Karen the Supertrader - TastyTrade Hybrid Experiment

[newwurldmn]

Does it say "live trading" in the title? But you are right, the title is a bit unfortunate. Karen over leveraged (not to mention the HF set up) but that just makes using her strategy the right way more interesting. Had she continued the way like Bobby and the 2 other Yahoo boys trade the strategy, she could have made a relative easy 10-15% in the last 2 years and she would be the queen of HF managers.

Now someone asked, what is Bobby selling? He is selling a dream. And the dream is that instead of useless chit-chat, someone here on ET puts real money behind an idea and makes it work. And explains it to interested posters. If you don't trust him (how can you not trust a guy called Sweet Bobby??) or you think he is here to sell something, then don't follow this thread.

Otherwise just relax, sit back and enjoy the show. The popcorn is ready in the microwave...

Look guys, the end of too much bitching will be that he is going to go back to the Yahoo board, and you will miss an opportunity to learn something. I understand scepticism, but he is not the only one using this strategy, and so far nothing magical happened. Actually, there is something magical, someone on ET is actually making money by trading...

Why do you shit all over nekes thread?

 

[El OchoCinco]

 

[MKTrader]

That chat was too rich for words, only laughter would suffice.

Sossy really selling the Koolaid. "Nobody makes money with 50/50 bets" is he for real?

Yeah, according to him, Ray Dalio, James Simons, David Tepper and company must be lucky. The only way anyone can make money is by selling volatility or HFT. That's it.

 

[Pekelo]

Here is one thing most people don't consider:

As long as margin is not used, if the market falls, just let the stocks to be assigned and suddenly the drop's % gets much lower in relative terms. You don't have to buy the puts back for 5-10 times more, once the stock is assinged, the drop is in real %, compared to the market. So the market drops 10% more, the portfolio drops the same, not being whipped out.

 

[El OchoCinco]

You realize he is selling puts on the index...you do not just sit around and wait to get assigned. If your short puts go from 1.50 to 5.00 you cannot force assignment.

 

[Metamega]

Yeah, according to him, Ray Dalio, James Simons, David Tepper and company must be lucky. The only way anyone can make money is by selling volatility or HFT. That's it.

I was kind of shocked by the bold statement, you could tell Aaron was too lol.

It did get me thinking though that maybe he does know some numbers on success rates since he did own a brokerage.

 

[i960]

As long as margin is not used, if the market falls, just let the stocks to be assigned and suddenly the drop's % gets much lower in relative terms. You don't have to buy the puts back for 5-10 times more, once the stock is assinged, the drop is in real %, compared to the market. So the market drops 10% more, the portfolio drops the same, not being whipped out.

Uh, no. If you sell an OTM put for 50 cents, market sells off significantly making these ATM or ITM, and it turns into 5$ due to gamma cranking up and delta following you *might* be able to wait out that initial IV spike but you're not getting away from what gamma just did to you.

It's gamma and vega that is eventually going to kill this strategy. While one may naively think that they're more exposed to both the nearer to the money they are what they're not thinking about is how they're much less exposed to *changes* in these two. The further OTM the more embedded the risk and the harder it is to control when things go wrong.

 

[Sweet Bobby]

Uh, no. If you sell an OTM put for 50 cents, market sells off significantly making these ATM or ITM, and it turns into 5$ due to gamma cranking up and delta following you *might* be able to wait out that initial IV spike but you're not getting away from what gamma just did to you.

It's gamma and vega that is eventually going to kill this strategy. While one may naively think that they're more exposed to both the nearer to the money they are what they're not thinking about is how they're much less exposed to *changes* in these two. The further OTM the more embedded the risk and the harder it is to control when things go wrong.

As I understand it, gamma risk increases the closer you get to expiration. To my knowledge, the only part of my strategy that helps at all with gamma risk is closing the trades at approximately 21 days to expiration.

Are there other things that I could be doing to help with the gamma risk?

 

[atrp2biz]

Gamma is also at its highest when ATM. This makes sense given its relationship to theta. Therefore, ATM straddles would have higher theta/gamma than equidistant strangles. Like Sle mentioned a few posts back (#732), if your theta is in a comfortable range, the gamma risk will take care of itself (or at least that's what I took out of his statement).

 

[DTB2]

I was kind of shocked by the bold statement, you could tell Aaron was too lol.

It did get me thinking though that maybe he does know some numbers on success rates since he did own a brokerage.

Maybe he could start with disclosing his success rate.