How to lose $1m in 2 weeks

Broke degenerate turns $0 into a million and back

There’s nothing quite so sad as watching someone blow up their life in real time.

This is happening now to a user called ElonILov3You on the WallStreetBets forum on Reddit (NYSE:RDDT). It’s the UK’s fastest growing social media app.

WallStreetBets is a particularly addictive corner of this platform. There are 17 million accounts in this community. An enormously large number, but nowhere near the biggest on Reddit.

It achieved worldwide infamy in the Gamestop (NASDAQ:GME) short squeeze saga in 2021. I detailed in this Charting Futures post how I got sucked into that sorry story.

It’s where novice traders and full-bore gamblers come to post their ludicrously risky plays and strategies.

The horror stories are fodder for Youtube channels like Kamikaze Cash, which spins these horrendous losses into hundreds of thousands of views.

The posts on WallStreetBets all follow the same trend.

User hits the jackpot on an insanely risky bet. User becomes gambling addict. User overtrades and loses it all. There’s a special section just for ‘loss porn’, where the biggest portfolio falls are posted for our popcorn-munching entertainment.

Here you see people losing 99% of their life savings, sometimes $20,000, or $50,000, or $100,000. More often than not, it happens just after they start trading options.

But one person has topped every lunatic risk-taker who came before.

Broke and a borrower be

Looking at the post history for ElonILov3You, we can see this person was begging for $300 to cover their rent as recently as a few months prior.

Then they discovered the magic of the markets. And memestocks like Tesla (NASDAQ:TSLA). And more recently MicroStrategy (NASDAQ:MSTR).

MicroStrategy is the public company that owns the most Bitcoin in the world. With one Bitcoin nearing $100,000 at time of writing, crypto is approaching the tail end of a two-year bull market. This is where things get really crazy.

Now, Robinhood (NASDAQ:HOOD) is a publicly traded broker responsible for introducing options trading to everyday idiots like you and I.

They make it simple to buy ‘call’ and ‘put’ option contracts on shares trading in the US market.

A call option is a bet that a company’s stock price will rise to hit a certain number in a stated amount of time. A put option is a bet that a company’s stock price will fall to a certain number in a stated amount of time.

Once a US-only business, Robinhood launched to UK users in March 2024. This is troubling.

I am someone who is dopamine-deficient and the opposite of risk averse. That means I have to stay as far away from addiction-forming habits as possible. Losers never leave the casino.

And short-dated option contracts — those that end soon — are proportionally more likely to lose money because they require a stock price to move drastically higher or lower in a short amount of time.

This was ElonILov3You’s gambling modus operandi. The dream, they wrote, was to reach $1 million from the $1,000 dollars they had to their name.

You Only Live Once

In the inner language of WallStreetBets, ‘YOLO’ means betting your entire portfolio of cash (life savings and all) on a single risky trade.

Perhaps for a 21 year old, fresh out of university with average £30,490 in student loan debt and little hope of ever owning a home, it’s not the hardest thing to imagine: that one big win changes everything.

Statistically speaking, people get more risk averse the longer they live.

As professional trader Michael Taylor often says: “No one ever wants to get rich slowly, but that’s the only way it tends to happen.”

You may only live once. But you still have to pay taxes every year.

$1k to $30k to $826k

On 8 November 2024, a post titled “Thanks Papa Elon” details our fresh-faced gambler flipping $1,000 into $30,000 with call options on Tesla shares. That first incredible win could have been the worst thing that ever happened.

They ran up another 12x on their previous $30k win to make $355,300 in one day with a short-dated call option on Coinbase shares.

Four days pass. Then a post appears titled: “I’m the coin guy moving on to MSTR”.

The trader shows Reddit 300 new call option contracts. They bet on the MicroStrategy share price to reach $400 from $347 in just three days. The chance of success? Insanely low. But it hit. The trade printed pure cash.

By 19 November ElonILov3You dumped another $270,000 into 150 more call option contracts: for MicroStrategy shares to reach $450 three days later.

24 hours on, and still in the green, the trader rolled over his options even higher, hoping MicroStrategy would hit $500-a-share. The risk was ratcheting up to the highest levels many Redditors had ever seen. This was a bet now worth a total $445,000.

From someone who started November with only $1,000 to their name, the hubris was incredible. But as long as MicroStrategy’s massive run up continued, ElonILov3You would continue to win, and win big.

Incredibly, the bet made it past the line, giving this newbie trader a new portfolio size of $826,846.80.

Now. Be honest. Would you have stopped here?

Sizing up to $1m

The same day, the trader took 90% of his available cash and made a call option bet on Tesla reaching $350. Another win. This time, they banked $150,000, to the evident relief of many WallStreetBets readers watching the story unfold.

With that six figure sum set aside, ElonILov3You had a net worth just over $1.1 million.

They made it. From less than four figures in a checking account to a stack seven figures deep. The dream was realised. Reddit would never see them again.

Right?

Wrong.

What came next was a fresh bet of epic proportions.

ElonILov3You put down $953,800 on MicroStrategy reaching $460 in seven days, from its 22 November price of $439.

Three days later, on 25 November, ElonILov3You posted again. This time the news was not so good.

They took a $440,000 loss on the trade. Their resulting move? To buy short-dated call options on SPY — the S&P 500 ETF — reaching $601. In two days.

This was now revenge trade territory.

Professional poker players call this ‘tilting’. It happens when a trader gets overtaken by emotion, furious at their losses, and starts trying to claw back previous winnings with increasingly aggressive and risky bets.

As Michael Taylor told me: “You shouldn’t be risking more than 1% of your account on a trade if you’re not willing to accept the dramatically higher proportional risk.

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Follow Pro Trader Michael on Instagram here — no rented Lambos, no bullshit

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“If you bet 5% and lose four trades in a row, you’re now down 20%. Aggressive position sizing doesn’t allow your edge to play out. Think of the casino. They only have one green on the roulette wheel — 99% of the slots are red or black. The house is there not to take your money in one go, but slowly. Impercetibly.

“They know, over time, they have the statistical edge. And you never see a casino go bust. That is how you trade, profitably.”

Best served cold

To be clear. $440,000 of shares in the S&P 500 index — averaging the annualised 50-year median return of 10.26% a year, and without investing another dollar — would earn ElonILov3You compound returns of $3,109,102 over 20 years.

The chart shows one thing clearly. Gambling isn’t about making money. It’s about winning. If it were about making money, they would dump their profits in an S&P 500 ETF for 20 years, enjoy their 3 million dollars and never look back.

But the dopamine hit of winning is what pulls gamblers in, again and again and again.

It’s more of a rush than jumping out of a plane. More satisfying than a pound and a half of Colombia’s finest. If you gamble, you will get addicted to the risk, not the money. Like a cocaine addict, you will need more and more to sustain the same feeling. And you’ll do it on autopilot, without even noticing what’s happening.

The frog boils, slowly.

What happened next

The losses started to pile up.

On 25 November they posted: “500k setback from Friday peak, only up from here. Not giving up. 500k back into MSTR and MARA.”

That’s half a million dollars on call options. Firstly on MicroStrategy reaching $600 — needing a further 48% increase in four days, after the shares had already gained 225% in six weeks — while the company’s only real underlying asset, Bitcoin, had moved up from $88k to $99k and back down to $91k.

Adding Marathon Digital (NASDAQ: MARA) was a new and desperate shift. This company is a Bitcoin miner, largely unprofitable, but catching some attention as traders seek the next MicroStrategy-like boom.

Was it really “only up from here”?

There are delusions particular to the market traders choose to play in.

Equities (stocks and shares) attract fundamental optimists. These people buy stories and love narratives and dream of hitting the jackpot. They fantasise about what they’ll do with their imagined future wealth.

Credit markets (bonds and the like) attract the fundamental pessimists of the world, who buy protection, knowing that dreams, like wealth, are fleeting.

On 26 November ElonILov3You was down to $350,000. They posted a new trade. The new flavour of the month was a call option on Amazon. The share price had to reach $210 in four days for the bet to turn green.

“Turned 1k to 1M to now 350k,” they wrote. “I will get back to the top. Setback for the Comeback.”

On 27 November, the $350,000 they had left was now only worth $251,000.

Turkey and chill

Bruised by such an enormous and rapid loss, ElonILov3You posted that they would take a week’s break from trading options over the Thanksgiving holiday.

“Going to enjoy turkey and chill till next week,” they wrote.

The chill lasted only hours. Their latest post appeared also on 27 November.

GOING back to my EX, MSTR

This time, it’s a $500 call option on MicroStrategy reaching $500 by 6 December 2024.

The post reads: “She did me dirty last time but i still believe. I cant stay away knowing that she’s one that got away if i do nothing. I gotta fight for the dream. I listened to you regards this time, im not getting 11/29 expiry. Giving it some more time, see? Im learning. Left 30k cash in account in case i need to buy the dip 🫡

What happened to that week break? “I can’t do it,” they wrote. Saddened replies flooded in. “OP please get help…He’s too far gone, there’s nothing we can do…As an ex-drug addict, I can confirm the dopamine similarities…”

The $150,000 they said was banked in cash? That dribbled down to $60,000, then $30,000 as ElonILov3You went back and back and back.

People don’t join WallStreetBets to be sympathetic. They go to laugh at their own misfortune and the misfortunes of others.

So when the most hardened egdelord traders on the internet start pleading with someone not to risk any more money? You know it’s a Hall of Famer.

The current market price for these $500 call options expiring on 6 December, are down from $12.93 to $11.10, which implies ElonILov3You’s last remaining $219,800 is now worth $188,700 and falling.

The truly mad thing…

…is that this strategy, if you want to call it that, might hit the jackpot again. There is significant open interest — that is, a lot of people are making this bet — in the 6 December $500 MicroStrategy call option.

From legitimate millionaire to $30,000 in the bank — how long the cash will stay there and not in options contracts is debatable — ElonILov3You has lost in two weeks what many will never see in their lifetime. Quite a feat.

We will know by the end of the first week of December whether they have pulled off the greatest escape in WallStreetBets history. Or whether ElonILov3You will be right back where they started, begging for rent money, with $1,000 in a checking account, and only the memory of a million dollars that slipped through their fingers.