Wall Street Bets’ Best and Worst Trades In 2020 (So Far)
2020 has been an incredible year in the stock market with historic volatility. The CBOE’s volatility index (better known as the VIX) tracks the 30-day expected volatility for the U.S. stock market and is generally used as a gauge to understand the “fear” level in the market. Higher fear = higher VIX. As the Coronavirus fears sweep the nation, we are now back around those 2008 levels, with the VIX trading as high as 85.47. For context, the VIX had been trading between 11 and 20 for the past several months and had not crossed the 80 level since the financial crisis in 2008.
With volatility comes great opportunity, especially for young investors (gamblers?) on r/WallStreetBets, the Reddit community founded by Jaime Rogozinski in 2012 that has more than 1 million followers. Users are known for posting big gains and losses, gaining fame either way for the huge swings in account size.
A common theme in the Wall Street Bets (WSB) community is to YOLO your entire portfolio into a trade – all or nothing. If they hit, they continue to press their luck into the next trade. This often leads to outsized gains (aka tendies) or losses. We are going to take a look at the Top 10 YOLOs from r/WallStreetBeets this week (in no particular order), highlighting some crazy trades that earned people some tendies or wrecked their accounts. Here we go!
Though we do not have proof of the exact trades, u/Dannyz7365 just secured some financial security for the foreseeable future, racking up a gain of 435.72% all-time. Virtually all the gains stem from recent trades, buying $TSLA puts.
After topping out at 968.99 on February 2nd, 2020, $TSLA traded as low as 350.51 on March 18th, a decline of over 60%. Tesla has had two things working against it – the Coronavirus and the fact that it ran from 176.99 to 968.99 in just 8 months. Over that time, there were plenty of stories on WSB of traders loading up on calls for massive gains.
The only problem this user has in life right now is that you can only withdraw $50,000 per day from your Robinhood account. Sad.
The saying goes, “it takes money to make money.” u/WSBGOD sure lives by that motto. With some significant upfront capital, this user now is sitting on millions – with an S – after buying puts in Disney, a name that has been hammered by the Coronavirus.
Peaking last year at 153.41, $DIS traded as low as 79.07 on March 18th. This comes a week after the company announced they would be shutting down their parks and cruise line amid the pandemic. According to CNBC, last year Disney’s revenue from Parks, Experiences, and Products totaled $26.2 billion, $6.1 billion of which came in the 2nd quarter. With parks worldwide closed and no opening date set in stone, the stock has dropped sharply, and u/WSBGOD has taken full advantage.
Don’t show this one to your neighbor who is complaining about the stock market crash! With puts all across the board, from $AAPL to $SPY and even $INDA which is the Ishares MSCI India ETF (Yes, you can invest in India), u/tebedam had himself quite the month, boosting his portfolio by over $500,000.
Think back to when you were 18 years old. You most likely were about to graduate from high school (or just did) and didn’t have a worry in the world but what beer you were getting for your summer parties (“Teen drinking, is very bad.” – J-Kwon). This up and coming options fiend clearly has bigger ambitions! Kudos to u/snakeperson123 – who by simply buying $SPY puts turned lunch money into fun coupons!
If you haven’t noticed the trend, puts have been everyone’s friend the last few weeks. While nearly everything has been hit hard, certain names and sectors have seen more serious declines than others. u/Wrldtvlr fittingly for his name understood that with the Coronavirus making everyone stay home and very afraid to travel, airlines would be slaughtered. With puts in United Airlines, American Airlines (as well as $SPY puts, $DIS puts, and $GILD calls), this user turned just $700 into a cool $35K!
Since mid-February when $UAL was trading around $80/share, it has declined by over 70%, hitting a 52-week low of 17.8 on March 18th. The stock hasn’t traded that low since 2012! $AAL is similarly down over 60% in the past few weeks. American Airlines president Robert Isom sent a memo to company employees this week stating, “We are in the fight of our lives…” as the airline cut 55,000 flights due to Coronavirus. While it is highly recommended everyone stay at home and limit their exposure to others, should you need to travel for business, flights are extremely affordable right now FWIW.
There are two sides to every trade. While we highlighted some big profits from $TSLA puts in #1, u/LonelyCloud404 hasn’t had as much luck. I think it is safe to assume these puts were bought early in the day (March 19th) when the stock was trading between $360 and $370. At around 10:00 am the stock went into rally mode with the rest of the market, shooting up to $433 in a matter of minutes and closing the day at 427. As of the post, this trade was down 44.84%.
We’ll be checking back for an update to see what $TSLA does and if this user holds into next week when these contracts expire.
If I were down 74% in the past month, I’d be asking myself the same thing – “How should I fix this?” Luckily, the great people of WSB are here to help:
Most of us have been there. Blowing up an account is never fun. Luckily, u/22yards still has enough capital to make a turnaround. We’re rooting for you!
One word – impressive! A return of -2,387% is truly artwork and not something you see very often. To get a negative return like this, u/TheTangoFox sold a call in $UVXY, which is the ProShares Trust Ultra VIX Short-Term Futures ETF. In simple language, $UVXY is a leveraged ETF that moves higher when the VIX rises, and lower when the VIX declines. Our friend here was betting that $UVXY would stay below $26 – it isn’t. In fact, on March 18th it traded over $100.
To put this in perspective though, this call was sold against his other call in $UVXY. Nonetheless, a position that is down over 2,000% is absolutely legendary!
Alexa, play “See You Again” by Wiz Khalifa and Charlie Puth. Down 99.85%, I know they say it isn’t over till it’s over, but u/Fredd_arauio’s account is one life support.
We’ll let the man explain for himself – “I’m just a dumbass who doesn’t know when to sell, I actually had a profit on most of my trades but didn’t sell and ultimately lost my money.”
Been there. It is always important to have an exit strategy for each trade. Otherwise, you are just free-balling it and making decisions on the fly, which is a setup for failure.
That being said, if we’ve learned anything from WSB, $30 is plenty to YOLO on some options to make an epic comeback. We’ll be waiting for the post of your gains, u/Fredd_arauio!
#10: “$34,764.69 – Thanks WSB (and u/wallstreetbooyah) – that’s how much you’ve donated to Autism Society” – u/jartek
To end this on a super positive note, members of WSB came together this week to raise over $34,000 for the Autism Society of America. u/WallStreetBooyah put together the idea of day-trading with guests for a 9-hour marathon livestream while viewers donated. Especially in times like these, it is really great to see others giving. It is super fun to YOLO thousands of dollars into OTM calls, but it is very fulfilling to give money to a great cause.
In true WSB nature, check out the donation goal amount. Nice