Karen the Supertrader - TastyTrade Hybrid Experiment

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Bobby,

Your approach might be more realistic but most of your trades are put heavy so keep that in mind. Vols will always affect the put side of the short strangles and vols are starting to creep up. Puts are often where the heat and losses come in.
 
optioncoach said:
Don't understand your point #2, hedge funds have nothing to do with this.
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She runs a hedge fund. So if other HF managers envy her and her strategy is well known, they are welcomed to try it... Not to mention portfolio margin isn't available for most of us...

Again, she never claimed the 10K to 41 million, you really have to rewatch the video. Those claims come from posts and Sossnoff sensationalizing it. Actually we have a few threads on her, just do a search on ET, I think I did a summary of her performance, which is by the way not clear. Her best year was when she was trading her own money and then the offers to manage money started to come in. Most of the money was raised and once she was handling big money her returns were around 20% IIRC...

Again about the supertrader moniker, if Sossnoff says: we have a HF manager with a well known strategy making 20%, would you watch the video?
 
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There is a lot of misinformation about her and misleading information. Don't doubt she made money selling strangles (I myself did it) but all the contradicting info raises some flags. Why is it so hard to just tell the truth? Methinks because once the fund is up you need people to pour in money so better to let the misinformation run. One source says she turned $10k into $41 million. Another says she made $41 million from her hedge fund after it was extremely well funded and thus she was very large in position size.

Another source from her says she will allow a position to move 30% ITM...she just keeps rolling out. Not something a retail trader could copy since a large fund can be solvent martingaling into a finite expiration period.

I doubt she is the only HF selling premium, there are a lot of them out there, most cannot advertise like she is doing.
 
OK for the lazy, here is the original thread:

http://www.elitetrader.com/et/index.php?threads/karen-the-supertrader.254837/#post-3699074

And here is my summary of her performance posted in that thread:

Pekelo said:
For the lazy:


OK, since most people didn't watch the video, the title of this thread AND the Youttube video are both missleading. Here is what happened:

2002 Opens account with 10K trades part time.

2007 Light bulb goes on and decides to go fulltime. She opens account with 100K. There is no indication of returns between 2002 and 2007!!!

2008 She makes 50%. When at 150K people gave her more money, so she ends up with 750-800K or so.

She keeps rising money and trade options, and end up with 80 million and 41 million of it is profit. There is no indication or mention of returns except once....So it is entirely possible she never had a bigger than 50-200% return...

Right now she is managing 160 mill and made 56 mill in a not clearly classified time period.
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Now there could be an explanation why she is not completely clear on her record: HFs can not advertise and going on a show and touting her record would count as such and she could be fined. By the time she was on TastyTrade, she already had enough money under management, so I don't think she cared about getting more... Just my projection...

Most likely she never had a better than 50% return, specially not with the HF. It would be interesting to know her record in the last 3 years, but I couldn't find anything on the net when I looked a few weeks ago...
 
optioncoach said:
There is a lot of misinformation about her and misleading information. Don't doubt she made money selling strangles (I myself did it) but all the contradicting info raises some flags. Why is it so hard to just tell the truth? Methinks because once the fund is up you need people to pour in money so better to let the misinformation run. One source says she turned $10k into $41 million. Another says she made $41 million from her hedge fund after it was extremely well funded and thus she was very large in position size.

Another source from her says she will allow a position to move 30% ITM...she just keeps rolling out. Not something a retail trader could copy since a large fund can be solvent martingaling into a finite expiration period.

I doubt she is the only HF selling premium, there are a lot of them out there, most cannot advertise like she is doing.
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I guess Google decided I wanted to read about "Karen the Supertrader" -- does anyone know the name of the fund or the person? I did not see a claim to turning $10K into $40M and I've not seen or heard the mistruths -- has someone compiled examples of where the interviews on tastytrade gave misleading information?
It seems to me, the only claim is that if you can stomach the trading, a two or three standard devs wide strangle on the SPY or SPX can be managed to consistent profitability in huge size (over $1M.)
As described in the Sosnoff interviews, having gone from a two-person novice operation to a team of polymath types, the capital influx was not insubstantial, and the gains have been consistent and far above typical performance for options traders.
I don't think the core strategy relies upon a martingale at all. The most I've heard on that was "never give back profits" but that's several steps away from double-up to catch-up -- a suicidal gamble. I do think the basic idea of very wide, actively scalped strangles is, by definition, at risk of a black swan of the "markets can remain irrational longer than the trader can remain solvent" magnitude and duration.
I don't know that tastytrade has ever disclosed the identity of the fund, though I can't say I've tried to find out, and they have suggested another fund would be added to respond to the requests to get in.
If you want to see all these so-called hedge boutique exclusive invitation-only funds come out of the woodwork, open an account at TD Ameritrade or Fidelity with $250K or more. I've tried several -- they are not hedged, the invitation is forthcoming to anyone with the capital and the only similarity with a boutique is the high prices on otherwise mundane goods. In each of my attempts, it was either a "thesis" approach (fundamentals) or a "derivative" model (covered calls being the norm) usually with "picking" or "timing" as the crucial weakness -- trying to pick stocks on a theory of fundamental or technical (price) opinion, or trying to time the long/short, entry/exit on an unproven system of time and price behavior.
 
One opening trade today. I needed a little short delta so I sold the SPY
01 JUL 16 214C(3)/170P(2)
By now entering a daily trade, I'm beginning to see my theta creep up to my target of 1/10th of 1%.
Theta is 123. Delta is -48. Vega is -565.
The experiment is down $22.16 for the day.
Karen tells us that she lives on the analyze tab. I find myself more and more doing the same thing. Some thoughts for the day. Can you actively manage an account by using the analyze tab and looking at the Greeks? Today, I really didn't pay attention to the price movement of SPY to determine my trade entry, I solely looked at the effects on my analyze tab.
If you enter high probability trades, manage risk using the analyze tabs and the Greeks, take profits at 50%, try to keep losses at around 2X the initial credit received, one would think that you can be successful with this strategy. I guess time will tell.
Happy trading!
Bobby
 
Bobby - interesting thread and good luck. If this is a real account get portfolio margin rather than reg t (if you don't have it already) 150k is above the td/Tos threshold. Don't increase your leverage but having portfolio margin helps a lot when the markets get a little rougher and you need to put on new positions as the new ones don't reduce your buying power as much.
 
One trade today. I sold the SPY ratio strangle:

01 JUL 16 213.5C(3)/170P(2)

The market was down and volatility was up, so I definitely wanted to sell some puts. But, after trying to be market aware like Tom, I looked at the chart for amount two minutes and decided we look like we are in a little downturn that might continue for a little while. So, since I was long delta, I wanted to decrease my delta. I therefore sold 3 calls to 2 puts.

The experiment is up $56.59 for the day. My delta is 0.98, theta is 129, and vega is -566.

I spent some time hovering over all of my positions to see if any of the puts/calls are in trouble or near Karen's radar of a 30 delta. All positions are safe and accounted for. I will add more positions tomorrow as I try to increase my theta to near my goal of 150/day.

I am now of the opinion that I don't care where the market is - up, down, or sideways. I'm going to be wherever it is ready to put a trade on.

Happy trading!

Bobby
 
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