Drowning in debt at 32, confessions of a failed options trader

livemint.com:

Mint. Here is SP (name withheld on request), who narrates his story offering valuable lessons for anyone considering entering the high-risk world of options trading: Over the past eight to nine years, I lost approximately ₹60 lakh in options trading, a loss so severe that I am now deeply in debt, which is almost that amount. I owe money to 11 different lenders.

I have a negative net worth and no assets to sell. My journey began in 2015 while pursuing an MBA in Pune. A friend introduced me to the concept of futures and options, and even the professors encouraged us to invest in the markets as a learning experience.

Excited by the prospect, I opened an account with a discount broker (Upstox) and made my first trade—an SBI call option. I made a modest profit of ₹800, but it was enough to spark a fascination that would eventually lead to financial losses. After graduating, I started working at a bank in Mumbai with a modest salary of ₹50,000.

I continued trading options for some additional income. The bank allowed employees to borrow money at just 5% interest, up to a limit of ₹1 lakh. I saw this as an easy arbitrage opportunity—borrow at 5% and aim for a return of 15-20%.

But the reality of trading was far from my expectations. As I switched jobs and my salary increased, my obsession with options trading only grew. There were times when I made money, like when I held IRCTC put option that soared in value when an announcment caused a stock crash.

Then I made profit from puts on Adani Group companies just before the Hindenburg report in 2023. Profits from that trade were enough to part finance my wedding. However, for every win, there were losses.