The reason why I didn''t mind waiting until my birthday to open a brokerage ount is because I knew that the market wouldn''t truly bounce back until early September, when many of the software and IT stocks that had plummeted would regain ground.
Almost all the major indexes, like the DOW and NASDAQ would continue to slide down untilte July.
My best bet would be to throw that money into health stocks until the big upturn hits; that''s when I''d be raking in serious cash in no time.
After the weekend, on May 14th, my father went through the formalities of opening a brokerage ount. I specifically told him to open an ount on ETRADING that would allow for easy online trading.
Most serious traders and investors at the time used groups like Charles Schwab or other more established institutions, but the fees for trading were much smaller on ETRADING.
The ount opened was a cash ount, meaning that I would only be able to buy stocks with my buying power and no leverage.
I still nned to open another ount somewhere inte September that would allow me to borrow shares and increase my buying power.
On Tuesday evening, I went into the home office.
My father had aputer he used to manage purchases for hispany.
The bulky CRT monitor sat on his desk, and the tower below it was as loud as a vacuum cleaner.
Yellow sticky notes with login credentials and reminders were stuck to the whiteedgeofthemonitor.
Theputer ran on Windows XP. The desktop background was the iconic rolling green hills.
I started Inte Explorer and after a couple of clicks, I opened the ETRADING website.
The site loaded slowly. The inte speed was a drag and a half.
Once it appeared, I copied the credentials from one of the sticky notes and logged in.
I was greeted with a crude looking main page.
Trading apps evolved very quickly in the following years.
I couldn''t even change the theme to dark...
The interface might have been basic, but I had everything I needed to get started right there on the top bar.
[ETRADING]
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[ount Code: 173259]
[ount Name: Jason Somnus & My Dear Son]
[ount Type: Cash ount]
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[Total Bnce: $14,981.50]
[Avable Bnce: $14,981.50]
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[Market Value of Holdings: $0.00]
[Buying Power: $14,981.50]
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Recent Transactions:
[Fee: $18.50 (ount Opening)]
[Deposit: $15,000.00]
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I noticed that they had already deducted the fee for opening the ount.
The painful thing was that every trade would cost me $17.50. This was on the low side for fees back then.
Looking for fees of around a few cents was like chasing a dream in the clouds.
It was impossible for smaller traders to make money on daytrading.
I scrolled down to the section with the biggest winners over thest month
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[Nvidia Corp. ($NVDA)]
[% Gain: +15.7%]
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[eBay Inc. ($EBAY)]
[% Gain: +12.5%]
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[Yahoo! Inc. ($YHOO)]
[% Gain: +10.2%]
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Those gains were impressive. However, I knew the truth: these were not the actual biggest gainers. Trading websites at the time often excluded penny stocks from their main dashboard to protect their clients from scams.
Those daring enough to dabble in penny stocks followed the market on separate, less regted websites or essed private chats.
Even in 2002, fortunes could be made or lost in a heartbeat.
I quickly clicked through to the health sector stocks, scanning through some of the biggest gainers. As I scrolled, my eyes quicklynded on one particr gem.
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[USANA Health Sciences ($USNA)] [$6.72]
[% Gain Over Last Month: +75%]
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Thepany sold nutritional supplements and healthy weight-management products.They opened operations in many new markets over thest few years, but the market slowdown was keeping them down.
I remembered that in 2002, they would be one of the best-performing stocks. Many new patents and big jumps in sales will get investor''s attention.
But no one in their right mind would jump into a stock that''s already up 75% in thest month, right?
Well... I was that crazy person.
I knew that this stock would continue soaring all year round.
However, I had no intention of limiting myself to puny gains like 100%.
There was no need to.
In situations like that, optionse in handy.
I quickly tapped my fingers on the old keyboard to get to the call-option chain for USNA.
Ifound an option that interested me.
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[Expiration Date: September 1,2002]
[Strike Price: $12.00]
[Price: $1.99]
[Open Interest: 0]
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"It''s time to capitalize on my future knowledge. I''m ALL IN!" I mumbled under my nose and smashed the buy-order button right next to the listing.
[Open Interest: 0] -> [Open Interest: 7,500]
Imitted the entire sum in my ount to opening interest on the call option.
"Now I just have to sit tight and wait for the non-believers to bite the bullet and get wiped out."
I had the biggest grin on my face.
If the price of the stock goes above $12.00, I''ll have the option to exercise my calls. The poor suckers on the other side will have to cough up their shares to me at a measly $1.99 each.
That''s the beauty of options—they let you steal without going to jail.
I gave the dashboard ast look.
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[Total Bnce: $14,925]
[Avable Bnce: $0]
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Recent Transactions:
[Fee: $56.50 (Options Fee)]
[Options Buy-Order: USNA Call Option, Cost $1.99, Quantity: 7500, Volume: 200]
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''I will never know how they calcte the fees...'' I thought.
I felt like I was getting robbed.
The good news is that my first ''business partner'' was found in less than a minute.
Someone ced a sell order and 200 of my colls had been matched.
Right as I was patting myself on the back for the great y, the door to the office swung open wide and my dad sauntered in with a can of non-alcoholic beverage in his hand.
"What are you doing, kiddo? Mom''s been calling you for dinner," he said, taking a sip from the can.
"I was looking through the brokerage ount," I replied.
"Have you bought something already?"
"Yes. Want to check it out?" I offered.
"No need. I have faith in you, son," he said warmly, turning to leave the room.
Itisagoodthinghedidnotwanttocheck.
I made sure beforehand that the worth of the calls would show as total bnce on the ount so it wouldn''t go under the 30% loss limit, but if I told him the truth about what I bought, he might as well disinherit me.
...
Later that evening, Lakers triumphed over Spurs and Kings defeated Mavericks. Both secured their ce in the finals.
Grandpacalledmerightafterthegameswereover.
Heaskedmetojoinhimforcoffeeandcookies.