On Monday 5 August 2024 at 16:00, Reddit user CircaMuse published a post titled "First $1M day 😎".
A trade he’d been preparing for four years had made him $1,095,758. Enough money to stop answering to a boss.
But greed was about to get the better of him...
Three days later, he posted again: "World’s quickest million-dollar round trip".
CircaMuse had just lost $1,484,193. He had $24,503 left.
How did he get there?
A lucky break
CircaMuse’s story starts with a retirement savings account holding $684.
As a "serious and rational" investor, he decided to invest whatever money he had left after paying his bills.
He did that for four years, reaching a healthy $413,344 in July 2024.
What was the brilliant, but very risky, idea he’d been preparing all that time?
Put all his savings into PUT options.
If you’re unfamiliar with them, a put option gives you the right to sell a share at a fixed price, even if its market price falls below that level.
The stock that would make CircaMuse a millionaire was Carvana (CVNA), a US online car retailer.
Spotting what he thought was a good opportunity in July, he bought 1,000 put contracts at an average cost of $4.35, for a total investment of $468,930. Each option contract represents 100 shares.
In early August, CVNA’s falling share price pushed each option’s value up to $14.52.
He’d bought 1,078 contracts, giving him a total profit on the sale of $1,095,726: $10.17 × 1,078 × 100.
But that wasn’t enough. He wanted more, so he started making other risky bets with his winnings.
No need to tell you they all failed...
CircaMuse wrote: "I made stupid degenerate bets to get to 1.5 million, and I made stupid degenerate bets to get back to 25,000. I got so greedy and lost everything as a result."
This wasn’t his first attempt
In his first post, he explained that he’d tried before:
"I was down $150,000 over the last four years and now I’m up a lot lol. Don’t be among the 90% who quit before they make it!"
We can conclude that he didn’t know when to stop, and took his own advice literally.
The catch?
The US retirement system doesn’t work like France’s. Americans have to fund their own retirement savings...
Which means CircaMuse was gambling with his retirement money.
Now he has to start again...
The moral? Learn when to stop.
The gain per share is the difference between the sale and purchase prices: $14.52 - $4.35 = $10.17.