Twenty-four-year-old trader Matt Reed lost his entire life savings—$180,541.79—in less than a month. He put it all into the options market.
His final trade was buying call options on wearable fitness device maker Fitbit. The trade went south, and his account went to zero.
Here’s (some of) Reed’s account of what happened (posted on trading website Stocktwits):
- I’m down $200K, aka basically everything, and pretty much suicidal right now.
- Kept buying on margin [i.e., borrowed money] as it went up. Held too long as it went down.
- Started small, then after it did well I figured why not put more in. Got behind [and] kept trying to break even. Never did.
- I was doing great which is how I got onto margin. Got greedy, but then January came and it got bad fast.
- It was purely my fault for being too risky with margin and trying to quick-flip during a bad month.
Now, Reed’s set up a GoFundMe campaign to try to recover his losses. In other words, he’s asking folks online to bail him out.
So far, he’s received $95 from a total of four people. That’s a little shy of his $200,000 goal.
This is a terrible story. But it illustrates why PBRG’s core investment philosophy is radical risk management.
Trading—and losing—1-2% of your portfolio in one position is manageable. Suffering a catastrophic loss by going “all in” on one trade is crippling… even life threatening.
Don’t let yourself become a Reed. If you’ve ever thought about trading options, consider subscribing to Palm Beach Income. Tom has a 96.2% win rate on over 150 trades.