “mountain zone” than the first 6 ½ miles. I wouldn’t stop, I couldn’t, and with determination and of course venison jerky, I reached a crest in which I could see the river. The river was there along with the islands, but one thing was missing, and that was the town. He checked if he had the right islands or perhaps coordinates, and after triple-checking he confirmed he was right on the money. What was supposed to be a self-sufficient town on the river was simply a couple wooded islands.
Yes the islands were big enough to support a town but he could simply see no buildings in sight. At this time also, twilight is beginning to fade and it is getting very dark. Even worse the clouds look very similar to the sky. Thunder echoes into my ears, like Zeus was condemning me to death. I tried to formulate why the town didn’t exist. Was it simply abandoned? I didn’t think so as I would at least see some ruins. Is it just hidden very well? Probably not as the bridges that spans the islands would likely still be visible.
It is also this time the first rain drop hits my neck, it only gets more and more rapid until it begins pouring. Fort Smith which I know for a fact is real seemed so far away, which it was. I couldn’t make the journey there. I kind of gambled my entire life on a town that didn’t even exist. No tent, no berries, and verily no resolve to continue on. It would also be dark soon for at least a couple of hours or so. On a cliff near the river’s edge I accept my fate. I hoped someone found find the Black Box, and hopefully don’t waste too much time and money trying to find me. “To Slavey Shores I go” I say cynically before jumping into the river to my death.
Epilogue
For the first couple of years it took a long time before the truth came out, or at least part of it. Cal’s former wife was hounding the governments of both the United States and Canada for information about her husbands’ disappearance. All she knew is he left the airfield in his hometown of Tulsa to head to his cousin’s ranch in the Alaskan bush. A place that he obviously never arrived.
It was actually a Native American boy and not a FBI agent or the likes who made the first critical discovery in the case. In a unprecedently dry year, the lake in which Cal made his emergency landing dropped to a level that the back wing of the plane was above the water. While he originally came for water and a place to fish, he rushed back to his village which unbeknownst to Cal was a mere 3 miles north of his tent. He told all the other villagers about it, and while there was no one there he could directly report it to like a police agency, he contacted the police in Fort Smith who arranged to meet with him in Fitzgerald the following day.
His chief who had to go there to buy more ammunition and various other essentials agreed to take him there. This village was very remote and did not have direct road access so they were forced to go horseback. Fitzgerald was only 2 miles north up the river from what was supposed to be the northern tip of Slavey Shores, had Cal kept his hopes up and continued northwards he likely would’ve found it. It simple was too small of a town to be put on the map that he contained.
They crossed the river in the shallowest parts of the rapids and were able to get to Fitzgerald fairly easily. Once there the police informed them they would be passing the case to the RCMP but still wanted some preliminary information. They asked lots of questions, all of which he answered and was told his case would be thoroughly investigated. The next day two police helicopters arrive along with a search team. They find the exact plane he’s talking about, but much more needs to be done.
A scuba team is eventually deployed to the lake and explore the cabin of the plane. They are surprised to not find human remains, but through process of elimination are able to determine that it is the missing plane of Cal Harphorne. More and more dives are done, primarily focused towards the south end of the lake where the plane was, but after weeks of looking no body was found. They had only explored half the lake but decided to not explore the northern end, and western arm as he is much less likely to be there, along with both bodies being significantly deeper.
To Hailey Harphorne, news of the discovery is bitter-sweet. When police play the final black-box recording she starts uncontrollably crying. Not only out of grief but also a feeling of solace. She was satisfied that she no longer was left without answers, and she felt she could finally let go of any longing thoughts that he may still be out there. Many questions still remained though. Why wasn’t a body found? Did he survive for sometime afterwards? By the time they reached the lake they simply weren’t sure. They found things like a burnt tent on one of the shores, and a beer bottle at the bottom of the lake, but they could’ve been left by anyone. Still to this day no one truly knows except you, I, and Cal, but he is festering at the bottom of a muddy river.
They don’t know about the paper town he encountered, nor the hardships he went through to get there. To those who knew him he was a father, friend, uncle, but one thing he wouldn’t be known as was survivor. Had he reached any other town that wasn’t put there as a copyright trap, he would’ve survived, likely grown old, and enjoyed his golden years, but he didn’t. He would be the one telling this story. But everyone knows that dead men don’t tell any tales. His endurance and will to live in a twist of fate pushed him in the one town on the map that wasn’t real.

/r/thetagang needs a FAQ/wiki so I wrote one

EDIT: Wiki now exists and has more info not in this post.

Overview

What is this place? What is theta gang?

/thetagang is a sub for traders who are interested in selling options.

An option? What's that?

Options are derivative financial instruments, which means they derive their value from an underlying, such a stock or commodity. Options are a contract in which the buyer has the right but not the obligation to buy or sell the underlying at an agreed upon price on or by a certain date.
All options have an expiration date after which they stop trading. Because they eventually expire they are also wasting assets, which means they lose extrinsic value as time passes. This is where theta gang comes in.

Uh huh... I don't really understand anything you just said, but I'm curious, why would anyone want to trade options?

There are two main reason why someone would want to trade options: hedging and speculation.
Consider an investor who buys a stock but is worried about a price decline. They can purchase options (put contracts) to protect themselves if the stock's price were to fall. And if they think a stock is overvalued and want to short it, they can purchase options (call contracts) to protect them should the price rise. In both cases the investor is hedging their trade because they are trying to profit from the stock and not the options.
The other reason is speculation. Options allow someone to make a directional bet on a stock without buying or selling the actual stock (the underlying).

Why would someone bother with trading options when they can just trade the underlying?

Leverage. Equity option contracts are standardized and each contract (also called a "lot") is for 100 shares of the underlying. It's a way to have exposure to the underlying without needing the capital to buy or sell 100 shares for each contract. In other words a smaller amount of money controls a higher valued asset.
Options allow a buyer to make amazing profits. If a trade goes incredibly well, they could see profits anywhere from 100% to 10,000% (a few are even lucky enough to get 100,000%). And despite being leveraged the most amount of money they can lose is what they paid to buy the options. This is known as the premium and is paid to the seller.
The option buyer's losses are limited to the premium and their profits are potentially unlimited, whereas for the seller the losses are potentially unlimited and the profits are limited to the premium.

WHAT?!? Why on Earth would anyone sell options with a payout like that? Especially when you could become rich so easily?

If only it were that simple.
The reality is most options expire worthless. If you buy options not only do you have to get the directional bet right, but you have to get the timing right as well.
If you buy a stock and it goes nowhere for a while and then suddenly takes off in price, you make money from this trade. Not necessarily for options. They eventually expire and if the stock soars after the option expires, tough luck. You get nothing and lose all your money.
All of the incredible gains you see with options happen because the underlying made a huge move in a relatively short period. In other words, you have to take an immense amount of risk to make a boatload of money. It's far more likely that the options expire worthless and you lose everything.
And if getting the direction and timing right wasn't hard enough, it gets even worse. Options are priced to lose. Recall that options are a wasting asset. An option slowly loses extrinsic value as time passes. This is referred to as theta decay. If the underlying doesn't move in price fast enough (in the right direction, of course) to offset the loss in theta, you lose money.
This leads to an interesting outcome: an options buyer can be right and still lose money, and an options seller can be wrong and still make money.

WHAT?!?! How can someone be wrong in a trade and still make money?

The value an option has can be split into two parts: intrinsic and extrinsic.
Remember how options have an agreed upon price to trade the underlying at? That's called the strike price. As an example, if a call option has a strike of $10, and the stock is trading at $10.50, the option has $0.50 of intrinsic value.
The extrinsic value is also known as the time value of an option. It's the risk premium the seller receives for taking on the risk of selling options. Using the same example as earlier, if the option is trading for $1.10, the extrinsic value is $0.60.
The intrinsic and extrinsic value combined are the option's premium, and the seller receives this premium in full. So if at the date of the option's expiration the stock is trading at $10.70, the option is worth $0.70. The seller's $0.40 profit is the buyer's loss. And if the underlying is at $10 or less on expiration? It expires worthless and the buyer loses 100%.

This sounds too good to be true. If most options expire worthless why doesn't everyone sell options and get rich?

If only it were that simple.
It's true options are priced to lose and that most expire worthless. What is a wasting asset for the buyer is a wasting liability for the seller. However, it's still a liability and sometimes that liability can end up being a real loser.
It's not just a matter of a win/loss ratio. The magnitude of the wins vs. losses must be considered. The most an option seller can make is the premium, but they can lose far more than that if the underlying moves against them. It's possible for a seller's loss to be multiples of the premium they received for selling an option. If an option seller is really unfortunate, they can experience a loss on a single trade that wipes out months of profits.
There's no easy money to be made trading options.

The Greeks

Let's pretend that I know what options are. How do the Greeks apply to option sellers?

Delta

Delta has multiple meanings:

How much the option's price changes relative to a change in the underlying's price.
The option's equivalent of a position in the underlying (a directional bet).
The probability the option expires in-the-money.

Definition #2 is important to understand when making delta neutral bets (discussed later). These profit from a decrease in volatility along with collecting theta. It's possible to construct a trade where a movement in the underlying does not change the position's value (or by much).
Definition #3 is an approximation. Many option sellers like to sell out-of-the-money options with a delta of 0.30, which means they have an approximately 30% chance of expiring ITM.

Gamma

Delta is not a constant. An option's delta changes as the underlying's price changes. Gamma measures how much delta changes relative to a change in the underlying's price. Option buyers have positive gamma, whereas sellers have negative gamma.
Long (positive) gamma works in favor of the buyer. As the underlying moves further ITM, gamma increases delta and profits accelerate. As the underlying moves further out-of-the-money, gamma decreases delta and losses decelerate.
Short (negative) gamma works against the seller. As the underlying moves further ITM, gamma increases delta and losses accelerate. As the underlying moves further OTM, gamma decreases delta and profits decelerate.
Gamma is bad news for sellers. Theta gang has always been at war with gamma gang. Gamma is also the reason that delta hedging is so difficult when it comes to being delta neutral.

Theta

Beloved theta. The namesake of /thetagang. It's why we're here all here and why you're reading this.
Theta represents the time value of an option. It's the extrinsic value of an option, and as each day ticks away the time value decreases a little. That amount is determined by theta. Theta decay is nonlinear and accelerates as expiration approaches.
The goal of an option seller is to profit from collecting theta. One could sell an option that's ITM and profit from the underlying moving OTM, but that's not a theta bet, that's a directional bet. ITM options also have less time value than at-the-money options. ATM options have the most time value and so the most theta to collect, but are at a greater risk of expiring ITM compared to OTM options.
The more days to expiration an option has the slower the theta decay. 30-45 DTE is a very popular period to sell. Others prefer weeklies.

Vega

Vega measures how much an option's price changes relative to a change in implied volatility.
The IV of an option is the market's estimate of how volatile the underlying will be in the future. The higher the IV the greater the time value of an option, which means options with higher IVs are more expensive.
Option buyers want to buy when volatility is low because options are cheaper. Sellers want to sell when volatility is high because options are more expensive.
The best time to sell options is during the gut-wrenching periods when no one wants to sell because volatility is so high (such as the March 2020 crash). Options become extremely expensive and there are juicy premiums to collect. Look for large spikes in IV.

Vomma

Vomma (or volga) is a much lesser known Greek. It measures how much an option's vega changes as the implied volatility changes.
Out-of-the-money options have the most vomma. This detail will be discussed later in a horror story of option selling gone wrong.

Rho

Rho measures how much an option's price changes as interest rate changes.
No one cares about rho anymore thanks to interest rates being stuck at rock bottom for over a decade.

Volatility

What are some basic details about volatility that are important to know?

Both option buyers and sellers care about volatility (at least they should). Buyers want to purchase when IV is low and sellers want to sell when IV is high.
An option's IV in isolation does not actually tell you if IV is high or low. It must be compared to the historical IV for that option. Two popular methods are IV rank and IV percentile.
For example, if options on XYZ have an IV of 35% and options on ABC have an IV of 45%, on the surface ABC has higher IV. But if XYZ has an IV rank of 75% and ABC only 40%, XYZ's IV is actually higher relative to its historical IV and may be better suited for selling.
There are different ways of measuring volatility and it's important to not mix them up:

Historical volatility: This is how volatile the underlying actually was. It doesn't tell you anything about the future volatility of the underlying. This is also called realized volatility.
Implied volatility: This is the market's prediction of how volatile the underlying will be in the future. It could be greater than, less than, or about the same as the historical volatility. It's only an estimate and can easily be wrong.
Historical implied volatility: This is simply the IV of an option over time. When you're looking at historical data and overlay HV with HIV, you can see how right or wrong the market was estimating future volatility.
Implied volatility rank: IV rank is calculated over a period of 52 weeks. The formula is 100 * (current IV - 52 week low IV) / (52 week high IV - 52 week low IV).
Implied volatility percentile: This tells you the percentage of time HIV has been lower than current IV. The formula is # of days with lower IV than today / # of trading days in a year (252 is normally used).

What is volatility skew?

To understand what volatility skew is we have to go back to the 1970s.
You may have heard of a theoretical options pricing model called the Black-Scholes or Black-Scholes-Merton model. This model was published in 1973 and became very popular. It was widely adopted in the options market.
The original Black-Scholes model predicts that the IV curve is flat among the various strike prices with the same expiration. It didn't matter if the strike price was OTM, ATM, or ITM, they all had the same IV.
IV stayed this way until the stock market crash of 1987, where the DJIA dropped 22.6% in a single day. This single event changed the options market forever. The IV curve was no longer flat but instead demonstrated a volatility smile (conceptual graph). Strike prices further from ATM started trading at higher IVs.
The crash was a gut punch to investors that taught them extreme moves in markets were more common than you would expect, and options started being priced accordingly. But the volatility smile is not symmetrical, it's actually skewed.
OTM puts have a higher IV than OTM calls. This is due to markets falling much faster than they rise (they take the escalator up and the elevator down). This causes more demand for OTM puts to protect long portfolio positions. Most investors are long the market, and some will sell covered calls which increases the supply for OTM calls.
Note that this is true for equity markets. Commodity markets behave differently. Normally there is a floor in commodity prices (although for commodities with storage or delivery constraints, as we learned in April 2020 they can dip below zero) and IV is higher for OTM calls compared to puts, because commodities can suddenly spike in price due to supply side shocks.
In equity markets IV is inversely correlated with price, that is, IV rises when prices fall (reverse or negative skew). This isn't necessarily true for commodities where rising prices can mean an increase in IV (forward or positive skew).

The story of James "Rogue Wave" Cordier of OptionSellers.com: A tragic lesson in how not to sell options

James Cordier is a former money manager who has the dubious honor of not only losing all the money of his clients by selling options, but even leaving them with a debt because the losses were so staggering.
James was a proponent of selling options and had even written a book about it. He had a now defunct website, OptionSellers.com, which targeted individuals with a high net worth. His strategy was simple: he was selling naked options on crude oil and natural gas. For years he made he made his clients plenty of money. Things were great. Until they weren't... and the results were catastrophic. His clients lost everything and even owed money to their broker, INTL FCStone. Where did James go so wrong?
James was selling naked strangles on natural gas and crude oil. In November 2018, both markets moved against him, but the real losses came from his naked natgas calls. He sent an email with the subject line "Catastrophic Loss Event" to his clients on November 15th, dropping the bombshell that not only was all their money gone, but they may be facing a negative balance.
If you look at a chart of natgas you can see why his accounts blew up. Natgas experienced a huge spike in November and his broker liquidated their positions at an absolutely massive loss.
What mistakes did he make and what can we learn from them?
1. Picking up pennies in front of a steamroller
Part of his strategy involved selling deep OTM naked calls on natgas (call leg of short strangles). Deep OTM options typically don't sell for very much, so in order to collect more money you sell a bunch of them to make it worth the trade.
This is a terrible idea and no one should ever sell a bunch of deep OTM naked options. It can work great for years, until one day it blows up your account. In order to collect a decent premium you have to overleverage yourself. This is extremely risky and you will eventually experience a major loss one day. The odds are not in your favor.
The underlying does not even need to cross the strike price for you to lose money. The underlying's price simply needs to move significantly closer to the strike price and you'll be deep in the red. This is made even worse if volatility spikes, which increases the option's price and your losses (discussed in detail in the next point).
Notice what happened the following months: natgas prices crashed back to what they were before the spike. Had James not overleveraged his positions, he could've ridden the losses out to a profit. In fact, all those options probably would've expired worthless.
There is another reason not to sell deep OTM naked options. Imagine you're a speculator with a small account (e.g., /wallstreetbets). They want to trade but they can't afford to buy ATM or slightly OTM options, so what do they do? Buy deep OTM options, bidding the price up. When a market moves big and the small-time speculators want to trade it, all they can afford are the cheap options, which are deep OTM. This is bad news when you're short them.
2. Not understanding the relationship between price and volatility
Remember how for commodities volatility can be positively correlated with price? Natgas is one of them, and when the price spiked so did volatility. James did not understand the consequences of this.
When you are short options, you have negative vega. As the price spiked so did volatility, and the short vega position piled up his losses in addition to being short delta.
But vega is not a constant. We finally get to discuss vomma now. Vomma measures how much an option's vega changes as IV changes. In other words, as IV increases, so does vega thanks to vomma. When you're short vega and vomma, this is bad news.
Remember which options have the highest vomma? That's right, OTM. So as IV increased, not only did his losses increase due to rising IV, but vega itself started increasing thanks to vomma, further accelerating his losses.
He got wrecked four different ways: being on the wrong side of delta, gamma adding to delta, being on the wrong side of vega, and vomma adding to vega.
3. A total absence of risk management
Risk management is essential when it comes to trading, and selling options is no exception. Selling naked options can expose you to extreme risks, and to ignore it is simply reckless. It's more important to avoid a huge loss than to make a huge profit, because all it takes is one big loss on a trade to make recovering from it impossible, ending your career in theta gang.
Tail risk is a very real concern in trading, and those "rare" events actually happen more frequently than traders expect (fat tails). Look at a price chart of natgas over the past twenty years. You can see random spikes sprinkled throughout the chart. James never stopped to think, what would happen to the value of my positions if natgas were to suddenly spike in price, which I know has happened in the past, and will happen again someday? How could I protect myself against this scenario?
It's pretty obvious that if a one-day or even few weeks move manages to blow up your account and completely undo years of profits, you have zero risk management in place. This stems from not understanding how the natgas market works, and trading it with no regard to risk.
Selling naked calls on natgas is a terrible strategy because natgas can have sudden price spikes, and IV will spike with it. A much better strategy would've been selling a call backspread. You sell an ATM or OTM call, and you buy two or more calls that are further OTM. That way if natgas did spike your losses are limited, and you might even turn a profit on the spike.
Spend the time necessary to learn about the underlying. And don't neglect risk management. If you're going to sell options, you absolutely must understand how the underlying behaves and its relationship with volatility, otherwise you cannot have proper risk controls in place.

Miscellaneous

What are some popular option selling strategies?

The most popular would be covered calls and cash secured puts.
CCs involve selling OTM calls on a stock you own. The short call position is covered by owning the underlying, hence the name (opposite of naked). A single equity options contract is for 100 shares, so an investor sells one call for every 100 shares they own. If the stock price rises beyond the strike price, the seller keeps the premium, but the options will get exercised and the shares called away. They sell them at the strike price, missing out on the extra gains beyond the strike. The seller still makes money on the sale, just not as much as they would have if they sold them at market price. If the stock grinds sideways, the options expire worthless. And if the stock falls in price, the options will also expire worthless, but the seller will lose money on their long stock position. Chances are they will lose more money than the premium they collected from selling the CCs.
A CSP is a naked put that's sold either ATM or OTM with enough money in the account to cover the stock purchase if the option gets exercised. If the stock grinds sideways or rises in price, the puts expire worthless. However, if the stock falls in price the options will get exercised, and the seller will be forced to buy the stock from the options buyer at the strike price, most likely suffering a loss greater than the premium they received.
A CC has the same downside risk as a naked put. If the stock declines in either scenario the investor risks losing far more money than the premium received. If you are comfortable with the risk of selling CCs you should also be comfortable with the risk of selling CSPs. However, you can lose more money in the CSP scenario if you buy back the put before expiration if IV rises enough, vs. holding it to expiration.
Selling a CSP always means selling a naked put. It is not a covered put because you have cash to buy the stock. Whether or not you have enough money in the account to buy the shares at the strike price is irrelevant. A CP means you are also short the underlying, hence it is covered. It's the same idea as a CC, except it has unlimited risk due to there being no theoretical limit the price the stock could increase to, whereas a long stock position can't go below zero (not a guarantee for certain commodities).
Other common strategies are wheeling and volatility crush.
The wheel is similar to selling a strangle but not quite the same. You sell CSPs on a stock you wouldn't be opposed to owning, and in the unfortunate case of being assigned, you then sell CCs to recoup your losses. If you've been selling CSPs for a while you may still be net up when assigned, but if the stock craters you're looking at a significant loss. You hope the stock slowly climbs while selling CCs, but if the stock suddenly spikes your shares may get called away and you miss out on recovering your losses on the upside.
There are variations to the wheel before being assigned. A jade lizard is selling an OTM call spread where the max loss on it is less than the premium collected from selling the CSP. Ideally the stock will trade in between the short put and call strikes and all options expire worthless. You can also trade a ratio put spread instead of just a put.
The volatility crush trade is a delta neutral strategy. It profits not from a change in the underlying's price, but from IV decreasing. It's very popular right before earnings. IV on a stock can spike just before an earnings report is released due to uncertainty (vol rush). Unless you have insider information, you can only guess what the results will be. After the report is released, IV crashes because the uncertainty is gone (vol crush). Everyone knows the results.
You find a company who's about to report earnings and the IV on their options has spiked. You then sell expensive ATM calls, and because ATM options have a delta of about 0.5 you buy 50 shares for every call sold. Your net delta is zero (delta neutral) because you've offset the negative delta from the short call position by buying shares which gives you positive delta. By hedging your delta you've eliminated directional risk. After earnings are released, IV craters and you buy back the options at a cheaper price and sell your shares.
In theory this sounds like an easy way to profit. In reality it's not due to our archnemesis gamma gang. Delta is not a constant and as the underlying's price changes so does delta. If the stock soars after earnings, the call option's delta will increase and your delta exposure will become increasingly negative as the stock rises in price. If the stock tanks, your delta exposure will become increasing positive as the stock falls in price. In either scenario you start losing money from your changing delta position, and the amount you make from IV decreasing must be greater, otherwise you lose money overall on the trade.
You can try to nudge your delta in a direction to hedge against this. If you're bullish on the stock you can overweight your exposure and buy more shares so that you have a positive delta. If you're bearish you can underweight your exposure and buy fewer shares so that you have a negative delta. If you're correct, good news for you. But if you're wrong, you lose more money than if you were delta neutral.
Then you have a plethora of spread trades, such as vertical, horizontal, diagonal, and ratio, some with creative names. There are far too many to cover in this guide in detail. All of them have at least two legs (each leg is a component of the options trade) to the trade where you are both long and short options.

How does assignment work?

There are two main types of option styles: European and American. European options can be exercised only on the expiration date. American options can be exercised at any time before (and of course on) the expiration date.
When an option is exercised, the Options Clearing Corporation randomly selects a member firm that is short the option, and the firm uses an exchange-approved method to select a customer that is short the option. The OCC processes all assignments after market close, and because it processes closing buys before assignments, there is no possibility of assignment if you buy back your short position during the day's trading hours.
An option buyer can exercise their option even if it makes no sense financially and they would lose money. It's their right to do so and you are obligated to fulfill it if assigned. Even if an option expires worthless it can still be exercised. The buyer may be speculating that major news gets released after hours (some options trade until 4:15 PM ET) and when the market opens again the underlying has moved favorably and their gamble paid off. To avoid risking this scenario simply close out the day of expiration.
Only about 7% of options get exercised and the majority occur close to expiration. This is because options still have extrinsic value before they expire, and once exercised the buyer loses the extrinsic value. It makes more sense for them to sell it.
Be aware that if you are assigned you may see a large negative balance or buying power in your account. This may be because the underlying stock trade has not settled yet. It normally takes T + 2 (trade date plus two business days) to settle. Settlement means an exchange of money and securities. Payment is made from the buyer's account to the seller's, and the seller's securities are transferred to the buyer's account. The other reason would be the value of the new stock position. If you have a small account and are now long or short hundreds or thousands of shares, the market value could far exceed the cash value of your account. You'll be forced to close out by your broker. Once either the trade settles or you close out the large negative balance disappears.

What are some scenarios I can expect assignment, especially early assignment?

If an option expires ITM you can expect it to be exercised. Unless instructed otherwise, the OCC will automatically exercise any option that expires at least $0.01 ITM.
Deep ITM options about to expire are candidates for being exercised. They start behaving like the stock itself since there's zero real chance of them not expiring ITM. They have no extrinsic value and in fact may trade slightly below their intrinsic value (at a discount to parity, parity being the intrinsic value). This is because no one really has any incentive to trade the option anymore, especially when they could trade the stock instead, which has more liquidity. A market maker would agree to buy it at a discount and at the same time open a position on the stock and exercise the option, profiting from the discount arbitrage. For example, XYZ is trading at $50, and a 45 call is trading at $4.95. A MM buys the call while simultaneously shorting 100 shares, exercises the option and collects the risk-free profit of $0.05:
(50 - 45) - 4.95 = 0.05
Selling spreads is a very common theta gang strategy, so let's examine the case of early assignment and assignment after expiration.
You sold a 50/55 vertical call spread for $1.40 on XYZ that's trading at $53. It expires in a few days but for whatever reason the buyer decided to exercise early and you were assigned. You're now short 100 shares at $50 while still long the 55 call. Because vertical spreads are risk defined trades, this isn't a big deal. You're still long the 55 call, so you have upside protection which will cap your losses at $360 (500-140) should the stock move past $55. You could take the risk of riding it out and hoping the stock falls or you can close out the trade, accept your losses and move on.
The other scenario is assignment at expiration. This is actually the more dangerous case of the two. Imagine the same circumstances except it's expiration day (Friday). The stock closes at $53, the short call expires ITM, and the long call expires worthless. The short call is exercised and you're assigned. Because you no longer have upside protection anymore, this is not a defined risk trade but instead undefined. You're short the stock over the weekend and no one knows what the opening price will be Monday. If major news gets published Sunday the stock could soar. Or it could crater. This is not the kind of risk theta gang likes to take. You should always close out of your short options on the day of expiration if there's a real chance of them expiring ITM, especially when your long options will expire OTM. Otherwise at that point you're now delta gang.
If both the short and long options are ITM at expiration, the most you can lose is the spread minus the premium received. You might as well close out to avoid the hassle of being assigned and exercising your long options.
The specter of early assignment gets raised quite a bit around the time dividends are paid. The scenarios are different for calls and puts.
You may have read that if the time value of an ITM call is less than the dividend, the call is at risk of being exercised early. This is not because the investor will make money from exercising. Let's illustrate with an example. To be paid a dividend you must own the stock before the ex-dividend date. Call owners do not receive dividends. If you buy the shares on or after the ex-date you won't be paid the dividend, so the call owner will exercise it the day before the ex-date.
XYZ is trading at $50, and a 45 call is trading for $5.25. It's paying a $1 dividend and the ex-date is tomorrow so the buyer exercises the call. They're now long XYZ at $45. The ex-date arrives, the dividend is paid, and the stock is discounted by the amount of the dividend, and is trading at $49. They sell and wind up losing $0.25. What happened? Simply add up the numbers:
(49 - 45) + 1 - 5.25 = -0.25
Whenever you exercise an option you throw away the extrinsic value. It doesn't matter how large the dividend is, since the stock's price is discounted by it on the ex-date. This is a losing trade. The only way the trade could make money is if the stock isn't discounted by the full amount. Sometimes this happens (other news gets published) but this is nothing more than a gamble if attempted. It's not an arbitrage opportunity.
In fact, as the ex-date approaches you may see ITM call options trading at parity. This occurs because the stock's price will be discounted by the dividend, and so the option's intrinsic value will decrease as well. Buyers don't want to be left holding it going into the ex-date because they're going to lose money, so the selling pressure drives down the option's price to parity. It may even trade at a discount, presenting the earlier discount arbitrage opportunity.
If the corresponding put with the same strike price as the call is trading for a price less than the dividend minus interest, then the call would be exercised and you would be assigned early. The trader long the call would exercise their call and buy the put, since this has the effect of recreating the same trade, except they receive the dividend.
It's actually puts that offer a dividend arbitrage opportunity if the time value is less than the dividend. Using the example from earlier, a 55 put is trading at $5.25. You buy 100 shares of the stock at $50. Ex-date arrives, the stock is discounted to $49. You exercise the put, selling the stock for $55, collect the $1 dividend and profit a risk-free $0.75. Add up the numbers again:
(55 - 50) + 1 - 5.25 = 0.75
You may already be guessing what happens to ITM puts as the ex-date approaches. Their price increases due to buying pressure, since the option's intrinsic value is about to increase by the dividend's amount. Once the time value at least matches the dividend the arbitrage opportunity no longer exists.
One other scenario where you may be assigned is when the underlying is trading close to the option's strike price on expiration day. You don't know if it will expire ITM or not. This is called pin risk. What should you do if you're short? Close out. It's not worth the risk if the underlying moves adversely after market close and the options are now ITM. Just close out.

Should I close out of a position after collecting most of the premium earlier than expected?

This is a good idea. A lot of people follow a rule where if they've collected at least 50-80% of the premium they close out of the trade and move on to the next. They especially follow the rule when it happens much sooner than expected.
Collecting the last tiny bit of premium isn't worth what you're risking (a relatively large amount of money to make a small amount). You're picking up pennies in front of a steamroller. What will happen one day is the underlying will make a dramatic adverse move, eliminating all of your profit and even putting you at a loss. You'll be cursing yourself for being greedy and not closing out earlier.
A lot of brokers will even let you close out of a short options trade for no commission if you can buy it back for only five or ten cents.

My position moved against me. What can I do about it?

You have a few choices.
1. Close out
Close the trade. Accept your losses and move on. How do you decide if it's a good idea to close? Ask yourself, if you didn't already have this position would you do it now? Would you open the position now given the current price and market circumstances? If not, close out.
You're going to end up on the wrong side of trades sometimes. It happens to everyone. Sometimes closing out is the right idea. Other times it's not. You can't predict the future, so don't beat yourself up when you make the wrong decision. But always be mindful of risk management and keep your losses small.
2. Ride it out
It's not unusual for option prices to spike only to collapse in price later on. If you haven't overleveraged yourself you have the funds available to ride out the trade. If the answer to the earlier question about opening the trade now is yes, it's reasonable to ride it out. You might even consider selling more contracts, but remember to never overleverage.
Just make sure the HAPI (hope and pray index) isn't high, otherwise it's a sign you should close out.
3. Roll
Rolling is a good idea when you think the trade in the short term is a bad idea, but long term will make money. You close out of your existing position and open a new one. This is ideally done simultaneously so you don't trade into the position one leg at a time, risking a poorer fill on price (slippage) or only getting only a partial execution and your positions are now wrong.
Rolling up is rolling to a higher strike price. Rolling down is rolling to a lower strike price. And rolling out or forward is rolling to a later expiration date. Typically you roll out, and possibly up or down. Whatever you decide, the goal is to roll to a new position that you can sell for more than the loss on the old position. That way you can at least recover your losses, and if you're fortunate, still turn a profit.

I'm doing great! I'm winning on all my trades collecting that sweet, sweet, theta. I want to sell even MOAR!

Slow down there, speed racer.
The second worst thing that happens to new traders is they have a series of winning trades (the worst being they lose all their money). They become overconfident, think they have it all figured out, and place a trade that's way too big for their account. They of course don't realize how clueless they are, discover to their horror the trade was completely wrong, and end up digging through the remains of their now smoldering account.
You've made a bunch of winning trades. Great. Don't let it go to your head. Don't start scaling up massively simply because you've been winning lately. A better strategy is to risk a fixed percentage (e.g., 1-2%) of your account on each trade. As you make more money the dollar value of each trade increases but the percentage stays the same. That way when a trade ends up being a loser, which will happen, the damage is minor and you can still recover.
Theta gang is not a get-rich-quick scheme. If you're going to commit to this you're going to be doing it long-term, which means slowly making money.

I like to sell options on stock indexes like the S&P 500. Anything I should know?

SPY is extremely popular for trading options but there is a much better alternative: SPX. Why?

Contract size: Both SPY and SPX options are for 100 shares, but SPX trades the full price of the S&P, so ten SPY contracts equal the notional value of one SPX contract. This cuts down commission costs by a factor of ten.
Cash settlement: SPX is cash settled so your account is either credited or debited and you never have to deal with any shares of the underlying.
No risk of assignment: Because SPX is cash settled there's no possibility of assignment. You'll never have to worry about early assignment.
Favorable tax treatment: SPX options are 1256 contracts, which means they have different tax treatment. It does not matter how long you hold 1256 contracts for, whether less than a minute or over a year, all trades are taxed the same: 60% of gains are treated as long-term and 40% short-term. Theta gang trades are almost always short term (one year or less), so this is the biggest reason why you should trade SPX over SPY. You'll get to keep more of your profits.
Minis are available: If you want to trade SPX options but don't have enough money, fear not. XSP is 1/10th the size of SPX, so it's the same size as SPY but has all of the benefits of SPX. The only downside is it's not as liquid.

If you like to trade options on other indexes (or commodities), you should consider futures options. Both futures and futures options are 1256 contracts and receive favorable tax treatment.
EDIT: Hit character limit, rest of post here

What everyone has wrong about Ridgway. EXTENSIVE write up on the crimes of Gary Ridgway, misconceptions about him and his crimes, a few comparisons to Bundy, and profiles of women murdered, still missing, and unidentified. Part 1 of 2.

Hello everyone. A few months ago, I posted an extensive write up on the DeOrr Kunz case and later the Asha Degree case with several other missing people’s cases sprinkled in between, which many readers seemed to enjoy. Those can be found here: https://www.reddit.com/UnresolvedMysteries/comments/fcmvmz/extensive_summary_regarding_the_disappearance_of/
Today, I wanted to do a similar long form write up but this time, I wanted to switch gears and talk about Ridgway and his victims.
Terms used
The scene- A term used by Bundy and LE to describe the people with high risk lifestyles those who are homeless, sex workers, exotic dancers, drug users, hitchhikers, and others who are down and out
The Strip- An area of Pacific Highway South near the airport in extreme south Seattle (no longer Seattle) known for the scene. Most GRK victims were last seen in this area.
The Avenue- An area of extreme north Seattle along Aurora Avenue North known for the scene. A handful of women disappeared from this area.
Rainier Avenue and Central District- Neighborhoods in south Seattle near the strip. Usually regarded as cheaper places to live. A handful of women disappeared from here.
The camp- An area of downtown Portland known for prostitution
Dating- A term used to literature to refer to soliciting prostitutes. Ridgway used this term as did many sex workers. I use this term below as that is what is described in GRK literature. I don’t use it dull what was happening in these exchanges.
Boyfriend or protector- Many of the women in this case had boyfriends or protectors who were actually pimps. Which is why some of these women had the same “boyfriends.” If the men who were involved were not believed to be pimps, I tried to note that.
Introduction
Living in the Pacific Northwest everyone you meet seems to have had a close encounter with a notorious criminal. I know a woman who Bundy followed on April 17th 1974 in Ellensburg, Washington before he abducted Susan Rancourt. I talked to a barber once who told me he cut Ridgway’s hair and used to watch Constance Naon (one of Ridgway’s victims) take dates to her place across the street in the Rainier area. In college I used to shop at a Safeway store that Bundy worked at. Some days it seems like everyone I talk to has the same stories, close encounters, and bizarre brushes with some of the worst men in America. This is the story of one of those men, Gary Leon Ridgway.
I believe that Gary Ridgway, the Green River Killer, was a much more prolific predator than most people online seem to think and I wanted discuss these crimes because his victims are often dismissed while they deserve to be remembered.
In the true crime community, there is a near reverence for Ted Bundy. On the other hand, Ridgway is considered boring and banal. These feelings of course are perpetrated Bob Keppel’s book, Riverman; Ted Bundy and I hunt for the Green River Killer which contains large swathes of interviews from an incarcerated Ted Bundy. King County authorities interviewed Bundy on Florida’s death row in hopes of getting confessions out of him during the 1980s. Instead Bundy wanted to talk about the new murderer plaguing his home state, the Green River Killer. In his interviews, Bundy provides interesting insight into the mind a killer and many of his predictions about the “Riverman” turned out to be true. Naturally, some of his predictions were also false. Bundy, the master manipulator, was able create a narrative about Ridgway and his victims which has bled into the public consciousness. The descriptions of Ridgway’s crimes have been controlled by Ted Bundy’s opinions and his apparent distaste for Ridgway. In discussions on this case I often see people say things like “Ridgway isn’t interesting to me because his victims were high risk” or “Ridgway was dumb, he was so lucky he wasn’t caught.” In my opinion this is unfair to victims of the Green River Killer – in addition to being false. Of course, Bundy is not the only reason people say these things but his opinions have shaped this case. At the end of the day, Bundy should not have a say in how these crimes are perceived.
Most importantly, the victims of these men (and other killers) are not entertainment, these are real people who lives were stolen and all of their stories deserve to be told, even if the man who killed them is considered by some to be “uninteresting.”
Additionally, no one wants to compare to Bundy and Ridgway but I believe the men have more similarities than Bundy wanted people to believe. Bundy hated being compared to the Riverman and I think it is because Bundy knew that the Riverman was more prolific than Bundy could ever be. Bundy’s ego led him to adopt a dismissive attitude towards this crime spree and he always bristled when compared to the “Riverman” and unfortunately these ideas have become gospel. These assumptions aside, I think Ridgway was a much more prolific killer than anyone will ever be able to prove.
There are so many misconceptions about Gary Ridgway that I want to discuss. People say that Ridgway was stupid, he was free to kill as long as he did because no one cared, and finally that he only was able to be “get away with it” because all of his victims were sex workers. Not only are these ideas false, these misconceptions invalidate the stories of Ridgway’s victims.
Intelligence
The first thing I think is often talked about when discussing Ridgway was his intelligence or lack thereof. While it is true that IQ tests showed that Ridgway hovered on the line between impaired and typical, and he apparently had a learning disability that affected his school performance, I will always argue that Ridgway was no dummy. I have worked with the disabled population for several years. That experience taught me that IQ is a bunk way to measure intelligence. Some of my acquaintances have higher IQ scores than Ridgway’s 80, but struggle to keep down jobs or lack social skills. On the other hand, people I have worked with lower IQs (62-80) than that have attended 2-year college, kept down jobs, married, and had families. IQ in and of itself is poor determinate of intelligence. In my experience, IQ seems to measure processing speed, not intelligence. I am not sure if this 100% scientifically accurate, it is just my experience but I think it is worth noting. All that to say, I don’t think Ridgway was nearly as impaired as many armchair detectives make him out to be. The women he fooled were street smart and don’t deserve less attention simply because they were fooled by a “dumb” predator. Perpetrating this myth does a disservice to Ridgway’s victims. I am not arguing that Ridgway was a criminal mastermind of above average intelligence, that is simply not true. I am simply trying to demonstrate that Ridgway cold and calculating, not blundering and impaired.
Forensic Counter Measures
Ridgway’s intelligence is also evidenced by his crime spree and the forensic countermeasures he employed. Many online sleuths have used this information to show Ridgway’s lack of intelligence, but I would argue that his forensic counter measures actually worked. The Riverman would put used gum, beer cans, and cigarette butts near his body dumping grounds. He also put airport and hotel pamphlets near the bodies to make law enforcement think that the killer was a traveling business man which is why his crimes would start and stop. While these attempts at misdirection did not fool law enforcement for very long, it did muddy the water with media coverage. It was reported that the killer was a traveler, a smoker, or a guy who liked big red gum even though Ridgway was none of these things. These little attempts at misdirection fooled the general public in Ridgway’s favor and precious time and resources were wasted forensically testing these items.
When Ridgway began dumping victims in the Portland area law enforcement incorrectly believed that their killer had moved and they minimized their efforts in Seattle, falling right into Ridgway’s trap. The killer also changed his car regularly and made sure that he created false trails. Ridgway changed his car often, he used his own cars sometimes but he also drove his brother’s truck, his parents station wagon and his girlfriend’s/wives’ cars. As many know Gary was employed as a truck painter. He spent a lot of his time at home painting and working on his cars, removing and replacing canopies and just in general altering his vehicles. This allowed Ridgway to move about more freely as he was not seen in only one type of car. This is in stark contrast to Ted who repeatedly used his tan colored bug until it was linked to the murders. At that point Bundy would use Liz Kendall’s bug or make slight modifications to his own car but these efforts paled in comparison to Ridgway’s efforts to conceal his vehicles.
Ridgway also made sure the women he killed were clean when he dumped their bodies. He would have them shower and used the bathroom before his crimes, which had a three-fold purpose. First it put his victims at ease around him. Second, it made his clean up easier (victims wet themselves when being strangled and Gary didn’t like doing extra laundry), and third it removed evidence from his victims’ bodies. This is a just another example of how Ridgway was able go undetected for so long. He thought about his crimes, learned things and then changed his methods to iron out bumps in his murderous plans.
When questioned by investigators he always had explanations for his whereabouts and did not deny “dating” women on the SeaTac strip. Ridgway even used women he had been seeing to create alibis and a false sense of security. In his confession he explained that he would often pick up sex workers for dates repeatedly and not kill or hurt them in order to create a facade that he was a nice guy.
All of these things suggest that Ridgway wasn’t the bumbling criminal he was made out to be.
Victims
Another misconception in the Green River case regards victimology. Many people seem to think that all of Ridgway’s victims were sex workers which is simply not true. Contrary to popular belief some of the Green River victims were not prostitutes, although most did lead high risk lifestyles and were part of the “scene” as Bundy called it. Many were homeless, addicts, sex workers, exotic dancers, and hitch hikers, but not all. Carol Ann Christensen had no connections to this scene at all and worked as a waitress at a bar and grill near the airport. Opal Mills, a local high school student, had no arrests for prostitution (or anything else) but was known to hitch hike. Cheryl Wims was not a known sex worker but did struggle with addiction to drugs and alcohol. Ridgway’s victimology was actually much broader than most people assume.
Bundy used this misinformation about GRK’s victims to “prove” that he was a better criminal than the Riverman as Bundy abducted low risk victims, even though we know Bundy killed at least several hitchhikers who were unfortunate enough to get in his car. And Bundy, ever the coward, often chose very small willowy women to victimize. Ridgway on the other hand was physically strong even though he appeared slight. Ridgway was able to control and subdue many women, and while many were small and young some of his victims outweighed him, and a few were taller than him. My point being, both men were cowards and monsters who took advantage of all types of women, their victimology is not that different. Both men killed both low risk and high-risk victims, but of course Bundy doesn’t like to focus on his high-risk victims.
The abduction and murders of women not in the scene, (waitresses, moms at bus stops, and daycare workers) demonstrates that Ridgway was intelligent and organized enough to pull off meticulous crimes which were never solved... he just preferred easier targets.
Investigation
Another misconception about Ridgway is that he was only was allowed to kill due to the women he victimized; this is a partial misconception. In 1982, right after the first several bodies were found floating in the Green River, a task force was formed made up of 25 detectives from both the city of Kent and King County. For the next 19 years, as many as 40 detectives at a time (70 people if you include officers and support staff) worked solely on this case. At its smallest, 4 or 6 detectives were at work following up on tips. For years, evidence was collected. Men were followed and interviewed. Suspect lists were compiled. When this crime spree occurred, there was no AFIS (automated finger print identification system), no DNA testing, and little cooperation between agencies. A single finger print could take two months to process. Then it had to be compared manually and sent from state to state to check for matches. At the end of the day, the tab for this investigation cost a whopping $30 million dollars.
In the late 1980s detective Matt Haney had a hunch that Ridgway was the most likely killer but it took years for his suspicions to be proved. Using a tip from Marie Malvar’s family, he collected Ridgeway’s DNA in 1987, the same year DNA testing became available. Most other detectives believed other, better suspects were the ones to blame.
Despite the best technology at the time and Haney’s suspicions, Ridgway was not caught. As mentioned above, Ridgway was always a Green River suspect. From his first arrest for solicitation in 1982 until the day he was apprehended Ridgway was among the hundreds of men suspected of being the killer. Despite being on this list, Ridgway evaded capture because on paper, he was a poor suspect. Ridgway was a very typical man in both appearance and life style. He held down the same job for years. He was married and even fathered a son. In his life he was generally even keeled and unremarkable. He was investigated by the Green River Task force several times. Gary’s coworkers even named him “Green River Gary” a moniker he hated, but even his coworkers claimed they were just teasing the awkward guy at work, they did not actually believe he was capable of committing such atrocities.
Moreover, Ridgway had no record of violent offenses. Several violent crimes from his past would come out once he was arrested, but none of these were on his official police record. In the early 80s he was accused of assaulting a sex worker, but the charges were dropped when the woman did not want to testify. Ridgway also had a juvenile record for stabbing a 6-year-old boy, but being a juvenile at the time those records were sealed.
Ridgway was always willing to work with investigators and readily admitted he “dated” women on the SeaTac strip. He allowed himself to be interviewed but nothing solid was ever linked to him. He even gave hair samples and passed two polygraphs. Additionally, Ridgway gained the trust of many working girls he did not kill. He purposely left many women he “dated” unharmed. Some prostitutes who were interviewed by the task force inadvertently protected Ridgway by painting the picture that he was a harmless John who showed them pictures of his son and was polite. Sometimes, he even bought them burgers to eat. This misdirection on Ridgway’s part was just one reason he was never apprehended.
Ridgway was so different than any other captured serial killer at the time that the FBI had to change their profiling techniques and knowledge of serial killers completely when Ridgeway was caught. From the 1980s when profiling was in its infancy until the early 2000s, it was generally believed that serial killers had high IQ's and were of above average intelligence. It was believed that serial killers had a hard time staying in relationships or keeping down jobs. Further, many experts in the field claimed that serial killers basked in the glory of their evil deeds, taunted police, and watched news coverage of their crimes. It was also taken as gospel that serial killers could not stop once they started killing and in general killers did not cross racial lines. None of these things applied to Gary Ridgway, adding to law enforcement’s belief that he was not a “good suspect.” (While Ridgway did write one anonymous letter to a newspaper, he did not aggressively flaunt his suspect status, or openly taunt police as some of the other men did.)
When DNA linked Ridgway to his murders, task force members weren’t totally shocked but they were surprised that it did not match one of the better suspects such as Melvyn Foster, William J. Stevens II, or any one of the violent pimps, husbands, boyfriends and exes who had been interviewed. They assumed their killer would be one of the men with more violence in his background, possibly a rape conviction, or one of suspects taunting them with letters and phone calls, but it wasn’t. Only detective Matt Haney wasn’t surprised.
As the phrase goes, hind sight is 20/20. I think this is a good saying to remember with this case. Once Ridgway was arrested many pieces fell into place and it painted a picture of an unhinged killer roaming King County, but no one piece of evidence was a smoking gun in this case. Ridgway dressed like the killer, plaid shirts and jeans but so did half of the working-class men in King County. Ridgway drove vehicles similar to the one reported by many witnesses, but how many men drove by the airport in tan or blue pickups and aged station wagons? Marie Malvar’s boyfriend was convinced Gary’s truck was the one he saw Marie climb into before her disappearance, but when Ridgway’s home was searched nothing of Marie’s was there. Investigators hit a brick wall, but kept Gary Ridgway in the back of their minds. Every little piece of evidence was part of a puzzle in this case but nothing conclusively tied Ridgway to anything more than being a client of many of the working girls in the area. This tip by Marie’s family and boyfriend was what lead Det. Haney to collect Ridgway’s DNA in ’87.
NOTE- before I go on, I just want to say that it would be naïve of me to pretend that the victims’ professions and life styles did not affect the investigation. It absolutely did. It affected public perceptions, law enforcement response, and media attention and these women did not receive the same attention as the Ted victims from seven years prior. For example, in late 1983, citizens called for a public forum and called for an “end of prostitution.” Detective Mullinax suggested that the killer was the problem, not the prostitutes and there were some very awkward moments before the citizens told him they just wanted Seattle to be free of sex workers. This was just one example of the public opinion not being kind to these women.
In this piece, I simply want to point out that law enforcement response was not as minimal as some people make it out to be. There have been many cases where law enforcement has completely dropped the ball when investigating the murders and disappearances of sex workers such as the Grim Sleeper investigation, but I do not think the Green River Task force deserves to be placed in the same category.
Additionally, if Ridgway was not caught ONLY because the police blatantly disregarded the cases of sex workers, then why wasn’t he caught after killing daycare worker Maureen Freeney? Or blonde waitress Carol Anne Christensen? But all measures these two women came from caring families, were white, and did not live in the scene, and were reported missing right away. If Ridgway was only going free due to poor law enforcement response, then he should have been caught after the deaths of the women above, but he was not.
Casualties
Because of the nature of Ridgway’s victims, media coverage was initially slim and many victims of Ridgway were never reported missing at all. Gary Ridgway was convicted or 49 murders although he admitted to over 71. In recent articles Ridgway has even confessed to leaving 80 bodies in King County alone. Investigators doubt King County was the only county that Ridgway operated in and it is generally believed that a string of bodies found in Tacoma and Portland, Oregon were the work of the Riverman. Some of those women are discussed below. Because of this information I am inclined to believe that Ridgway has many, many more victims who have never been found, who are unidentified, who were never reported missing or whose deaths were attributed to other things. Many missing women have been placed on the “Green River List” because the pool of potential victims is much larger than only missing sex workers. With the addition of these victims I think it is very possible that Ridgway’s victim count far surpasses any official numbers and may make him one of the worst serial killers in America.
Some of the women I believe were victimized by Ridgway are profiled below.
In conclusion, all of these things point to Ridgway being a much more prolific, cunning killer than many have made him out to be. If Ridgway’s known victim count is 70 (charged with 49) and he himself claims there is 80 bodies in King County alone, I think it is safe to assume the real number may be closer to 100.
Ridgway has only been charged with homicides if he both confessed to and there was one or more pieces of evidence against him. For example, if he led investigators to a body he was charged with that murder and all the murders of the women he left in the same cluster. He has also been charged with other cases if there was circumstantial evidence, fiber evidence, paint chip evidence, or DNA. He has not been charged with the murders of women still missing or women whose cases cannot be linked to him in corroborating way, which is why the confession list is so much longer than the charged list. Also please remember that mass murders are not known for their honesty and we have to take confessions with a grain of salt.
The official Green River Victim list is challenging to compile because different agencies have different lists, some add women are still missing while others add only known homicides. Some add all suspected victims, some do not. Some add victims to the list only if Ridgway is the prime suspect, and other lists add victims whose cases have other prime suspects but Ridgway is still a possibility.
Below I have completed write ups of women I believe were victims of Ridgway as well as a section to remember his proven victims, both known and unknown.
NOTE- I want this section to tell the women’s stories in a respectful way and initially I did not want to focus on either their professions or their physical appearances, but I was also wanted this section to be authentic and I don’t want to sugar coat any of these stories. For many of the victims there is very, very little information available. I think this is why sometimes their appearances are mentioned as it sounds better to say “At age 21, she was a tall woman with thick red hair and a great smile” rather than she died at 21. Additionally, some of these victims’ stories are not very pleasant and a in a few cases information from family and friends is unflattering or downright negative (Wendy Coffield and Marta Reeves specifically). Rather than skip these women or pretend these things did not occur I chose to include them in the summaries below. I added as many positives as I could and tried (key word tried) to shy away from information solely about their appearances or criminal records but sometimes no other information is available. I hope everyone can understand that my intention is to remember these women and their lives in the best possible way while realizing that not everything is positive. I ask you for only respect down in the comments. Thank you.
In remembrance
Gary Ridgway pled guilty to the homicides of the 49 people profiled in this piece. (Because this is a mystery sub reddit and the write-up will have to be put into broken into several pieces, I will begin with the Jane Does Ridgway confessed to killing. All other victims both potential and confirmed are placed in chronological order to the best of my ability.)
Jane Doe B-10 was a murder victim who was found in 1984, near the remains of Cheryl Wims. She was a white female between the ages of 12 and 19. She most likely died in the summer of 1983. She may have had brown hair and was around 5’5’ and 120 lbs. She was likely left-handed. She had a healed injury to the front of the left side of her skull. She is not Rose Cole, Janel Peterson, Susan Cappel, Lisa Dickinson, Wendy Huggy, Kase Lee, Keli McGinnis, Anna Anderson, Kristi Vorak, Amy Matthews, Teresa Hammon, Cheryl Wyant, Denise Dorfman, Carol Edwards, Linda Jackson, Angela Meeker, Andria Bailey, Dean Peters, Joan Hall, Patricia LeBlanc, MaryJo Long, or Kerry Johnson.
Jane Doe B-17’s bones were found twice. Some bones were found in 1984 and some more were found in 1986. She was most likely a white female, aged 14-19, around 5’4”- 5’8” and average weight, around 120-140 lbs. She most likely died in 1983. Ridgway said she died in Spring or Summer 1983. Isotope testing shows she is possibly from the Northern United states (Alaska, Montana, Idaho, North Dakota) or Canada. She is not Rose Cole, Janel Peterson, Susan Cappel, Lisa Dickinson, Wendy Huggy, Kase Lee, Keli McGinnis, Anna Anderson, Kristi Vorak, Linda Jackson, Andria Bailey, Joan Hall, Patricia LeBlanc, MaryJo Long, Carol Donn, Barbara Cotton, Pollyanne Carter or Kerry Johnson.
Jane Doe B- 20 was a murder victim who was discovered in 2003 after Ridgway led investigators to her body. Her skull was not recovered so no composite can be made and no race can be determined. She died in between 1973-1993 but most likely died in the late 1970s. She was likely 13-24 years old. Ridgway says she was a white woman about 20 years old with brown or blonde shoulder length hair who he killed in Summer ’82 or ’83. Ridgeway claims to have started his crime spree in ’82 but it could have been earlier. He does not remember killing anyone in the 1970s but admits it is possible. Jane Doe B-20 is not Keli McGinnis, Andria Bailey, Cora McGuirk, or Deborah Tomlinson.
Wendy Lee Coffield was a young woman whom life had never treated kindly. She was a junior high dropout, a chronic runaway, and a hitchhiker. She never had the chance to land on her feet and start over. She was only 16 when she was murdered in 1982. To add insult to injury, her own family even said they weren’t surprised when her “lifestyle” caught up with her. Gisele A. Lovvorn was a 17-year-old Dead Head and free spirit who wandered the country watching Grateful Dead shows with her on again off again boyfriend. In early high school was a straight A student before dropping out. In the summer of 1982, she called her parents in California to tell them she was going to travel home and re-enroll in high school. She left her apartment one Saturday in July at 1 pm to “turn 3 or 4 tricks” she never made it home and her parents were never able to see their free-spirited daughter again. Debra Lynn Bonner was 22 when her body was found in the Green River. She had dreams of getting a GED and joining the navy but an abusive relationship and addiction lead her to a life on the streets. Despite her profession, Debra called her parents regularly and was trying to pay off her debt (She had several unpaid tickets in Tacoma). She was planning to visit her father after he had an eye operation but she never made it home. Marcia Faye Chapman nicknamed Tiny, was a mother of three who engaged in sex work only to support the three children she loved so much. She left her apartment one August evening and disappeared into the night. She was only 31 years old. Cynthia Jean Hinds had no criminal record but frequented the streets of south Seattle. Everybody called the 17-year-old her nickname, Cookie. Her boyfriend and probable pimp reported that he last saw her get into a black Jeep on August 11th 1982. Her body was later recovered from the Green River. Opal Charmaine Mills was a biracial 16-year-old who, according to her brother, struggled to fit in in a racially divided world. She never got the chance to learn to be comfortable in her own skin because she disappeared after going to work in 1982. An occasional hitch hiker, Opal had no other links to the “scene.” Opal and her friend Cookie (Hinds) had been hired to do some painting near Angel Lake park. Opal called her parents to pick her up from work, but she never made it home. Terry Renee Milligan, a 15-year-old, hadn’t been seen for several weeks when her live-in boyfriend reported her missing and then immediately skipped town. Terry was a bright student who wanted to study computer science in college and dreamed of going to Yale. Terry gave birth to a son as a teenager and her hopes of college changed course, although friends have always explained that Terry adored her son and care of him the best she could. She was also musically inclined and sang in the church band all throughout her childhood. She was seen last arguing with another woman outside her apartment after that she disappeared. Mary Bridgett Meehan was adopted as a young child and grew up in Bellevue, a wealthy suburb east of Seattle. She was a compassionate soul who loved animals and children. She wanted to be a mother. Two miscarriages at ages 15 and 16 left her broken inside, her family and friends explained that she was never the same. She starting using drugs and drifted around the Seattle area and began engaging in sex work. Later, Mary gave up another baby for adoption after her boyfriend kicked her out because he didn’t want kids. But unfortunately, less than a year later, the cycle began again. Mary was back living with a dead-beat boyfriend and pregnant, except this time she was determined to be a good, stable mother, but she never got the chance. She left her motel room and vanished into the night at 8 months pregnant in September 1982.
Debra Lorraine Estes went by the name Betty Jones on the street. She was barely 15 and had entered the scene five years earlier at age 10. Her parents were always worried for her, driving the streets looking for their daughter and bailing her out of the King County jail under various names and aliases. Her pimp was a sleazy older man whom occasionally lived with her and her friend Becky Marrero. She was last known to be alive in September 1982, but may have been alive into December. Linda Rule’s parents divorced when she was a teen and the family disintegrated with each person taking their own paths. She last seen leaving her apartment and walking to Kmart on Aurora Avenue north, to buy clothes. When she did not arrive back home, her boyfriend assumed she had been arrested, but he couldn’t find her at any of the local jails. He did not think Linda was working as it was rare to see girls working Aurora Avenue during the day time. He immediately filed a missing person’s report. Unlike many other men in this case, her boyfriend was not believed to be a pimp. 16-year-old Linda and her boyfriend were saving up for their wedding and but it would never come.
Denise Darcel Bush, a 23-year-old Portland native had traveled to the SeaTac strip after hearing that money was better in Seattle. She suffered from epilepsy but used medication to keep it under control. She was last seen crossing the street to buy cigarettes. She was never reported missing and her friends all assumed she had simply had decided to go back to Portland. At the time, it was hard to know if she or many of the other girls left willingly or suffered a much worse fate. Shawnda Leea Summers from Bellevue, Washington loved going to the beach. She was last seen at the same intersection on the strip, the day after Denise Bush was last seen. She was not reported missing for months and some girls thought she had moved to Portland to work. Her parents looked for her whenever they could but Shawnda would never reach her 19th birthday.
Shirley Marie Sherrill at age 19 was described as tall and beautiful. She was last seen in the China town area of Seattle having lunch with a friend. They both left the restaurant to work and were picked up by different men. Shirley was never seen again. Like Shawnda and Denise, she disappeared in October 1982. Becky Marrero was the 20-year-old friend of Debra Estes. The two lived together at a motel on the SeaTac strip on and off. In the fall of 1982, Becky left her two-year-old son with her parents and told them she was leaving for a while and going to a place that “babies shouldn’t be”, but she would be back eventually. She packed her bags, borrowed some money from her father to rent a room and vanished. Becky was registered as living at a motel on the strip until December 1st ’82, along with her friend Debra Estes. She never made it home for Christmas like she said she would. Colleen Renee Brockman was 15 years old when she was last seen alive. She worked the SeaTac strip, but her friend Bunny and other girls still thought she was naïve. She trusted her customers wholeheartedly and enjoyed the gifts and dinner dates she got from johns. She was identified through the braces that were still on her teeth when her skull was found in Pierce County years after she was last seen. Delores Lavern Williams was a tall, slender, African American girl with a lovely smile. She worked near the Red Lion hotel near the airport and generally “dated” wealthier, traveling johns. In early 1983 locals and friends realized they hadn’t seen her in a few weeks. She was reported missing. She was only 17 years old. Alma Ann Smith hailed from wine country and was born in Walla Walla Washington. In the 8th or 9th grade she began traveling to Seattle alone on the weekends, something that confused her younger friends. She eventually moved to Seattle and was last seen entering a blue truck with a very average looking male. Gail Matthews was drifting through life in her mid-20s. She lived with her boyfriend, Curt in south Seattle. The couple did odd jobs, tried to win money by gambling, and hitchhiked around the area. Gail would occasionally come home with money that Curt assumed she made doing sex work but he wasn’t sure and didn’t want to ask about it. He saw Gail leave the bar they were at together saying she was going to “make some money”. He later saw her in a car with an average looking white guy with a mustache. For some reason the scene chilled him and he knew Gail was in trouble because she looked scared. He waited for Gail to come home but she never appeared. Curt called the police and the Gail’s family. Gail’s ex-husband had custody of their children, but he was worried about the young woman who he remembered as a meandering soul who wanted to be an artist. A missing person report would be filed in April 1983. Andrea M. Childers moved from California to Washington to move in with her father and step mother. She was a wonderful dancer who wanted to be a dance instructor to children. She taught a dance exercise class and was close to her elderly grandmother. At 16 she left her family home and was never seen again. Sandra K. Gabbert was called “Sand-e” by her family and was known as Smurf on the street. She was on the varsity basketball team in high school before dropping out at age 17. Sand-e moved in with her teenage boyfriend and started working on the SeaTac strip. Sand-e told her mother that she made more in turning one trick than she did working a whole week at KFC. Her mother understood her daughter’s desperation and commissioned her to “be careful.” They also talked about taking a trip to sunny California sometime. That was the last time Sand-e and her mother even spoke. Kimi Kai Pitsor street name Melinda was a happy 16-year-old who loved glitter, unicorns, and the color purple which was fitting for the young woman whose native Hawaiian name means “golden sea at dawn.” Kimi Kai always wanted to be an adult and when she turned 16, she left home to move in with her boyfriend/protector in downtown Seattle. Her boyfriend last saw her talking to a date in a blue pickup. She never made it home and her boyfriend called the police with the description of the vehicle. She had left home and entered the scene less than two months before. Tragically, Kimi Kai was the third of Joyce Pitsor’s three children to pass away. Kimi Kai’s two older siblings died as infants. Kimi Kai’s mother, Joyce later adopted three other children. Sandra D. Major was from Rochester, New York. Her family knew she worked as a prostitute and while they weren’t thrilled with her lifestyle, they always kept in touch and “loved her the same.” The last contact the Majors had with Sandra was a post card sent from Seattle. After that they lost touch. Sandra was believed to be last seen on Aurora Avenue north in 1983 at age 20. A TV in program in 2013 highlighted the unidentified victims of the Green River Killer, prompting the family to contact the police. Sandra was identified and laid to rest. The family gave a brief interview in which they asked for privacy. Because of this very little is known about Sandra’s personal life.
Marie Malvar’s came from a large Filipino family. At 18 she had left home but called her parents and siblings regularly. Marie’s boyfriend saw her enter a blue truck and drive away. She was gone a while and he decided to track down the truck. He drove where he saw the truck go but couldn’t find Marie or the vehicle. He was hesitant to contact the police due to their backgrounds and was even more scared to tell Marie’s parents about her profession. After 4 day had passed her boyfriend, brother, and parents went to the police station to report Marie missing. They even drove around with police until they found a similar looking truck. Police questioned the man and took down his information. His name was Gary Ridgway. But Marie wasn’t in his house and he had no record of note, so the police left. The man was one name among hundreds that they took back to the task force offices.
TO BE CONTINUED....
These sources are a good place to begin
Green River Running Red by Ann Rule
The Riverman: Ted Bundy and I hunt for the Green River Killer by Bob Keppel and William Birnes
The Search for the Green River Killer: The True Story of America's Most Prolific Serial Killer by Carlton Smith and Tomas Guillen
https://archive.seattletimes.com/archive/?date=19920727&slug=1504298
http://charleyproject.org/case/keli-kay-mcginness
https://unidentified.wikia.org/wiki/Green_River_victims
https://www.kingcounty.gov/depts/sheriff/about-us/enforcement/investigations/green-river.aspx
http://www.seattlemag.com/article/remembering-victims-green-river-killer
https://archive.seattletimes.com/archive/?date=19911121&slug=1318612

If I can in anyway contribute to fighting fake news, let it be this piece about Gen. McInerney (pls share)

Since McInerney is back in the news spreading conspiracy theories about our recent Presidential election, making up bullshit stories about US Special Operations raids, many will find this article I wrote six years ago helpful in learning who this guy is and what he is really about.
While many are familiar with President Dwight D. Eisenhower’s famous farewell speech, fewer have read the original drafts which include dire warnings about the future of America and what Eisenhower termed a “military-industrial complex.”
One of the original drafts, penned by speech writer Malcom Moos, reads:
“We must never let power, implicit in this combination, endanger our liberties or democratic processes. We should take nothing for granted. Only an alert, knowledgeable, and wise citizenry can compel the proper meshing of the huge industrial machinery of defense with our peaceful methods and goals, so that both security and liberty may prosper.
In the councils of government, we must jealously guard against the acquisition of unwarranted influence by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We can ignore it only at our peril.”
The tone is softened slightly in the speech that Eisenhower delivered, but his message remained intact. Since the Eisenhower presidency, the military-industrial complex has grown and gone through a metamorphosis, the rhetoric changing to match the current threats, real or perceived, to the United States. The Cold War gave way to the War on Terror.
At the forefront of those who shape the rhetoric are often the same retired generals and admirals who staff the boards of directors of America’s largest and most powerful defense companies.
Lieutenant General Thomas McInerney carries three-star clout following an extremely impressive career. Retiring from the Air Force, McInerney served four tours in Vietnam, including hundreds of sorties as a combat aviator. Afterwards, McInerney served in a succession of important military commands. He is a graduate of West Point and also has a master’s degree from Georgetown. Since his retirement in 1994, General McInerney has also served on the board of directors for perhaps a dozen different defense and defense-related companies.
However, General McInerney says some very odd things. To the uninitiated, like MSNBC host Rachel Maddow, he sounds “nuts.” When McInerney makes outlandish claims as a paid Fox News contributor, people sometimes describe him as sounding crazy. Yes, the general’s claims, a few of which we will examine here, are bizarre, but McInerney is not crazy. In fact, he is very intelligent, highly rational, and each of his words are very calculated.
The Pentagon’s Military Analyst Program When the Pentagon established the military analyst program in 2002, they did so largely to help build public support for the invasion of Iraq. Retired generals were recruited into the program by the Pentagon and given exclusive access to classified briefings, as well as tours of Guantanamo and bases in Iraq. While these analysts were presented on network news each night as being objective experts, they were actually being groomed by the Pentagon and fed talking points. Moreover, many of them had ties to major defense contractors with material interests in the war.
Former Green Beret and member of the military analyst program, Robert Bevelacqua, later said of the program that the Pentagon was telling them, “we need to stick our hands up your back and move your mouth for you.” When the New York Times sued the DOD to obtain documents about the program, they found that the talking heads we saw on television were referred to as “message force multipliers” and “surrogates.”
When one retired general in the military analyst program received talking points from the Pentagon, he wrote, “good work” and “we will use it.” That general’s name was Thomas McInerney.
Malaysian Flight 370 While McIerney is known for his very hawkish stances on foreign-policy issues, he is perhaps better known for the straight-up outlandish claims he often makes. One of the most curious is the theory he advanced on Fox News multiple times when Malaysian Flight 370 disappeared somewhere over the Pacific.
The theory: Flight 370 was hijacked by terrorists, probably the pilots, who then turned off the aircraft’s transmitters and flew the plane westward. The pilots then shadowed Singaporean Flight 68 in order to hide their aircraft’s radar signature as they flew over Indian airspace. McInerney insists that the Indian radar operators would not necessarily have picked up flight 370’s radar signature as most countries don’t have their “A-team” manning the radar late at night.
If we are to accept this bizarre leap of faith, we then have to invent some way in which Flight 370 then broke away from Flight 68. McInerney insists that the Malaysian passenger plane then landed in Lahore, Pakistan, and the passengers are being held hostage.
Fox News is always quick to point out on air how General McInerney has amazing sources and contacts within the Pentagon and elsewhere—an attempt to backstop his strange claims and theories. In this case, McInerney pointed out that it wasn’t simply his sources that gave him his information, but rather that logic dictated the plane was hijacked and flown to Lahore.
But this isn’t the same type of logic advanced by Plato, Hobbes, or even Machiavelli. McInerney is making inferences based on inferences based on inferences and none of it adds up or can be verified by anyone. Despite McInerney’s incredible sources that Fox News pundits constantly reference, no one that SOFREP has spoken to in the intelligence community lends a bit of credence to this claim.
DEFCON 1 “Something is happening out there and we are asleep at the switch.”
Another interesting statement made on Fox News by McInerney is that the United States should go to DEFCON 1. Defense Condition One is America’s highest level of alert and means that nuclear war is imminent. McInerney reminds us that America has never gone to this level of alert before.
Even during the Cuban Missile Crisis of 1962, when the United States was on the brink of nuclear armageddon with the Soviet Union, we only made it to DEFCON 2. Why would America need to raise our alert status to DEFCON 1 in September of 2014? McInerney references a variety of nebulous threats. In various interviews he says that this threat could be nuclear, an EMP weapon, or cyber-warfare attacks against our infrastructure.
Where does this threat emerge from? General McInerney said on Fox that, “unchecked, ISIS is an existential threat to the United States…” However, there is no evidence that ISIS is even remotely an existential threat to America. While ISIS can—and gone unchecked, almost certainly will—become a threat to America, the idea that a ragtag group of jihadists could destroy America has no credibility. Even the 9/11 attacks on the Pentagon and World Trade Center came nowhere close to actually destroying America.
In the same interview, McInerney then repeats his suggestion that the government raise the alert level to DEFCON 1, and that he believes that multiple American cities are soon going to be attacked because ISIS has slipped through our porous borders and are already staging in American cities to strike. He then pushes for a “massive air campaign in Iraq and Syria.”
Nuclear Iran “Getting the bombs or the components of bombs into the United States would be simple.” (End Game, 27)
At the New Hampshire Institute for Politics, McInerney commented on one of his favorite topics: nuclear Iran. In this speech, he warns America that Iran could develop a nuclear weapon, possibly hand it off to a third party, and then it could be smuggled into the United States to be detonated in a city. McInerney would have us believe that while intercontinental ballistic missiles carrying a nuclear payload can be traced back to the country that launched them, a nuclear weapon smuggled into America would leave no fingerprints as to who the culprits are.
Of course, this claim is patently false. The science of nuclear forensics would allow us to quickly identify who built a nuclear weapon set off on American soil. Iran knows this. So does General McInerney. Contrary to many alarmists, Iran is a rational state and the Iranian government does realize that, should they launch such an attack against America, the nation of Iran would cease to exist in short order.
To effect a regime change in Iran, and according to McInerney, to prevent this nuclear nightmare, he advocates a 48-hour air campaign over Iran. The goal would be to set the Iranian nuclear program back at least 5 years. This would include the use of bunker busters, 70 stealth aircraft, and 400 non-stealth aircraft to bomb 2,500 targets inside Iran.
America’s Nuclear Deterrent “It is very safe and it is very secure.”
Considering the dire threats that McInerney insists America is facing on an almost daily basis, he made one curious appearance on television to assure the public that America’s nuclear stockpile is safe and secure. On January 14th, 2014, McInerney appeared on Fox to address reports of missile launch officers being caught up in a drug investigation and cheating on their certification exams.
General McInerney responded to the question of the disposition of our nuclear stockpile by assuring us that it is, “very safe and it is very secure.” He goes on to point out that there have been some human failings in our nuclear command, but that our “nuclear-deterrent force is in very good shape.” The general pushed for modernizing our nuclear forces and said that these weapons needed to be maintained, but when it came to the personnel and overall capabilities of our nuclear deterrent, he was very positive.
For someone who often warns Americans about dire threats against our nation and even insidious conspiracies from within (in a TruNews interview, he warned that Obama is carrying out a well-orchestrated conspiracy to transform America into a communist/socialist state), it is curious how he assures us that everything is fine with our nuclear forces. Nothing could be further from the truth.
The problems plaguing our nuclear command are not just limited to our aging stockpile, a few drug users in the ranks, or cheating on exams. Major General Michael Casey, who was in command of three nuclear wings, was relieved of command in 2013. The reason? Casey was boozing it up in Moscow and hooked up with two local women at a hotel. He was drunk, incoherent, and belligerent during his trip, and went missing for hours at a time. This sounds very much like a “honey trap” engineered by Russian intelligence services.
Vice Admiral Tim Giardina was also relieved from his position as deputy chief of U.S. Strategic Command, ostensibly because he used fake gambling chips at a casino in Iowa. With Giardina and Casey relieved within days of each other there may be a real conspiracy at play here. It seems likely that beyond a few human failings, America’s nuclear forces are heavily targeted, if not penetrated, by foreign intelligence agents. This raises the possibility that U.S. military counter-intelligence decided to clean house in October of 2013.
Again, the implications of these scandals within our nuclear command would not go unnoticed by someone with the depth of experience and knowledge that McInerney has. All of this begs the question as to why he goes on television to tell us everything is fine with our nuclear forces when he is also constantly warning us about foreign threats and the destruction of American cities.
END GAME “Syria is a domino waiting to fall.” (End Game, 54)
In 2004, McInerney co-authored a book called End Game with Major General (ret.) Paul Vallely. The two graduated from the same West Point class and became reacquainted when they were both brought into the Pentagon’s Military Analyst Program.
Their book opens with, “Today, America is at war with an enemy every bit as dangerous as Nazi 51D6TASMSFL._SY344_BO1,204,203,200_Germany or the Soviet Union: We know it as radical Islam” (End Game, 9). In order to counter terrorism, they advocate regime change (“major policy shifts”) using military action in six countries. Afghanistan and Iraq were two that had already been toppled when the book was published. They suggested further military action in Iran, Syria, Libya, and North Korea.
Since 2004, Libya has experienced a regime change while Syria and Iran have both been under serious duress. Interestingly, two other countries were identified for reform rather than military action: Pakistan and Saudi Arabia. But, according to the book, if Saudi Arabia can’t shape up, we may have to bomb them, too. End Game tells us that we don’t have time to take these countries out in sequence, but rather we have to attack all of them at the same time (End Game, 38). To what extent McInerney and Vallely have actually influenced the policy decisions to target these countries is unknown, but it is a safe bet that they have been hard at work behind the scenes.
End Game is also filled with predictions that never came to pass. For instance, they said that, if North Korea detonates a nuclear bomb, that Japan, and maybe even South Korea, would develop their own nuclear weapons (End Game, 25). They again assert that if a nuclear bomb was detonated in America that “evidence would vaporize,” making the weapon untraceable (End Game, 29).
Regarding Afghanistan, they write that, “The force level that NATO needs to maintain in Afghanistan is relatively small, the duties in the long term, relatively easy.” (End Game, 40). When it comes to Iraq, they write, “We are confident that the Iraqi people are up to the task, based on how enthusiastically they have embraced the opportunities to vote in meaningful elections.” (End Game, 44)
Considering the author’s failed predictions for post-war Afghanistan and Iraq, perhaps we should scale back from attacking the rest of these “rogue” nations all at once with massive American air power as they suggest.
Maddow Gets it Wrong “We report, you freak out.” -Rachel Maddow
Interestingly, journalists and media commentators have never really put McInerney in the spotlight for his many irregularities. On the rare exception in which a critique is offered, it always portrays McInerney as a far-out-there right-winger. Four years ago, Rachel Maddow did a story on McInerney for her show on MSNBC.
The reason for her coverage was because McInerney was supporting an Army doctor who refused to deploy on the grounds that he suspected President Obama was not born in the United States, and therefore was not a valid President. In an affidavit written by McInerney, he praises the doctor’s courage and bravery for standing by his beliefs. Yes, apparently McInerney is a birther as well.
Rachel goes on to say, “what is news is that someone with General McInerney’s qualifications is saying that maybe the President is secretly foreign.” While Rachel is correct in pointing out how preposterous it is that a three-star general would endorse such a zanny conspiracy theory, she is ignorant of the calculated intent behind his carefully worded and pre-rehearsed statements.
She then wraps up the segment with, “the real story, it seems to me, is that a guy this nuts gets paid to comment on foreign policy and wars. The birther general is on Fox New’s payroll…” Rachel is directionally correct in pointing out the strange disconnect between the fact that McInerney is a retired three-star general and that his statements don’t make any sense. However, she misses the fact that, while his statements are off-the-wall, they are never off-the-cuff.
In short, McInerney does not actually believe the bizarre things that he says on air, but rather, these are carefully worded statements fed to the public for political purposes.
The Military-Industrial Complex Thomas McIerney is constantly on television beating his war drums and warning Americans about amorphous threats to our nation. According to him, we are just days away from a horrendous terrorist attack. But McInerney is not simply a television military analyst, rather, he is an active participant in the military-industrial complex via the various boards of directors upon which he sits. What he does is not analysis, but advocacy. He is an advocate for nuclear weapons, long-range bombers, UAVs (specifically Global Hawk), and he is an advocate of going to war with a half dozen countries simultaneously.
This is not conjecture or secret information from anonymous sources, but rather McInerney’s own words. In his book End Game, he claims to have plotted the liberation of Iraq in 2002 on a cocktail napkin with Paul Vallely. They then pitched this plan to Bill O’Reilly at a party hosted by the Fox News network, who agreed to have them on his show to talk about it. In End Game, the generals write, “We knew appearing on The O’Reilly Factor to discuss the plan was something of a risk. In the past, we had acted solely as military analysts. Presenting our plan came close to advocacy.” (End Game, 85)
General McIerney chose not to simply be a passive analyst, but to instead become an active participant in shaping history. He believed we could take down Iraq in 30 days, and that the rest would basically be a cake walk. The U.S. military invaded in 2003 and our soldiers fought, bled, and died in the streets fighting terrorists, Baath-party loyalists, foreign fighters, and run-of-the-mill gangsters in places like Mosul, Baghdad, and Basra for an additional nine years.
Mcinerney is not to blame for the failures of the war in Iraq, but his rhetoric is suspect when the companies he works with have a material interest in the United States going to war—wars in which the products endorsed by McInerney, such as air power and UAVs, would be employed. In order for those products to be used, the American public has to be kept in a constant state of fear. That fear can then be channeled and used as a vehicle to support war. The vehicle of choice for McInerney is radical Islam.
He isn’t a right-wing nut as people like Rachel Maddow would have you believe. If we were to take McInerney’s word’s at face value, the politics he endorses are actually divorced from any ideology in contemporary mainstream politics. Like Lyndon LaRouche, Thomas McInerney’s politics are so far out there that it is disingenuous to describe them as right-wing, Republican, or conservative. But it is highly unlikely that McInerney actually believes silly stories about Flight 370, Iranian nuclear weapons, and birther conspiracies.
Far more likely, he says these things cynically for purely political purposes.
McInerney honorably served his country for many years, but contrary to the lapel pin on his collar, what he does today is far from patriotic. In fact, it is the exact opposite. Misleading Americans with alarmism and hyperbolic statements is deconstructing our political process. An informed public is an absolute necessity for a democracy to function. When retired generals leverage their credibility to mislead the public like a pied piper for political purposes, we are in serious trouble.
When they lend their name to conspiracy theories, it only contributes to polarizing American politics and driving wedges between the American people. When politicians see that the talking heads on television are saying something that does not match up with what our intelligence professionals are telling them, it is then seen as an intelligence failure.
Thomas McInerney is not alone. He is one member of a clique of retired generals, admirals, and CIA officers who have created an echo chamber in which they cite each other as sources and stir up the political fringe of America. They do this intentionally, knowing that their alarmist messages will be diluted by the time they make their way down to more reasonable people. But in the meantime, the damage done to American politics is impossible to calculate.
This is one facet of the modern military-industrial complex Eisenhower warned us of.

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How To Value A Stock (From Someone Who Has Beaten The S&P Almost Every Year Since 2008)

DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1

DraftKings (NASDAQ: DKNG) - Deep Dive Research - Part 1

[MF] Slavey Shores

/r/thetagang needs a FAQ/wiki so I wrote one

Overview

What is this place? What is theta gang?

An option? What's that?

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The Greeks

Delta

Gamma

Theta

Vega

Vomma

Rho

Volatility

What are some basic details about volatility that are important to know?

What is volatility skew?

The story of James "Rogue Wave" Cordier of OptionSellers.com: A tragic lesson in how not to sell options

Miscellaneous

What are some popular option selling strategies?

How does assignment work?

What are some scenarios I can expect assignment, especially early assignment?

Should I close out of a position after collecting most of the premium earlier than expected?

My position moved against me. What can I do about it?

I'm doing great! I'm winning on all my trades collecting that sweet, sweet, theta. I want to sell even MOAR!

I like to sell options on stock indexes like the S&P 500. Anything I should know?

What everyone has wrong about Ridgway. EXTENSIVE write up on the crimes of Gary Ridgway, misconceptions about him and his crimes, a few comparisons to Bundy, and profiles of women murdered, still missing, and unidentified. Part 1 of 2.

If I can in anyway contribute to fighting fake news, let it be this piece about Gen. McInerney (pls share)

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