What Is Worse Than Having A Portfolio With $618,800 (Unrealized) Loss?

by Jason Cai

After Friday’s (10 June 2022) selldown because of a worse-than-expected CPI data release, my unrealised loss has increased from the previous -$576k (just a week ago) to -618.8k now.

If all these unrealised losses come from my shares whose value has dropped significantly due to the huge correction, then I am not too concerned, because I can still hold them until the market recovers.

However, in my top 10 losses on my portfolio, most of them come from my options contracts (see green boxes below) that have expiry dates.

That means, even if I am prepared to wait it out, these unrealised losses will automatically be realised when the contracts expire, somewhere between Sept 2022 to Jan 2024 (table below shows the different expiry dates of the contracts).

If the market does not recover by Jan 2024, my 453k LEAPS options portfolio (see table below) will turn to dust (though it is down by 90% currently). This means in my current 618k unrealised loss, 400k comes from my LEAPS options portfolio.

The LEAPS Strategy is a double-edged sword, while it helps to magnify my returns in a bullish 2021, it has now magnified my losses in a bearish 2022, as the portfolio is down by 90%.

Still Losing Money After 10 Years Of Investing?

I did a recap on my investing journey that started on 16 July 2012.

On 15 July 2021, after 9 years of investing, I made a realised gain of $113,383 from dividends and profits from selling my stocks.

However, towards the end of 2021, I realised a loss of $135,715 from all my poor-performing SG stocks that have dropped in value over the first 9 years of investing.

I then earned $267,894 off the profits made by buying SG banks shares on the cheap when the pandemic crashed the stock market in 2020 and the phenomenal returns from options trading in 2nd half of 2021.

So, if the current LEAPS options contracts expire worthless and my unrealised loss of $453,639 become real losses, I will still lose around 72,360.85.

So, after 10 years of investing and options trading, I would be so much better off leaving my money in the bank earning 0.5% interest per annum and letting inflation eat up my money. But, I will not lose 72,360.85 away for nothing.

Wait, Maybe There Is Still Hope

Even if it is confirmed that the market will continue to stay depressed for the next few years and that I would lose everything in my LEAPS Portfolio, that is going to happen only in Jan 2024 when all my options contracts expire worthless. Between now to Jan 2024, I may continue to gain more returns through the various means of investing or trading.

In another scenario, the market may recover if inflation is under control, interest rate hikes are halted, the war in Ukraine has ended or the supply chain issue caused by covid has finally been resolved, though that seems very unlikely now. All the FUD that we hear in every space seems to ascertain that the worst is going to happen.

Why Am I Even Sharing This?

Writing this kind of article certainly shows how bad an investor I am, and I am sure the haters are going to come in and say “See, I told you, this guy is an idiot”. However, I am not sharing my experience to please the haters. I just hope to tell people, friends, who have lost a lot of your hard-earned money (whether it is unrealised or realised loss) that you are not alone in this journey.

I am not sure if it is comforting to know that there is someone who has lost more money than you but I sincerely hope this article sends some encouragement to you. Remember this, the reason that you are able to lose this amount of money is not because you are foolish, the reason you are able to lose this amount of money is because you have made them in the first place (assuming you are not investing on borrowed money). So, there is every chance you can make it back again.

It is important to keep your morale high and evaluate what went wrong with your investment. Have you taken on too much risk? Or are you too complacent when times are good? And then think of what you can do moving forward. Can you salvage anything? Should you cut loss? What will be your new strategy to recoup your loss?

I think we learn the most when times are bad and that will help us become better investors/ traders in the years to come. We will gain money, lose money, then gain it back and then lose it again, and the cycle continues, but what we will never lose are our experience and knowledge. The harder you fall, the more you learn and the better you will become.

The last thing I wish to say is this, you can lose all your money but what you can’t lose is your health. There are many people who file for bankruptcy and then came back stronger to create their legacies, such as Walt Disney, Elton John and Donald Trump. But, if you lose your health, you lose everything. So, please take good care of yourself, and may the storm be over for you soon.

Sharing this quote that I really like. Mistakes do not define who you are until you give them permission to do so. Wish you guys all the best!

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16 thoughts on “What Is Worse Than Having A Portfolio With $618,800 (Unrealized) Loss?”

    1. thanks bro, appreciate your comforting words, most of us have returned all the gains in the past 2 years back to the market. But, the road is still long ahead, we can make it back again!

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  4. Yield chasing mentality is the death of retail traders. Hard to comment more – u can take a look at my twitter Ginzabike if you want to get a sense of how professional traders trade. There is no shame in losing trades, only in letting them get beyond you.

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      1. I thought I learned my lesson but I keep making new ones. It’s really exhausting. It’s probably better to buy etf and not do anything. I’ve already lost $200k this year (unrealized loss) selling Nvda naked call. I have until 1/2025. I am not sure if I should just close it and take the $200k loss or wait it out and risk it keep going up. The company is already at 2T but it seems unstoppable. I thought it was already top at 400 then 500 600 700 and now at 800 people are saying it will go to $1,000 next. These numbers sounded ridiculous a few months ago but not too farfetched at this point

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      2. Wow Kelly, I thought I was reading my own story. I got into Nvidia naked CALL too when I took profits and redeemed my capital for other investments. I sold my 200 Nvidia shares at USD400+ range without getting out of my SELL CALL contracts. Now, Nvidia’s share price hitting USD800, my unrealised losses are close to yours. I suggest you roll your contract to a later expiration date as you may face liquidity issue or early assignment as you get closer to the expiration date. Here is the move I think earlier but it kind of failed. Now I am playing catch up to cover back my shares but it is a very expensive mistake.

        Nvidia Catch-22: How I Attempt To Unwrong A Failed Covered CALL Trade

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  5. Pingback: 40 year-old lost $600,000 Options Trading in 2022 – Here’s what he learned | Financial Horse
  6. Pingback: 40 year-old lost $618,848 Options Trading in 2022 – Here’s what he learned

  7. Thanks for sharing Jason,

    It must feel very tough to stomach the losses, but things will always find a way of resolving itself .

    In 2008s , I bought Centro REIT , loss an entire stake in GNC when it went bust , lost some more money in Tailored Brands when it declared bankruptcy.

    I began to doubt and feel I failed as an investor, went to relook at my methods and risk tolerance. Refined my methods and also relooked at my spending and saving habits , making small gains and smarter choices around the way .

    All these add up , and while I might not have made up for my past mistakes, I am sure going forward , my new game plan and ability to relook and cut down expenses and increasing personal financial management skills as well as knowledge on accounting gained from looking at my past mistakes logically instead of regretfully . All these will add up and make you a better investor.

    Wishing you wisdom and fortune going forward.

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    1. Wow…thanks very much for leaving an encouraging note and for sharing your experience. I am sure you have grown stronger and better! The investing runway is still long ahead, I am sure this experience will serve you well in many years to come. All the best, Bro!

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  8. I found your blog when I searched for “should I recover my naked NVDA call”.

    First of all, I just wanted to say that your blog posts are very well written and I enjoyed reading your story. I feel like I was reading my own story.

    Sorry…but this is going to be very long lol

    You are I made a lot of the same mistakes…I was also in the market for about 10 years (started in 2010), but it was all DCA ETF. It wasn’t until 2020 when the pandemic hit and all the gurus popping up on YouTube and I started to listen to them. I sold all my UNH and ETF shares (which I later paid lots of taxes on) and started buying all the penny/hype stocks. Those gave me 100% return within days and I thought I was pro at trading. They all had “potential” so I didn’t sell them until they went from 100-200% return to worthless. 

    Then I started the wheel strategy. The strategy was correct, the execution was the problem. I followed “gurus” selling bio and small cap stocks because the premium was juicy and lost a lot of money (some of those stocks probably don’t even exist anymore).

    Learned my lesson and decided to stick to big caps ONLY. Bought leap calls on Amazon and Google and the market pretty much crashed in 2022 and those calls became worthless (hindsight..should have just bought shares). Sell put on big caps and got exercised on them all when market crashed. 

    Too scared to buy and kept waiting for market to crash even more in 2023 so I did covered calls on the stocks I had below the strike price (couldn’t sell above cost price since i was really under water and those got called away and I lost money on those as well). Who knew that META can go from $85 to $480 just like that.

    Now back to my NVDA naked calls….I’ve only done naked calls with NFLX, TSLA (also learned about the Tesla from Chicken Genius), and NVDA with expiration 1-2 years out starting in 2023 because I expected the market to crash. The strategy is not to wait for 1-2 years to close the position, but after a pump and dump…I can close the position and make some premium while not having to worry about short term volatility. I chose to stick with big caps only because there is no way they can move like a penny stock. And as luck would have it, NVDA moves like a penny/mem stock. 

    My expiration is not until 1/2025. Do you think I should roll it even further out or just close it and be done with it? It doesn’t seem to make sense to roll it out even further out. Part of me thinks there is no way it can go up any higher but I’ve been wrong so many times, part of me is worried they’ll announce a split that would drive the stock price into oblivion. NVDA went from 1T to 2T in just 9 months…so anything can happen.

    I know people often say to never use margin, to never short naked calls…but I think people don’t listen until they experience it. I am definitely not listening to any gurus after this. I felt confident when I heard Michael Burry opened short position for semiconductor. Only to find out recently that he closed them back in December. 

    Like you, I don’t think options trading is bad, but it took a lot of money loss to learn these expensive lessons. 

    What expiration did you roll your NVDA out to? My plan was always to roll out but at this point NVDA is a cult stock so I am not sure what to do.

    Sorry for the long post. I thought 2024 was going to be a better year, but so far…it’s even worse than 2022 and 2023 lol.

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    1. Thank you for sharing your story, Kelly, it was really heartfelt and we really walked the same path of following the gurus on YouTube, had some wins then lose it all again. After 3 years of options trading, I am currently -32k at this time of writing. I got into options trading after Chicken Genius first introduced concept of options selling like an insurance company back in 2020. I did my research for a further 3 months before making my first trade in Feb 21. I had the whole year of bull run to clock a huge 200k+ profits, only to lose them all in the following year.

      I had followed another guru (MTM) into believing that 2023 would have the mother of all crashes, which later made me lose more than 40k in bearish spreads and got me stuck on my Covered CALL for more than a year. I briefly managed to escape from one of my Tesla CC position (1 out of 6 contracts) recently as I closed the contract near to the premium that I received. I am still stuck on 5 other Tesla CC contracts, alongside with many other CC contracts in AMD, Apple, Google, Palantir and so on. Similarly, I sold CC at the bottom of the market in 2023 (before all went on an incredible bull run since), and at strike prices which could get me big losses if the contracts were exercised. I can only keep rolling them to a later date to increase the SP to eventually breakeven price many years later.

      As for my Nvidia SELL CALL contract, I initially sold at SP220 (expiration date in Sept 23) back in Jan 23 where Nvidia was trading around USD120. I had rolled it multiple times to the current SP of USD260 with expiration date in Dec 26. My cost price on Nvidia was around USD263 so I by right suffer minimal loss if one contract was exercised prematurely. However, since I was short of 200 shares, it meant that upon early assignment, I had to buy 200 Nvidia shares at the current price of USD788 to sell them at USD260, which translated to a -USD105.6k loss. And this loss will keep increasing with Nvidia’s going higher and higher each day. It is also affecting my liquidity as my “Excess Liquidity” fell below the 10% mark and I kept getting liquidity warning from my brokerage. So, I am now dealing with liquidity issue, an increasing unrealized loss on the contracts and the risk of early assignment. My plan is to cover my short positions, buying 1 or 2 Nvidia shares in every pullback (if I still have spare cash) and to keep extending the expiration date and SP, and hope very hard that the SELL CALL contracts do not get assigned early like my Meta options contract.

      This whole AI bandwagon may run out of steam in 2025 or 2026 when supply exceeds demand, just like what happened in 2021/2 when Nvidia was hyped up and went further up after stock split, then crashed spectacularly when they have oversupplies and no one was buying GPUs anymore for gaming/ crypto mining. However, Nvidia could also followed the likes of Apple and Microsoft that keeps growing over the years. So, I am hoping I do not get assigned early and have the time to cover my shorts, or have a market crash to bail me out of my trapped positions.

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