Are naked puts really this safe????

[JSHINV]

Wow!

Quote from RedDuke:

I just got update on the fund.

Unfortunately for their investors, they went bust. This week they realized 85% loss from the top of their assets.

The thing that amazed me, is that some investors took out large loans and dipped heavily into their home equity line of credit to invest. The biggest capital infusion happened this year, because of fund earlier stellar performance, and thus the losses are huge for them.

redduke

 

[dmo]

Quote from RedDuke:

I just got update on the fund.

Unfortunately for their investors, they went bust. This week they realized 85% loss from the top of their assets.

The thing that amazed me, is that some investors took out large loans and dipped heavily into their home equity line of credit to invest. The biggest capital infusion happened this year, because of fund earlier stellar performance, and thus the losses are huge for them.

redduke

Thanks for that update. Now to complete the classic cycle, these guys will soon come back with another fund. They will explain that they went bust because they made some mistakes but learned from them, so it won't happen again. Investors will eat it up. Don't ask me why, but it happens over and over and over again. One of life's great mysteries.

 

[Wayne Gibbous]

Quote from RedDuke:

I just got update on the fund.

Unfortunately for their investors, they went bust. This week they realized 85% loss from the top of their assets.

I bet they aren't the only ones. And throw in over-leveraged IC guys too.

Any short put fund that says "We are completely safe...we carefully tested against historical moves and there never has been a time when..." is gonna eventually get blasted.

It only takes a little 20% down week to knock 'em off!

 

[tyrant]

Quote from RedDuke:

I just got update on the fund.

Unfortunately for their investors, they went bust. This week they realized 85% loss from the top of their assets.

The thing that amazed me, is that some investors took out large loans and dipped heavily into their home equity line of credit to invest. The biggest capital infusion happened this year, because of fund earlier stellar performance, and thus the losses are huge for them.

redduke

Which fund is this?

 

[makloda]

Quote from RedDuke:Unfortunately for their investors, they went bust. This week they realized 85% loss from the top of their assets

Fat tail strategies work great until they don't. I wouldn't be surprised to see a large percentage of premium selling CTAs closing shop with their Oct returns.

"Dear investor, we're sorry to inform you..."

 

[blackjack007]

Quote from RedDuke:

I just got update on the fund.

Unfortunately for their investors, they went bust. This week they realized 85% loss from the top of their assets.

The thing that amazed me, is that some investors took out large loans and dipped heavily into their home equity line of credit to invest. The biggest capital infusion happened this year, because of fund earlier stellar performance, and thus the losses are huge for them.

redduke

i'm not surprised. his 'hedging' technique of rolling out the option to further months only works if volatility eventually declines, but if things get worse and worse like the last few weeks, this method will result in account destruction. which it did.

if things turn against you there is one and only one way to save the account: close your naked positions. do not roll out, do not attempt to hedge.

 

[RedDuke]

Quote from tyrant:

Which fund is this?

The person who gives me updates, asked me not to reveal the fund name on any public forum.

 

[Nanook]

Quote from dmo:

Now to complete the classic cycle, these guys will soon come back with another fund. They will explain that they went bust because they made some mistakes but learned from them, so it won't happen again.

Based on our analysis with the Selling Naked Puts Fund LLC we've discovered we should have been selling calls all this time.

We are now starting up our new Selling Naked Calls Fund LLC.

 

[dmo]

Quote from Nanook:

Based on our analysis with the Selling Naked Puts Fund LLC we've discovered we should have been selling calls all this time.

We are now starting up our new Selling Naked Calls Fund LLC.

LOL, please let me know when this fund debuts - I'll know for sure then that stocks have bottomed!

 

[kinggyppo]

I doubt anyone was modeling 70% volatility on the index, where will the market be if it hits 100%? I wonder where and if they covered. I am sure they are in good company in a world of hurt. I thought the market would reverse at 55% to 60% vol, incredible spike down.