The Trump Trade: A Risky Bet That Didn’t Pay Off
As the 2024 US presidential election drew to a close, investors were placing their bets on the potential impact of Donald Trump’s economic policies. Some thought his win would boost domestic producers, while others believed it would lead to higher interest rates and larger deficits. I decided to take a chance and place an options trade on Trump Media & Technology Group, known by its ticker symbol DJT.
A Risky Move
I’m not a seasoned investor, but I wanted to see how the “Trump trade” would play out. With the guidance of Eric Hale, founder and CEO of Trader Oasis, I bought a put contract with a strike price of $25, hoping to sell 100 shares at a profit if the price fell below $25 before my contract expired on November 15. The contract cost $390, and I stood to make a profit of $1,110 if the price dropped to $10, and $2,500 if it went to zero.
The Waiting Game
For a few days, it seemed like my gamble was paying off. The stock closed at $40 the day I bought my put, and then fell to nearly $30 the following day. But I decided to hold on, hoping for a bigger payoff. Then, Trump won the election, and I thought my trade was doomed. However, instead of soaring, the stock languished, eventually falling to $27.
A Lesson Learned
On November 15, my put expired, and I lost my entire $390 investment. It was a hard pill to swallow, especially since I had lost money on a similar investing fad in 2021. But I took away some valuable lessons from the experience. I learned how to place option trades, and I realized that trendy investing ideas can be risky business.
A Silver Lining
Ironically, my losses were offset by my earlier investment in cryptocurrency, which surged in value after Trump’s win. My crypto gains more than made up for my loss, and I gained a new appreciation for the complexities of the market. While I won’t be quitting my day job to become a full-time trader, I did gain some valuable insight into the world of options trading.
Insider Insights
As I watched the stock price of DJT fluctuate, I paid closer attention to the company’s inner workings. I noticed that Trump’s announcement that he wouldn’t sell his shares boosted the stock, while other insiders selling their shares dragged it down. It was a fascinating glimpse into the world of high-stakes investing.
In the end, I may have guessed the direction of the stock correctly, but my bet didn’t pay off. Still, I came away with a newfound respect for the complexities of the market and a healthy dose of skepticism towards trendy investing ideas.
Leave a Reply