BY HANS ALBRECHT
March 26, 2025
Editor’s Note: Andrew and I are thrilled to bring you a special guest post from Hans Albrecht, a veteran options trader and fund manager who’s managed over $1 billion in options-based assets.
Today, Hans shares one of the most valuable trading lessons of his career—a hard-earned insight born out of the infamous Bre-X gold scandal. It’s a wild story packed with trading wisdom, showing how even crushing losses can lead to massive success when paired with discipline and determination.
Hans is also hosting a LIVE event tomorrow at 7pm ET, where he’ll reveal his $1 billion strategy and how to find the #1 income stock every single week. Click here to save your spot!
— Mark Sebastian, Founder and CEO at Option Pit
It was the early days of my trading career. I had been a professional options market maker for about a year—six months of that profitably.
Confidence was building.
I was young, sharp, and ambitious, with a taste for high stakes and big wins. As a market maker “Specialist,” I had two stocks I was assigned to trade, but my real passion was roaming the pit, hunting for action wherever I could find it.
And in the mid-’90s, all paths led to Bre-X, the gold mining stock that was setting the market on fire.
For those unfamiliar, Bre-X was a Canadian company at the center of one of the largest mining scandals in history.
After acquiring the Busang mining site in Indonesia, the company announced in 1995 that it had discovered a massive gold deposit.
The news sent its stock price soaring from pennies to nearly CAD $286.50, giving it a total market capitalization of over CAD $6 billion.
Bre-X captivated the financial world. The story was irresistible. Traders couldn’t get enough of it. The stock soared, and the options pit was buzzing like never before.
Everyone wanted a piece of Bre-X, and I was no exception.
What happened next turned into one of the most unforgettable—and expensive—lessons of my career.
Riding the Momentum Wave
For a trader like me, Bre-X was the ultimate playground.
It had everything: wild price swings, sky-high volatility, and an endless stream of momentum. Every day brought new opportunities, and I was quickly becoming known for my ability to spot and ride these waves to profit.
For months, Bre-X was my bread and butter. I scalped wins left and right, taking advantage of the frenzied action in the pit. The energy was electric, and the money was flowing.
One trader famously said, “If you can’t make a Volkswagen a day trading Bre-X, you shouldn’t be here.” And for a while, I did just that.
When the Dream Turned into a Nightmare
But as every trader knows, nothing lasts forever. And Bre-X’s fairy tale was about to take a dark and dramatic turn.
The first cracks in the story began to appear. Rumors started swirling in the pit—whispers that the company’s gold samples might have been “salted” (fraudulently enhanced with gold to inflate their value).
Then came the shocking news: Michael de Guzman, a key figure in Bre-X’s operations, had mysteriously fallen out of a helicopter in the middle of the Indonesian jungle.
Officially, it was ruled a suicide, but the timing was suspicious, to say the least.
The final blow came when Barrick Gold, a major player in the mining world, abruptly pulled out of a potential takeover of Bre-X.
They didn’t say much, which spoke volumes.
The market caught on quickly. Bre-X’s stock, which had once traded as high as CAD $286.50, began to plummet. The selloff was brutal and relentless, with the price crashing down to $4 in what felt like an instant.
The Gamble That Cost Me
Even as Bre-X imploded, the options pit remained alive with activity. Traders like me were still looking for ways to profit from the chaos.
At one point, with the stock hovering around $4, I saw what I thought was an opportunity.
I sold a straddle at $4 for $3.50. For those unfamiliar, selling a straddle involves selling both a call and a put at the same strike price—in this case, $4.
On paper, this looked like a can’t-miss trade. The position would be profitable as long as Bre-X stayed above $0.50. And with the stock still trading at $4, I thought I had plenty of cushion.
What I failed to fully appreciate was the extreme risk still priced into those options. The premiums were incredibly high, but I convinced myself they were overpriced.
Then the hammer dropped.
Bre-X filed for bankruptcy. The stock effectively went to zero, and I took close to my maximum loss on the trade—$0.50 per share, multiplied by hundreds of contracts.
What I thought was a smart, calculated trade turned into a crushing blow.
It was a painful—and humbling—reminder that high option premiums exist for a reason. The market had priced in the risk, even if I refused to see it.
And on that fateful trade, I ended up donating a Volkswagen back to the market.
The Lesson: Why Volatility Is King
Looking back, the warning signs were everywhere. Bre-X was a ticking time bomb, and deep down, I knew it. The whispers, the mysterious death, Barrick’s withdrawal—it all pointed to one inevitable conclusion: Bre-X would fail.
But I got greedy. I thought I could squeeze a bit more profit out of the situation before the final hammer came down. I ignored the risk, and I paid the price.
Here’s what I learned that day:
- High option pricing reflects high risk. When premiums look too good to be true, it’s because the market is pricing in danger. Ignoring that is a recipe for disaster.
- Volatility is unforgiving. Betting against extreme volatility is like playing chicken with a freight train. You might win for a while, but eventually, it catches up with you.
- Trust your instincts. I knew Bre-X was a house of cards, but I let greed cloud my judgment.
It was an expensive lesson—one that cost me thousands of dollars and a bruised ego. But it was also one of the most important lessons of my career.
The Trade That Made Me a Better Trader
The Bre-X saga was a turning point in my career. It taught me to respect volatility, understand the risks behind high option pricing, and approach trading with greater discipline.
Since then, I’ve spent decades refining my strategies—managing $1 billion in options-based assets, generating $750 million in cash flow for investors, and helping traders unlock income and long-term growth.
Today, I use these same strategies to help regular folks master the markets.
Join Me LIVE Tomorrow at 7pm ET: Discover My $1 Billion Secret
I’ll reveal how to:
- Generate 14% per trade every week
- Unlock triple-digit upside on monthly turbo trades
- Find undervalued stocks for long-term growth
When you register, I’ll send you my FREE Report: My Top 2 Long-Term Stock Picks To Buy Now.
Don’t Miss Out
Click below to register now and join me live:
Hans Albrecht
Income Trader
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