I bet against Donald Trump and lost. At least I’ve made progress.
In the final days of the 2024 US election, the ‘Trump trade’ turned woolly. Investors who thought Trump would win or lose the presidential race were betting on or against the impact his economic policies could have. New tariffs on imports could be bad for shippers and good for domestic producers. Tax cuts could lead to larger deficits and higher interest rates. Deregulation could lead to more corporate mergers.
The most direct Trump trade was a bet on the stock of Trump’s own company, Trump Media & Technology Group, known by the ticker symbol DJT. A Trump victory could boost the fortunes of the faltering Truth Social network, while a Trump loss could doom the money-losing company. The stock price was yo-yoing based on any indication that Trump was up or down in the polls.
I decided to try the action. I wanted to place an options trade on DJT because that’s how a lot of other Trump traders were playing it. I’m a simple trader, so I asked Eric Hale, founder and CEO of Trader Oasis, to walk me through an options trade. I didn’t know if Trump would win or lose, but I thought DJT’s stock, which was trading around $50, was seriously overpriced. The company was a social media moron with barely any revenue, but its stock price gave it a market value of $8 billion. That seemed far too high under any election outcome.
I bought a put contract with a strike price of $25, which meant I could sell 100 shares for a profit if the price fell below $25 before my contract expired on November 15th. The contract cost $3.90 per share for 100 shares, for a total of $390. I would make a profit of about $1,110 if the price went to $10, and $2,500 if the price went to 0. If the price never dropped below $25 on November 15, I would be out the entire $390.
For a few days things looked promising. The stock closed at $40 the day I bought my put. It dropped to almost $30 the next day, pushing the market value of the put higher than what I paid for it. I could have closed the trade at that time with a small profit. But I wanted to go the distance.
Trump won, of course, which should have destroyed my Trump business. But instead of rising after Trump’s victory — which was the expectation the trading action had signaled — the stock languished. There was a brief surge when the election results were clear, but then the stock fell to $30 and then to $27. A few dollars lower and I’d at least get some of my money back.
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On November 15, the day my put expired, the stock crawled back to about $28. I was unlucky and my $390 was gone. It was the second time I failed to take advantage of an investment craze. In 2021, I tried myme stock investing by buying shares of BlackBerry. I immediately went underwater and ended up losing $1,760.
