Trading & Options · Profile from Trading and Options Research Companion
LJM Partners
The Chicago options manager, owned and run by Anthony Caine, that sold short-dated, out-of-the-money options on S&P 500 futures — mostly puts, some calls, partly hedged but net short — to private funds, separately managed accounts and, from January 2013, a retail mutual fund, the LJM Preservation and Growth Fund. Marketed as "risk centric" with a worst-case daily loss of 20% for the mutual fund and 30–35% for more aggressive versions, it grew from ~$450m (Feb 2016) to ~$1.3bn (Feb 2018), including more than $800m in the mutual fund. On 5–6 Feb 2018, as the S&P 500 fell more than 6% over two sessions and the VIX rose 177% (SEC complaint; Volmageddon — VIX +115.6% close to close on 5 Feb, Shared facts), its futures commission merchant ordered all remaining positions liquidated to meet margin, and the funds lost more than $1bn, about 80% of their value (SEC LR-25101, 28 May 2021). The SEC and CFTC later alleged that LJM's stress tests and "consistent risk" claims were false and that it had raised risk from October 2017 to chase returns; consent judgments in June–July 2025 imposed disgorgement, penalties and trading bans without admission. For a trading book LJM is the clearest regulator-documented case of short volatility without survival limits. The public record is thin before 2013, so this profile has six moves (rule 6).
At a glance
- Founded
- Chicago; Caine registered as an associated person of LJM Partners from Dec 1998 (CFTC complaint, May 2021, via search summary) — founding year of the firm itself not confirmed (verify)
- Founder / owner
- Anthony J. Caine — owner, founder and chairman of LJM Partners, Ltd. and LJM Funds Management, Ltd.; co-portfolio manager; resident of Aspen, Colorado in 2021 (SEC complaint)
- Key people
- Anish Parvataneni, co-portfolio manager / chief portfolio manager 2010–Mar 2018; Arjuna Ariathurai, chief risk officer (SEC complaint; CFTC)
- Headquarters
- Chicago, Illinois
- Ownership / structure
- Two Illinois corporations operating "effectively as one entity": LJM Partners (adviser and commodity pool operator for private funds and SMAs) and LJM Funds Management (adviser to the mutual fund) (SEC complaint)
- Vehicles
- LJM Preservation and Growth Fund (open-end mutual fund in the Two Roads Shared Trust; began Jan 2013; ~$800m before Feb 2018); private funds including LJM Investment Fund LP, LJM Preservation & Growth Fund LP, LJM Aggressive Fund LP, LJM Fund LP, LJM Master Trading Fund LP and others; SMAs (SEC complaint)
- Strategy
- Writing short-dated OTM options on S&P 500 futures, mostly puts; partial hedges with long near-the-money options; net short options; three versions with target returns of 8–12% (Preservation and Growth), 18–24% (Moderately Aggressive) and >24% (Aggressive) a year (SEC complaint)
- Scale (dated)
- ~$450m (Feb 2016) → ~$1.3bn (Feb 2018), >$800m in the mutual fund (SEC complaint); "over $1 billion" in Jan 2018 (CFTC)
- Outcome
- Losses of >$1bn, ~80%, over two trading days in Feb 2018; mutual fund closed to new money 7 Feb 2018 and liquidated Mar 2018 (SEC complaint; fund supplement: on or about 29 Mar 2018); LJM ceased business (CFTC)
- Regulators and courts
- SEC; CFTC; NFA; US District Court, N.D. Illinois (SEC case 1:21-cv-02859); SDNY (Kafka v. Wells Fargo Securities, 1:22-cv-01034)
6 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
1998
Short SP Futures Options Programme
Founding / new strategy
2013
Retail Mutual Fund and Asset Growth
Fund launch; capital raise
2017
Raising Risk in the Low Volatility Regime
Leverage, sizing or risk-limit change (failure)
2018
Closure Dividends and Investor Litigation
Closing a fund or strategy; legal action (private)
2018
Volmageddon Loss and FCM Liquidation
Loss, drawdown or blow-up; counterparty or clearing event (forced liquidation)
2021
SEC and CFTC Charges and the 2025 Judgments
Regulatory, enforcement or legal action