I Lost Almost $50k Trading Stock Options

In this video, I cover some of my absolute worst trades with the biggest losses. Woof.

Luckily, I had enough winning trades to bankroll some missteps during my first year of trading options. Hopefully, this video helps illustrate my mistakes so you can avoid similar pitfalls with your own trading!

Biggest Losers After 1 Year of Trading

A lot of traders on the internet don’t like to talk about their losing trades since many of them want you to buy their courses or join their discord groups or just think they’re a genius. But I have nothing to sell you, and the fact of the matter is if you trade on a regular basis, you’ll definitely have some losing trades. So in this video, I’ll go over my biggest losing trades and what I learned from them.

I’ve only been actively trading for a little over a year and I mostly trade stock options. I have two main accounts, one on TD Ameritrade and one on Robinhood, so I’ll be covering both. And, keep in mind, while I have been very profitable my first year of trading, I am by no means an expert and as you will see in this video, I had a lot of missteps and made some bad decisions, but I think it is important to learn from your losses so you can become a better trader.

I made an account on a platform called TraderSync on which I was able to import all of my trades from each platform.

ROBINHOOD LOSSES

SPY (-$9,204)

On March 13th, with COVID lockdowns looming, I bought a lot of puts on the S&P 500 ETF, SPY. I bought 6 contracts with an expiration date of May 15th. And the market fell a few days later. Now, I was very new to options trading at this time and I hope I wouldn’t make the same mistakes now, but my put contracts that I purchased for $1,534 apiece hit $2,974 just a few days after buying them. This would’ve made me an $8,600 profit if I sold, but I thought the market would continue to tank, so I held. And I held. And the market recovered, and I kept holding. I expected another drop that never came, and these contracts expired worthless for a total loss of $9,204. I should’ve known that Jpow makes the money printer go brrrr. But really, I didn’t have any profit target. At the very least, I should’ve sold 4 of my contracts when I was at 75 or 80% profit . This one hurt a lot.

TSLA (-$6,024)

This was one of the dumbest trades I ever made. I was feeling reckless and decided to YOLO my account right before Tesla’s battery day. I had already withdrew a large amount of profit from this account, so I was just playing with profits, but still, dumb is dumb.

On September 18th, I bought 2 call contracts for a total of $6,250, expiring on October 2nd. Tesla’s battery day failed to impress and their stock sold off a lot afterwards. One of the many issues with this trade was the Implied Volatility of the options contract was already high when I bought them, since Battery Day can make the stock move a lot in either direction. After Battery Day, that Implied Volatility will drop, causing options contracts to lose value, known as IV Crush. So the volatility dropping along with the price crushed the value of these contracts. I held for a week and although the stock price started to recover, my contracts did not, so I sold them for a total of $226, resulting in a loss of $6,024. The lesson learned here is don’t play Tesla right before Battery Day unless you want to lose a ton of money.

GILD (-$5,282)

For another COVID-related trade, I bought 10 call contracts of the biopharmaceutical company, Gilead, who manufactures the drug Remdesivir. All 10 of these cost a total of $5,282. I thought their stock price would continue to go up with everything going on, but as you can see, it actually sold off after I bought it. It slowly started to regain value and on the day my contracts expired, it actually gained at almost $10 a share, but it was still nowhere close enough to my strike price of $95, so I sold them for $12 apiece, taking a $5,282 loss. The lesson here is to not spend so much money on such a speculative play during a volatile time.

LK (-$5,100)

Okay, I really didn’t want to share this one because it’s pretty embarrassing and I think this qualifies as my WallStreetBets initiation. In February of 2020, I saw a post on WallStreetBets about the Chinese coffee chain, Luckin Coffee. I honestly don’t even know what I was thinking because I did zero research and just hopped in. This is a Chinese company in February of 2020, when COVID-19 was really just starting to spread around the world. I went in heavy on this play and have no idea why, so I deserved to lose the money. I bought 20 call contracts for a total of $6,800. The stock price fell and five days later I sold those contracts for $1700, netting a loss of $5,100. The moral of the story is do maybe more than 1 minute of reading on a company before dropping a ton of money on it. Oh, and maybe get another source other than WallStreetBets. It turns out, Luckin was giving fraudulent revenue numbers and the stock plummeted in April. The company fired its CEO and COO after this scandal and then recently filed for bankruptcy in the US. Yeah, that was a horrible trade, and I deserved to lose.

So those are my biggest losses in Robinhood. Now, I’m going to load up my TD Ameritrade account to TraderSync, so we can take a look.

TD AMERITRADE

SPY (-$11,115)

Again, back in the middle of March of 2020 during the “Coronavirus Crash,” I thought the market was going to continue to dip so I bought Spy put contracts, just like I did on my Robinhood account. On March 16th, which was the day the Dow dropped almost 13%, I bought my first set of 5 contracts for a total of $5,310. The market was continuing to sell off, so I bought 5 more contracts on the 19th. But, as I mentioned earlier, the market started recovering, and I held onto my puts, thinking things would get worse. And they did, but not in the stock market. I lost $11,115 on these 10 contracts since I held onto them until they were only worth $11 apiece by the end of April. Ouch.

SPY (-$3,800)

I obviously didn’t learn my lesson, because in April, I bought more Spy puts. I bought 4 contracts on April 20th, and my timing was pretty good because the market dropped the next day. But instead of selling like a smart trader, I held onto them like a big dummy. I bought 2 more contracts on the 29th. Why? – I have no idea. Either way, I sold these a day before expiration for… one penny apiece, locking in a loss of $3,800.

TSLA (-$2,796)

Up until now, all of these trades happened within the first few months of me trading options. Which is good, because of course, the longer I trade, the better I want to get and the fewer big losses I want to take. This one though, is pretty recent. Tesla was selling off on January 11th, and I was scalping it – meaning I got in and out of a position during the day, pretty quickly to make a quick profit. I had done it earlier in the day and made a quick $1,000, so I went in for another 2 put contracts 30 minutes before market close. But instead of continuing to sell off, it gained about $10 into close, so I decided to swing the trade over night. Unfortunately, it opened at $830 the next day, so I sold my puts for a loss of almost $2800.

The lesson here is don’t get over-aggressive when day trading, don’t swing scalps over night without a good reason, and cut your losses before they turn into massive losers.

TSLA (-$2,630)

At this point, I’ve been burned trying to trade Tesla many times, so I really don’t know why I continue to trade it. I guess I’m a glutton for punishment. So before these put trades I talked about just a minute ago, I had bought 2 call contracts with a strike price of $1,000. I thought Tesla was going to continue on its war path all the way to $1,000, but I bought these on a Friday and after hours it started selling off and continued to do so into Monday. I cut my losses on Wednesday, selling the contracts for a total of $1,020, putting my loss at $2,630.

The lesson here is don’t trade options on Tesla. Or don’t buy short-term call contracts on a Friday where you’ll lose a ton of value to time decay over the weekend. Or just buy contracts with way more time on them. Or don’t spend so much money on low-conviction plays. I don’t know – lots of lessons, and you can see I still make these dumb mistakes.

UBER (-$2,505)

Okay, I’m glad my next big loss is actually from last March again, because I’d like to think all of my biggest losses happened back then and not like a month ago. I bought 5 puts on Uber on March 19th, thinking they would take a revenue hit from COVID lockdowns. These contracts cost me $2,505 in total. But unfortunately, I bought puts pretty close to the stock’s all-time low, so uhh yeah, I held until expiration and watched them expire worthless, losing my entire $2,505 spent.

The lesson here is stop buying puts once Jpow has broken out his money printer.

Stop Trading Tesla!

Since I know my Tesla trades usually don’t work out in my favor, I decided to pull up my Tesla trades from both Robinhood and TD Ameritrade and include it in this video so I can really get it through my head to stop playing Tesla. In Robinhood, my accumulative return on Tesla is -$5,837.24. In TD Ameritrade, it’s -$4,857 for a total loss of $10,694.24 just from Tesla. I would’ve been far better off just dumping my money in Tesla shares if anything. So next time I’m about to trade Tesla options, I hope I’ll remember this now that I’ve documented it here in this video.

Final Thoughts

Well, that was a recap of $48,456 in losses for you. As much as I hate going through my losing trades, it really is important to analyze what you were thinking at the time, where you went wrong, and how you can improve to not make the same mistakes. For me personally, my options trading is something I am always trying to improve upon. I need to better manage risk, avoid short-term, expensive contracts, and develop my exit strategy and stick to it before entering trades.

I hope at the very least, me showing these huge losses can help you see my mistakes so you don’t have to make them yourself. It’s also important to see how options trading can be treacherous and not just an easy way to make big bucks.

If you have any questions about anything I covered in this video or about options trading in general, leave me a comment, and I’ll do my best to answer as many as I can.

Do me a favor and hit the thumbs up button on this video so Youtube will show my failures to more people. Consider subscribing if you have not already, and I will see you in the next one.