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(Picture is from stock.xchng.)

After I wrote a posting “How I come into Trading World“, a friend of me asked how I lost $25,000 this year.

First of all, I would like to disclose how I made $25,000 profit in the stock market last year. There were three of my stocks that hit home-run last year, i.e.:

  • VMW (VMWare). VMWare is probably the most successful IPO in 2007. My profit from VMWare is about $6,000.
  • AAPL (Apple). Apple made home-run last year by releasing iPhone. My profit from Apple is more than $5,000.
  • TIM (Timminco). Timminco is one of the stars in Toronto Stock Exchange last year. It is a mining company specializing in solar grade silicon used in the solar photovoltaic energy industry. My profit from Timminco is almost $5,000.

I made a couple of thousands more on other stocks, such as SPWR (SunPower), a company who sells high-efficiency solar power systems for home and business, and BIDU (Baidu), a Chinese Internet search engine.

When year 2008 started, I was so greedy. I was trapped in a “rich-quickly” scheme. I bought some call options of Apple. I knew that Apple is going to release iPhone 3G. Besides that, Mac is eating PC’s market share slowly. Btw, If you have no idea about options, there is a nice article from Wikipedia.

After I bought Apple’s options, suddenly Apple’s stock dropped 40% in less than a month. If I hold Apple’s stocks at that time, I might not be so worried. The thing is I hold options; so I have to fight against time-decay. At the end of the day, I sold my Apple’s options for a total loss of ~$15,000. I lost another a couple of thousands more from my other stocks that tumbled as the global stock market crashed.

Bottom line: Do not be so greedy. There is no such thing called “rick-quickly” scheme. Lastly, be careful when trading options. It is very risky business.