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Napanee, Ontario | this was in the equities market, but it was quite a doozy for me..
a few years back I Made Close to $130k buying calls on company called CCME. Had stars in my eyes and head was as big as a beach ball - it was probably my best run ever, on the back of about a 20k bet in 3 months..... so of course i couldn't see the danger that was right in front of me.
After cashing out the calls, of course I was real careful with the winnings (feeling like Midas) and decided to keep trading options on the company since I had become quite familiar with it. I started writing put contracts and had sold about 12k work of puts on the company in time after i cashed in the calls. The put premiums were massive, and seemed like a 'sure bet'. Guess i found out why. About 2 or 3 months after I has stared selling the puts (rolling the sales into the next month each time), Deloitte and Touche dropped them as a client, and wouldn't sign off on their 2010 numbers. DT also released a statement saying their last three years' audit opinions were compromised and couldn't be relied upon.
About 5 minutes after the news broke those 12k in puts ballooned into a 140k black hole.
That was when the broker's credit department called me and gave me 1 minute to liquidate or they were doing it for me - stayed on the phone with me to ensure it happened. Lucky they did. The company went dark a short time after that, and trading was halted for two months. It opened up on the pink sheets @ $4 and I would have been out 600k. yea... yikes. So even though I ended up losing it all and then some, I Guess I was 'lucky' hahaha
Turned out that the company was a total sham. The options market had incredible volume and open interest for a company that was only 700 million in market cap.... like i said, I found out why. The options, as well as the huge run in the underlying, was a major con job by some connected insiders and Russian mafia related hedge fund outfits, or so the best information I have found out so far goes. Law suits are still going on I believe, but most people are just S/t outta Luck. I doubt we'll ever find out the whole story. Just another hard knock lesson.
It was an experience i'll never forget. Quickly learned how much risk there is in selling options naked. Sometimes learning the hard way is the only way to learn. I'll never forget that huge knot feeling that rose up in my gut, the moment when i heard the news about Deloitte. I almost puked in my office garbage can. People talk about that feeling... but until you experience it, it's only then that you realize it's something you never want to feel again in your life.
Six flags had nothing on that ride | |
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What is your worst trade ever?
