My Loss: Whose Gain? A Case of Disappearing Stock

Where did the money go? The $40 I lost went to the guy I bought it from. We are so intent on looking to the branches for the next fruit when we win, that we forget to look at the roots when we lose. What argument will they come up with to explain away the disappearance of the actual stock, now that it is no longer a question of price, but a grab of the physical contracts?