Scariest Investment story 2022: losing 94% in 1 second

The scariest Investment in 2022 goes to $Tricida (TCDA.US)$. Not only did it lose 94% in a second, investors and options trader cannot do anything about it because it is suspended to deliver the super bad news. hundreds of millions of dollars got wiped out within a second, wooooo spookyyyyy.

TCDA was reporting their 3rd clinic trail result for their new kidney disease drug and it failed. It was looking so optimistic, even the insiders were pumping in millions buy more shares before the actual announcement. Well, now they are all millions of dollars poorer. What a Halloween night.

Before the news was announced, trading was suspended. Then when the big bad new came out, everyone knew they are in for a lot of pain, but everyone is wondering how pain will it be. Will it be a 50% drop pain? 70% drop pain? The anticipation is horrible. Then when trading resumed, poof 94% drop immediately.

Of course I was also caught in this mess. As with all pharma company, during the release of their clinical trial results, IV% for their option will skyrocket. for TCDA's case it went as high at 1300%, but average around 600%.

As an option trader I just can miss this opportunity to milk theta and IV%. So for the first round it was a success, as the announcement wasn't out and the option expires worthless. allowing me to keep all the premium. However, greed got the best of me should have stopped playing with fire and call it a day. But I fired a second shot, and was caught in the slaughter house

Luckily I practice portfolio management principle and only allocate tiny amount of my portfolio for risky plays. As the amount that I risked was only a very small portion of my portfolio so it didn't hurt much. Also I had gains from $Twitter (Delisted) (TWTR.US)$ option play as well, so I didn't get burn too badly.

Lesson learnt: Don't be greedy, and allocate your investment appropriately. Go in when there are good opportunities for a good play, but learn to take profit and run. Greed kills

Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more

Translate

Report

21K Views

Comment

GoLeopard : thanks. beginners need to learn how to avoid and understand the risk for options trading. One good way is to read your documentation

Report
Reply

Cancel Reply
doctorpot1 OP GoLeopard : agreed a lot of new traders goes all in without understanding the risk, some even use tons of margin without even realising it until they get margin called and their account blows up

understanding and managing risk is really important when managing their portfolio

Report
Reply

Cancel Reply

doctorpot1

Moo Contributor

crawled out of poverty, working towards FIRE!! (financial independence, retired early)

15KFollowers

111Following

18KVisitors