options (finance)

[SlowHabit]

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Besides hedge fund managers [or employees who are required to re-invest their salary/bonus into the fund], can you give me an example where the person running a fund is liable for losses? And even if he has a negative return, he still gets paid by the fund for doing a shietty job.

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just because you can't lose money doesn't mean you have risk-free compensation. the bulk of compensation in these careers comes from bonuses, which are tied to performance. so your earnings could be much lower than your peers if you have subpar performance.

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Very true.

But my point was you don't lose money out of your own pocket even if you have a negative return; you also get paid! And if you're a hotshot [and achieved good returns from previous years] who over-leveraged your fund to busto-town, there will be people waiting to help you start up a fund again. I know that's an exception rather the rule but it wouldn't be a stretch to say it's "common practice" in Wall Street, where greed makes people's memory less than optimal.