A 27-year-old American man, identified only as Paul, recently lost $80,000 (approximately Rs 68 lakh) from his emergency savings after a high-risk stock market bet went wrong. His story, shared on self-made millionaire Ramit Sethi's podcast "Money for Couples," has sparked a wider conversation on the dangers of speculative investing, CNBC Make It reported.
In April, Paul had been tracking reports about potential auto tariffs under US President Donald Trump's administration. Betting that the news would hurt major automakers like Tesla, he attempted to profit by trading stock options, a complex and high-risk investment tool. Initially, his move paid off, earning him $4,000. But encouraged by the gain, he made a bigger bet the following day - and lost $80,000 overnight.
"I thought I had enough information to make the right choice with the money we had in our brokerage account. It was not the right choice," he said during the podcast.
Paul began options trading in 2021 and has admitted to being in the red overall. While he once made $80,000 within three months during the early days of his trading journey, recent losses have left a lasting impact. The money lost was part of the couple's emergency savings. They now have about $23,000 left in that account, along with $110,000 in retirement savings. Paul and his wife Vicki earn a combined $169,000 a year.
Experts warn that options trading is not suitable for most retail investors. "Options trading can be incredibly risky for casual investors because it often requires a deep understanding of market mechanics, volatility, and timing," said certified financial planner Douglas Boneparth. "It's often misunderstood, and many people treat it like a lottery ticket."
Unlike simply buying and holding stocks, options trading relies on precise market timing - something even seasoned investors struggle to master. Small fluctuations can lead to disproportionately large gains or losses, making it a dangerous tool for those without the expertise.
For Paul, the financial blow was also deeply emotional. "It devastated me," he said, noting how the loss eroded his sense of security and trust. His wife Vicki echoed the sentiment, saying the emergency fund had represented a safety net, and now that sense of financial freedom was gone.
Ramit Sethi, known for advocating long-term passive investing, used the example to emphasise why "boring" strategies like index funds may be better for most people. These funds offer automatic diversification, low fees, and have often outperformed actively managed portfolios over time.
"For most retail investors, the best approach is setting up automatic contributions and investing passively," Sethi said. "By the time people come to me, they've often lost a lot trying to beat the market - but their passive investments are doing just fine."
For Paul, this may finally be the turning point. He admitted it's time to step away from options trading - a decision he's considered before, but now feels more urgent than ever.
