Not everyone who passes through our portals does well. I don’t mind telling you this because there are risks involved in trading securities, especially options that have certain Greeks attached to them.
For example, theta loss is one such factor that cannot be ignored when holding options. This is a component that eats away at the value of an option based on time. The longer you hold an option, the more time value decays it, making options not a ‘buy and hold’ strategy. Think of it as buying an ice cube. The longer you hold it, the faster it melts. Unlike equities that share the value of the underlying company, options prices are based on other factors, such as time and volatility to name a couple.
Alfredo was a lawyer in Latin America who apparently wasn’t meeting with much success in his chosen profession. He joined our group in hopes of simply emulating me and striking it rich that way.
From the outset, I explained that this was not feasible and that he should not blindly follow anyone, regardless of who they are. We are all human and apt to make mistakes or misread markets from time to time. Even if we correctly identify a setup, prices have a way of often taking a different path to what we envision. Furthermore, every single trader is unique, with different risk tolerances, different capitalizations and even different opinions on market direction. I insist that our clients become the experts themselves.
Alfredo had a different idea, however. He was just going to follow my every move. Turned out he was doing well, even moved his family to Florida on the apparent trading gains… not sure I fully understand how that happened but that’s what he told me.
Then came the pandemic. COVID 19 hit, and SPY took a $**t.
By this time, Alfredo had been a member of the Inner Circle and Trading Room and had even taken the full training program. He definitely ought to have known what to do. But the ensuing days, all he did was email me asking for guidance. I, on the other hand, was dealing with other issues, including salvaging some of my own positions, which I did.
Turned out, Alfredo blew out his account…. and blamed me for it! He even had the audacity to suggest that he followed me all the way to the loss. That would have been impossible as I repaired my trades and he obviously left his to rot on the vine. When asked to supply the details – even though I offered but was not obliged to review them – he declined. But it was still my fault, according to him.
And because of that, he had not enough money to buy groceries and will have to find his way back to Latin America. As for me, I have a “special place in Hell”, his final words to me.
Despite all the disclaimers, FINRA compliance and all the many direct personal coaching sessions we’ve had, there will still be people who will latch onto others in shear hopes. If we could guarantee markets, we would, but we can’t so we won’t.
I do feel bad for Alfredo and his family.