This is one of those articles where I have to lay myself bare. It wasn’t the trade where I lost the most money — I’ve lost far more trading futures in a matter of seconds — but it was the one that caused me the most stress. Sleepless nights, checking my phone at dawn to see how the futures were opening, constantly thinking about how the market would wake up. I’m telling you about it with a cool head so I can analyze it and, above all, so you can avoid the two serious mistakes I made.
The context: November 2020
You all know what happened in 2020. We’re talking about the end of November, and at that time I was working at ProRealTime. As always, I had the platform open watching how the markets were doing. Suddenly, every index starts to climb enormously, but especially the Russell 2000, which shoots up so hard that it even gets halted for volatility.
The reason: the vaccines against the virus we all know were announced. The pharmaceutical company behind it was listed on the Russell 2000, and the market’s euphoria was absolute.
At that moment I had an Iron Condor open on the Russell future. Of course, it was the call side that went against me.
The original trade
The strategy was an Iron Condor — or rather almost a straddle — on the Russell future. The strikes of the short legs were quite far from the price, almost 20% above and below. The deltas were extremely low precisely because of that distance. The expirations I used were around 30 to 35 days.
It was that simple: with this trade, 95% of the time it was a winner. Almost more than that. And the thing is, the difference between the short leg and the long leg was huge — 100 points — which meant it was really almost a straddle. The long legs were bought only to reduce the margin the broker required, but the potential losses could be enormous.
The disaster: the vaccine and the Russell’s explosion
When the vaccine was announced on November 9, the Russell surged brutally. I had opened the trade on November 4. On top of the price moving closer to the call strike, volatility spiked enormously. Everything was going against me.
Honestly, I thought that after such a strong rise it would calm down a bit. But no: it kept climbing. And with each passing day, the broker demanded more margin from me. The stress was unbearable.
The desperate adjustments
First adjustment
The first thing I did was close the puts below, which were almost expired, and open new puts closer to the current price. Here I made an additional mistake: I increased to 3 contracts. I was trying to offset the unrealized losses on the calls with the premium from the new puts. But since the price was far above, the puts paid little premium.
I also closed the calls that had unrealized losses and opened new calls higher up, with the same expiration. Again, with 3 contracts. The result: even in the best case, the trade was going to be a loser no matter what. At the peak of the risk graph, the line was already below zero. The accumulated loss at that point was about $360.
Final adjustment: throwing caution to the wind
The last correction was the worst of all. I was no longer thinking straight. The stress was getting the better of me and I wanted to close the trade at any cost. I closed the 3 puts and opened 5 new puts even further out, collecting a laughable premium of $0.80 that, with the commissions on 5 contracts (buy + sell), was practically worthless.
Finally, I closed the calls above and simply opened a long call, betting that if the market kept rising I’d at least recover something on that directional side.
The final result
When the whole trade was closed, the loss was about $420 plus commissions — around $450-500 in total. Ironically, I had easily made that amount the previous month with the same strategy. It wasn’t the loss that made it my worst trade — it was the enormous stress it generated.
I found myself in a market situation I had never experienced: a volatility halt on an index future. It’s quite rare, but it can happen, and you have to be fully aware of those risks from the very first moment.
The two fundamental lessons
What I learned from this trade
Never over-leverage — a strategy working 20 times in a row doesn’t mean you can triple your contracts. You should always keep capital available or invested in strategies that let you manage liquidity quickly
Define the triggers BEFORE opening the trade — be clear about what you’ll do when the price reaches a certain level, a certain delta, a certain point. Everything decided with a cool head, not under the stress of the moment
No strategy is 100% winning — events like this can happen. What matters is looking at the set of 100 trades: if 4 or 5 come out losers but the remaining 95 make up for it, the system works
Stress is an indicator — if a trade keeps you up at night, the position size is too big for your account. Period
The strategy today
It’s important to say that this is a strategy I still use today, but with the corresponding corrections. With a different level of maturity, with positions proportionate to my capital, and with the triggers defined before each trade. And it works wonderfully.
I make these videos precisely so that you can avoid the mistakes I’ve already made. I’ve already lost a lot of money learning the hard way. I wish I’d had someone to tell me this back then.
Conclusion
This trade taught me that no matter how many times a strategy has worked — the market can surprise you at any moment. The key isn’t to avoid losses, but to have a clear plan for when they come. Controlling leverage and defining your triggers before trading aren’t optional pieces of advice: they’re the difference between a rough patch and a catastrophe.
Whether you’re just starting out with options or have been at it for a while, I hope this real experience helps you avoid repeating the same mistakes. Losses are part of trading — what shouldn’t be part of it is uncontrolled stress from not having done your homework beforehand.
