4 ms·

Here's a story of my mom's journey as a day trader: My mom got laid off in 2008. The job market was brutal and she had a hard time looking for a new job. She ha

by songzme 10y ago

Here's a story of my mom's journey as a day trader: My mom got laid off in 2008. The job market was brutal and she had a hard time looking for a new job. She had to find ways to make money to support my sister and I through school so she turned to the only other place where she could earn some money - the stock market. She started with around 100k, read up about stock options, and decided that shorting calls and puts would work well. The time value decay seems to work in the investor's favor. Every time she made enough money, she would take them out and buy houses (all cash) and start from 100k again. Now, 8 years later, she has acquired a few properties in West LA and Oakland and makes more rental income per month than my salary as a senior software engineer. She still trades today.

bsder 10y ago
Winning the lottery always happens to somebody. Just not many.
- kgabis 10y ago
  It doesn't sound like winning a lottery but rather like making a series of good investing decisions.
  - nibnib 10y ago
    Buying a winning lottery ticket always looks like a great investing decision in retrospect...
    - kgabis 10y ago
      I don't think it's a valid comparison. Lottery results are unpredictable, stock market to some degree is.
      - stevenwiles 10y ago
        That is incorrect.
a13n 10y ago
> decided that shorting calls and puts would work well. The time value decay seems to work in the investor's favor Yeow that could go wrong very easily. For shorting a call/put option, the maximum amount of money you can make is 100% when the contract expires worthless. However, you can potentially lose way more than 100% if the contract ends up being worth a ton of money. This could bankrupt you if you don't know what you're doing, especially if you're trading with volumes where you can buy houses off the profits...
- songzme 10y ago
  yes. this is correct.
nicholas73 10y ago
I might have taken this at face value if the houses weren't in LA and Oakland (well, maybe you mean condos, or cash for down payment only). To make that much money (>million?) with 100k means selling massive amounts of naked options. Theoretically it could all work out - but what broker let her take out so much risk?
- songzme 10y ago
  Yeah. Its an incredible amount of luck. 30-40 naked calls/puts at a time. I'd never do this myself, but time and time again I am still awed at how its worked out over the years. Here's an example: 10 naked puts of Netflix at 95 strike that expires at the end of the week will yield 1k, with a margin req of 10k. Same with calls, thats potentially 2k earnings / week with 20k margin req (very optimal case). If Netflix goes down, she'll short more calls or puts (I forget) that expires at the end of the week. If stock goes in the money, she closes it and opens a new position for the week after so she never exercises the options unless they are too deep in the money. Its all very messy and very crazy, just wanted to share a story of how day trading worked out for my mum.
- Blackthorn 10y ago
  > Theoretically it could all work out - but what broker let her take out so much risk? Margin rules on options (including naked options) are highly standardized. For naked options, you need a pretty strong stomach. Most of your trades will be winners but it's that overnight black swan event that's going to hurt you.

by songzme 10y ago

bsder 10y ago

Winning the lottery always happens to somebody. Just not many.

kgabis 10y ago
It doesn't sound like winning a lottery but rather like making a series of good investing decisions.
- nibnib 10y ago
  Buying a winning lottery ticket always looks like a great investing decision in retrospect...
  - kgabis 10y ago
    I don't think it's a valid comparison. Lottery results are unpredictable, stock market to some degree is.
    - stevenwiles 10y ago
      That is incorrect.

a13n 10y ago

> decided that shorting calls and puts would work well. The time value decay seems to work in the investor's favor Yeow that could go wrong very easily. For shorting a call/put option, the maximum amount of money you can make is 100% when the contract expires worthless. However, you can potentially lose way more than 100% if the contract ends up being worth a ton of money. This could bankrupt you if you don't know what you're doing, especially if you're trading with volumes where you can buy houses off the profits...

songzme 10y ago
yes. this is correct.

nicholas73 10y ago

I might have taken this at face value if the houses weren't in LA and Oakland (well, maybe you mean condos, or cash for down payment only). To make that much money (>million?) with 100k means selling massive amounts of naked options. Theoretically it could all work out - but what broker let her take out so much risk?

songzme 10y ago
Yeah. Its an incredible amount of luck. 30-40 naked calls/puts at a time. I'd never do this myself, but time and time again I am still awed at how its worked out over the years. Here's an example: 10 naked puts of Netflix at 95 strike that expires at the end of the week will yield 1k, with a margin req of 10k. Same with calls, thats potentially 2k earnings / week with 20k margin req (very optimal case). If Netflix goes down, she'll short more calls or puts (I forget) that expires at the end of the week. If stock goes in the money, she closes it and opens a new position for the week after so she never exercises the options unless they are too deep in the money. Its all very messy and very crazy, just wanted to share a story of how day trading worked out for my mum.
Blackthorn 10y ago
> Theoretically it could all work out - but what broker let her take out so much risk? Margin rules on options (including naked options) are highly standardized. For naked options, you need a pretty strong stomach. Most of your trades will be winners but it's that overnight black swan event that's going to hurt you.