Karen the Supertrader - TastyTrade Hybrid Experiment

[rawrick]

Nobody is asking me, but I say it anyway since it was awesome.

It was my best day of this year. Up 5,5% today and 15,5% YTD. And my biggest position is short IWM that I am carrying since Jan. Damn you tastytrade!

 

[Sweet Bobby]

The project is up 0.17% for the week ending May 19, 2017. It is down 3.00% since inception on January 19, 2017. I'm at Disney World this week and trading will be very light. I took off most of my trades if they were a scratch or better. Happy trading!

 

[Sweet Bobby]

Anyway, let's ask Bobby how he did today when the market went down 1.7%?

My net liq was down 1.52% for the day. I closed a number of short calls for the day for profits. Overall everything went according to plan.

 

[DTB2]

In tastytrade there are some great insights and help for every trader. Need an example? Just ask the next hater if he can buy something for 100 and sell it for 90 for a profit with HIS strategy. If his answer is no, you got him on the ropes.

The tastytrade way is a great way of trading. I would never say it is the best, because I don't think it exists. If you are directionally completly wrong on your trade and still make money, that is just powerful...

Then why doesn't anyone ever show a profitable P/L?

Because it's not about P/L; LOL

Like Sweet Bobby, he's down 3% YTD and loving it. While ES is up 150 points on the year. Tastytrade is all about the action, that's it. The hosts cannot even amend their trading methods.

 

[rawrick]

Then why doesn't anyone ever show a profitable P/L?

Because it's not about P/L; LOL

Like Sweet Bobby, he's down 3% YTD and loving it. While ES is up 150 points on the year. Tastytrade is all about the action, that's it. The hosts cannot even amend their trading methods.

When the markets goes down, Sweet Bobby makes money. Until then he patiently sells premium to cover the damage.

I trade like this longer. You make a little or lose a little on calm months. The moment the markets move in your favor you make a killing. That happens about 2-4 times a year.

And who says that a strategy HAS to be up or the strategy is bad? You have to make every single day money or the strategy is bad? Last time I checked what counts is the end of the year.

Last time I checked Tony's son Nick was up 10% YTD.

Last time I checked they are trading since 30 years and have able to gain wealth. I don't know about you, but that is strong indication, that they know what they are doing.

Last time I checked they are dozens of people calling in from all over the world having profits.

Last time I checked they tell the price they get in and what price they get out. If you look at the option prices, it is exactly where the price is. Surprisingly they take off a lot of winners.

Last time I checked they are carrying a lot of "static" short delta while selling rich equity premium, which is basically an underhedge. They wait until the marktes move in their favor to make a killing. Until then they sell the equity premium the cover or reduce the losses, while the market does not work in their favor. Very logical.

But it is all about the P/L. Weak argument.

 

[Pekelo]

When the markets goes down, Sweet Bobby makes money.

Last time I checked, he didn't.

WTF is wrong with you? Are you reading a separate thread? He clearly stated he lost 1.52% when the market was down 1.7%. And even if he didn't say so, the strategy usually loses on days when the market moves big, be it up or down.

What you are referring to is Taleb buying puts for expecting a big sell off.

 

[sysdevel99]

Surprisingly they take off a lot of winners.

Look at their earnings plays - it'll give you an idea about the overall strategy.
They have 10 winners and 2 losers and the 2 losers are bigger than the 10 winners combined. Yes - they take off a lot of winners but the losers kill them. Don't get me wrong - they made decent money - most of it was when they sold ThinkOrSwim to TD - more than they ever made trading. When they did make money trading - the markets were very wide - so I would not compare this to today's environment - you hear them say "you could drive a truck through the bid/ask" that's mainly how they made money - not the strategy. Some of their backtests or "learnings" are ridiculous - e.g. if it took them 30 years to understand the challenge of correlation that tells you they may not be the fastest learners. On the bright side - they are funny and fun to watch - so they should continue - just ignore their findings or look at it a little bit more critically. Just cause there's lemmings following claiming they get the same results (slimfast, weight watchers, real estate gurus like kiyosaki, ...) doesn't mean much - some of them are happy following a path with others - hence this thread cause performance can't be the motivation (5 month and so far -3% return - the ones that make money with the trade small trade often approach are obviously not the followers)

 

[ironchef]

Hey Bobby,

I follow tastytrade religiously (since 2013) and I support your trading style. I do something similiar aswell. Let me just give you some advice.

The guys attacking you are partially correct. When the market does goes down in a violent way, the issue won't be just the long deltas you will collect on the way down. Or the gamma increasing.

On a big down move you might buy your puts back, but still lose more then from the move itself, because of slippage. When the market goes down fast and the Market Makers (MM) can't hedge their risk propably - because the underlying they use as hedge against your put moves too quick - they widen the bid/ask spread. A 1-2 cent spread becomes a couple of dollars. You have to give up a lot of edge to buy your puts back when that happens.

The worst case scenario is when the MM step out completly. They don't know what's going on and pull back all the bids. There are literally no bids (Watch documentations on the 1987 crash). You have no choice but keep your short puts, because nobody wants to buy them.

The liquidity from the underlying is important. The less liquid the underlying is the extremer the those issues mentioned above will be.

Watch the first show from Dr. Jim "From Theory to Practice". It is about Negative Skew and Positive Kurtosis. He describes it beautfully. If you watch that, he will also tell you the solution for that problem. You have to carry short "static" delta.

Tom talks about that all the time. He carries short delta 95% of the times as a protection against a sudden market crash. If he loses on the short puts, then he makes profits with the negative static delta (It is about 1-3% of the net liq in short deltas).

The tastytrade haters are wrong when they discredit the tastytrade method as whole. They always attack the vulnerablitly to the downside, but never mention carrying the static delta as protection.

In tastytrade there are some great insights and help for every trader. Need an example? Just ask the next hater if he can buy something for 100 and sell it for 90 for a profit with HIS strategy. If his answer is no, you got him on the ropes.

The tastytrade way is a great way of trading. I would never say it is the best, because I don't think it exists. If you are directionally completly wrong on your trade and still make money, that is just powerful...

Hi rawrick,

I started trading options back in 2013 and at first tried to follow the tastytrade methodology. I have since moved away from exclusively carrying negative delta and gamma, because I found other methods better suited my trading style.

You have been trading with the tastytrade method since 2013, I have a question for you:

Can you explain and expand on how one carries a small static delta as a hedge? For example, since your overall delta is negative, I assumed "a small static delta" is positive as a hedge, and if so do you have to dynamically change your static delta as the trade move against or in your direction?

This is a discussion forum and I am not debating or picking sides. I also recognize there is no right or wrong way for folks who knows how to trade and make adjustments.

Thanks for posting.

 

[ironchef]

Look at their earnings plays - it'll give you an idea about the overall strategy.
They have 10 winners and 2 losers and the 2 losers are bigger than the 10 winners combined. Yes - they take off a lot of winners but the losers kill them.

Are there ways to manage the 2 losers by limiting the losses so that losers won't overwhelm the winners?

I have been following the threads on Risk Management and try to understand if such is possible?

Thanks.

 

[DTB2]

When the markets goes down, Sweet Bobby makes money. Until then he patiently sells premium to cover the damage. Not according to what SB has posted but maybe you know better what his portfolio does.

I trade like this longer. You make a little or lose a little on calm months. The moment the markets move in your favor you make a killing. That happens about 2-4 times a year.

And who says that a strategy HAS to be up or the strategy is bad? You have to make every single day money or the strategy is bad? Last time I checked what counts is the end of the year. OK, let them post end of year P/L, fine by me.

Last time I checked Tony's son Nick was up 10% YTD.

Last time I checked they are trading since 30 years and have able to gain wealth. I don't know about you, but that is strong indication, that they know what they are doing. As others have posted, they made the money on the spread and hedged everything to have zero Delta when 3 o'clock came.

Last time I checked they are dozens of people calling in from all over the world having profits.

They claim to have around 100,000 viewers, why are the 20 always calling in? And it's almost always in distress over what to do. They may be profitable yet don't know what to do?

Last time I checked they tell the price they get in and what price they get out. If you look at the option prices, it is exactly where the price is. Surprisingly they take off a lot of winners.

Amateurs love a high win rate, that's why it's part of the mantra. Has little to do with profitability.

Last time I checked they are carrying a lot of "static" short delta while selling rich equity premium, which is basically an underhedge. They wait until the marktes move in their favor to make a killing. Until then they sell the equity premium the cover or reduce the losses, while the market does not work in their favor. Very logical.

Those scalps that become core positions have taken them far from profitability, let alone making a killing. Even they can average down only so long, then you sit with it.

But it is all about the P/L. Weak argument.

Weak argument indeed.