4 thoughts on “5 Aug 24, A Black Monday For Me (USD38k Realised Loss) | Risk Of Trading On Margins”

  1. bro. your net liq is around 127k sgd now? at one time i tot u put in as much as sgd1 million in the account? or i am missing something here. so this option journey has depleted nearly 900k? from your capital assuming u liquidate all your positions today?

    i find your strategy to be overly aggressive bro particularly at the beginning. u are not managing your portfolio delta in a way that minimises such wild swings.

    when black monday hit, my p/l ytd went into the red at one point but because many of my trade structures are hedged, there is no risk of a margin call even when the whole market goes deep red. now with the rebound, the p/l ytd is already back to pre black monday levels. I supposed you just discovered that is not possible for your case as you were force to liquidate some of your positions at the worst possible time.

    u have to decide what is your objective when you set up your trade structures bro. is it to generate consistent income (to stay rich) or outsized gains (to get rich). i believe you started with trying to achieve outsized gains especially when the structures worked for you in 2020-21. then u sort of switch to a capital preservation mode when market tanked in 2022 but still maintaining an aggressive stance (with large number of contracts).

    not being cleared eyed about the goals and deploying the appropriate trade structures is the no 1 reason why many option traders blow up their accounts.

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    1. Hey Bro Raymond, thanks for dropping by and giving your valuable advice. I made two big mistakes in 2023 and now I am reaping the consequences of the mistakes, one was to sell CC on Nvidia before it bottomed and rocket at the start of 2023 and the second was to go naked on my SELL CALL by selling 2000 Nvidia shares away at USD40+ to free up some cash for other purpose. Without any hedge using CALL options back then, I allowed my unrealised losses in the SELL CALL position to keep increase with Nvidia’s phenomenal rise in share price. I then tried to fix the problem by converting SELL CALL into SELL PUT and my maintenance margins went up considerably. All was going well when market was good until the black Friday came, when the excess liquidity dropped significantly.

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  2. Hi Jason

    Hope u are still doing ok with the recent sell off. I suspect u could be facing some margin pressures from the broker again. Looks like your NVDA structure is locked in a minimum loss no matter how the stock price move. You need to be aware of your overall delta for individual positions as well as overall portfolio. This will allow u to make better decisions on what trade structures to add. Most option traders start out with constructing structures that seeks to earn a consistent income (e.g. the popular wheel) but some will get side tracked and try to go for outsized gains (e.g. a simple long put or long call). its ok to do it as long as the the sizing and delta is managed well. Trouble starts when structures are abused. E.g. running a hi delta wheel strategy with large number of contracts on margin. Actually a low risk long DITM LEAP call would be more suited for the job if one is particularly bullish on a stock. This is what I meant by being clear eyed on the goals and using the appropriate structure to do the job. cheers.

    Raymond

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    1. Thank you Bro Raymond for your concern, indeed the recent selloff has caused liquidity issue, I actually sold off 200 NVDA shares to reduce my maintenance margins but I am back to 200 shares naked. My entire trading portfolio now hinges on the fate of Tesla and Nvidia. If they plunge, then I am in deep trouble. Hope the market can recover soon and that I will have the chance to mend whatever is broken and not burnt down by then. Nevertheless, I do very much appreciate your advice and kind thoughts 🙂

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