Good evening everyone!
Somewhere along in your investing journey, you’ll come across some “opportunities” that feels like an irresistible deal. You’ll think - If I don’t act now, I’ll miss out. And before you know it, you’re halfway to doing something you never planned to do.
Let me share with you a story where one of these “deals” came right to me, about five years ago.
It was a Friday afternoon in June 2020. My phone buzzed, and it was a WhatsApp message from an investing group I was in:
“Eh guys, Wirecard options are giving damn good premiums right now!”
If you didn’t know Wirecard back then, it was one of the largest payment processors in the world (you might have seen the name on your credit card receipts previously).
That Thursday, a string of shocking news hit the payment industry:
They were missing US$2.1 billion - over half their reported cash.
Their auditors refused to sign off on the 2019 accounts.
There were rumours about hidden funds in two Philippine banks which they didn’t report.
To add salt to wound, they retracted their Q1 2020 and full-year 2019 results.
The kind of headline you read twice just to be sure you saw it right. What happened next was insane - the share price crashed 85% in a matter of days!
So being curious, I opened my IBKR brokerage app. And wow - a 30% premium for a strike price so low it almost looked like free money. I stared at the screen and thought: “That’s… a lot for doing nothing but selling an option.”
Click. 2 put options contracts sold. At that time, it felt like I scored a deal!
But over the weekend, doubts started creeping in.
What if they go bankrupt? Do I even want to own this company?
I tried to brush it off, but every time I read more news about Wirecard and even working out the valuations a few times, I got even more uncomfortable.
By Tuesday, the stock had dropped even more. My mind was completely taken over. I was staring at a loss, and the possibility of having to buy the shares at a price way above what they were worth. I couldn’t focus on work, just 10 tabs of Wirecard news open, refreshing again and again for the latest updates.
That afternoon, I closed the trade. Not because I had the perfect plan, but because the noise in my head was too much. I took the loss, but instantly felt lighter.
And a few hours later, Wirecard filed for insolvency. Boy, what a roller coaster (downwards)!
So why am I sharing this experience with you?
Sometimes, the numbers in a trade can look amazing. But if you’re doing it for speculation especially on a company you’d never want to own, the mental weight is something else. A deal that looks good on paper can still cost you your peace.
And when it comes to options, they’re like a kitchen knife. Used properly, they can be a powerful tool, cutting cleanly and helping you work faster. But juggle it recklessly, or wave it around in the air, and you’re going to get hurt.
That’s the real difference between a tool and a weapon: how you choose to wield it.
By the way, I’ve started a free Telegram channel where I share my personal market insights, real-time updates, and lessons I’ve learned from years of investing, plus the occasional video of me rambling about life 😅
If that sounds like your cup of tea, I’d love to have you join us 👉 https://t.me/patiencebuildswealth
Till the next post, ciao!
Patience builds wealth,Bjorn