Recently, I made a mistake. It was a very expensive mistake. I decided to experiment with trading options, which belong to a class of financial instruments you may have heard of: “derivatives.” Essentially, an option gives you the option, but not the obligation, to buy or sell shares of a stock at a set price, regardless of what the market price is. Options expire on a set date, and if the stock behaves in particular ways between when you buy the option and that date, you can make a lot of money. If the stock behaves otherwise, then the option expires worthless. But they are cheap, in general, and are often used as a hedge on a stock you own. For instance, if I own Apple stock, which I do, I can buy an option relatively cheaply that pays off if the stock declines. So if Apple stock declines, my shares lose value but I make money on the option, which offsets my total loss. If Apple stock goes up, then the option expires worthless but I’ve made money off the appreciating shares. It works something like insurance in this scenario. I pay a small flat fee to cover my butt in an the event of something unexpected or inconvenient. These are not necessarily intuitive concepts, but after doing some research, I thought I'd see just to see how the theory played out in reality by making a small practice trade. I decided to buy a cheap option on a different stock, an option that was a bit “out of the money,” which means that as things were at the time, it would likely expire worthless, which is why it was so cheap. But if this particular stock went up, which I believe it will in the not-too distant future, then the option would pay off many times what I paid for it. A little like a lottery ticket, I suppose, but educational and not completely dependent on random chance.

My mistake concerns another aspect of options that I didn’t encounter in my research. The crucial detail is that a single option is actually an option to buy a bundle of shares, usually 100. The option also costs 100 times as much to buy as the amount listed. So when I placed the order for y options costing $x each, my account was immediately charged $100x, and I was granted the option of buying 100y shares of stock. This is not intuitive behavior at all, which I understand now, in retrospect, is one of the many reasons why every page that mentions options on the online trading company’s website has a huge warning plastered at the top: “Options are not suitable for all investors, as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.” Or, in short, “Chumps best watch out.”

For me, $y was pocket change, because I knew I was making a practice transaction. But $100y was not pocket change. And there is no way to undo a trade. So I’m fairly like to lose a lot of money when this particular option expires in late October. The upside is that there’s a tiny but nonzero chance that I’ll become a multithousandaire instead. Given that this is the only basket available to me, it’s the one into which I’ve put all my eggs. If either of my readers knows anything about manipulating stock prices, drop me a note. We’ll chat.

The thing that bothers me most about this loss is not that the money will be gone. That’s painful, but the real pain comes from the giant flushing sound that indicates where it has gone, and all because I didn’t read far enough into the manual. I’d gladly have given $100y to any number of charities or individuals, but that is not an option available to me now. No pun intended.

Corinne found me banging my head against a wall (figuratively) and asked what was wrong. I admitted my gaffe, and by way of making me feel better, she told me about this Guatemalan gentleman who recently lost a lot of money. He came to the US illegally and worked for 11 years as a dishwasher, making $5.50 an hour for most of it. Over the course of 11 years, he managed to save $59,000. If you’ve ever made $5.50 an hour, you know that it’s very difficult to cover all your expenses on such a wage, let alone save over $5000 a year. From this we know that Pedro Zapeta is a very frugal man, and probably did not enjoy many of the material comforts that were available to him in his adopted home. I suspect that he worked more than eight hours a day, and he perhaps shared a small apartment with several other people not related to him, probably more than one to a bedroom. I further suspect that he did not particularly enjoy his life here, but instead got through many days by thinking of the life he would have many years hence, back in Guatemala, living off the wad of cash he was working so hard to save. 11 years. That’s a very long time to live a life in the name of diligent delayed gratification. For the average person, that’s 20 percent of an adult life.

One day, Pedro decided he’d saved enough to realize his dreams, so he packed up his $59,000 into a duffle bag and headed for the airport. He apparently didn’t pick up much English while he was in the US, and as a result didn’t understand the part of the customs paperwork that informed him he was required to declare any cash in excess of $10,000. He didn’t declare it, and when it was discovered, it was seized. At that point they realized that he was in the country illegally, so they called in the INS, who promptly deported him.

My day was a walk in the country compared to this story, but hearing it didn’t make me feel much better. In fact, I think it made me feel worse. When his case became public last year, folks who sympathized chipped in and raised $10,000 in donations for him. However, he is not allowed access to that money for a reason that is not explained in the article. For me, though, the clincher of Pedro’s story is how the federal prosecutors assigned to his case tried to buy him off. According to CNN, “Robert Gershman, one of Zapeta's attorneys, said federal prosecutors later offered his client a deal: He could take $10,000 of the original cash seized, plus $9,000 of the donations as long as he didn't talk publicly and left the country immediately.” But Pedro stuck to his guns, which explains why his case is still wending its way through the courts two years after the incident. Go Pedro!

Possibly more disturbing than the ass-headed reaction of the authorities in this case (who are, admittedly, just following the ass-headed laws), is the reaction of the ass-headed right wing (in this case, self-appointed exposers of Liberal Media Bias), who are outraged that this man admits to not paying income taxes the whole time he was in the country, that he was illegal, that he never learned English, that he is brown. Um, excuse me, right-wing. Having spent several years earning $5.50 an hour, I can tell you confidently that, come tax time, you always get 100% of your deductions back, due to convenient reality that the federal minimum wage places you safely below the poverty line.

Nonetheless, the bloggers (who are far more kind than the commenters, as you’ll see if you dare read down to the kind of hateful, xenophobic comments posted by the kind of people who read right-wing blogs) have things like this to say about Pedro:

It is an insult to all law-abiding Americans to frame Zapeta's “mistake” as being his failure to successfully flee the country with his ill-gotten, untaxed cash. Zapeta’s “mistake” was entering this country illegally in the first place. Zapeta compounded his error by failing to pay income taxes—which over 11 years would likely comprise a significant portion of the $59,000. Wouldn’t we all like to keep 100% of our earnings for the next 11 years?    

Now I’m definitely more sad than I was. I can handle losing some cash. I can even handle the ass-headed way in which I lost it. But I am becoming less and less able to handle the fact that public discourse in my country, whose founding rhetoric is among the most beautiful and inspiring rhetoric ever crafted, is ever more dominated by small-minded, hate-filled regurgitators of bullshit rhetoric that would have made certain hate-filled fascists of the twentieth century proud. Like this commenter:

Had you came legally and attempted to learn english you wouldn't have this problem. You are a crimminal, be happy that we are only keeping the money and sendng you home, In my world we would keep the money, sentence you to hard labor, force you to pay back taxes and any tax payer paid services you scammed. We woyld also shave your head and brand you with a huge "I" in the middle of your forehead. We would allow you to choose what the "I" stood for though, illegal or idiot, your choice.