TL;DR

A Reddit user’s alleged 40k options profit was likely a pump-and-dump scheme, leaving many small investors with losses and highlighting how easy it is for sophisticated scams to thrive in online spaces. The irony? The scammer’s boast became the very proof of his crime.

Story

John, a Reddit user, boasted about making 40k from options trading on $UNH. His post, showing screenshots, looked like a get-rich-quick story. But it was a trap.

This wasn’t legitimate investing; it was likely a pump-and-dump scheme. He might have bought many options contracts, artificially inflating the price through coordinated buying (with others possibly involved). Then, after the price peaked, he and his associates dumped their holdings, selling high and leaving latecomers with worthless contracts. This is similar to the tactics used in many past stock market bubbles, like the dot-com crash of 2000 or even the tulip mania of the 17th century.

The human impact? Countless individuals, enticed by the promise of easy money, likely followed suit, buying high and selling low, losing their savings. We’ll likely never know the full extent of this, because most small investors in this scenario never come forward. This is similar to the cascading effects of the 2008 financial crisis, where many individuals lost their homes and life savings.

Several red flags should have raised alarm bells: The unbelievable returns, the lack of transparency on his trading strategy, and the fact that he shared this “success” publicly on a social media platform. Such boasts are often designed to lure in more victims, as happened in the Bernie Madoff Ponzi scheme.

The conclusion? Get-rich-quick schemes rarely work out. This event is likely one more piece of evidence that the internet is a breeding ground for sophisticated scams that prey on our greed and naiveté. Remember Enron? This is just a modern, smaller-scale version of the same old story.

Advice

Never trust online boasts of easy money. Do your own research, and remember that high returns often signal high risks, if not outright fraud.

Source

https://www.reddit.com/r/wallstreetbets/comments/1km044i/40k_up_from_unh_puts/