Karen the "Supertrader"

Quote from Pekelo:

For the lazy:

http://www.youtube.com/watch?v=cXy9HoWX0es

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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Assume in 2008 she had 1m;
assume in 2011 she had 40m (the video claimed that in 3 years she turned 750-800k into 41m);

There are 35 months in 3 years;

assume her monthly return is x;

then we have (1 + x)exp36 = 40;

solving ;

thus x=0.108; or she makes 10.8% consistently on average every month for 36 months;

she uses strangle; thus each side makes 5.4% each month on average for 36 months;

she sells options on indices, say SPY. Current SPY is $161 and 5.4% is $8.69; and in order to have $8.69 call or put, do you have to be in or out of money?

Now, tell me it is possible to get OUT of money , one month out, $8.69 option on SPY as she claims? (Same analysis for SPX)

I am more easily convinced if, on several occasions, she bought a few million far out of the money options that became in-the-money.

Either way, she is just lucky.

Or am I drunk and my math is all screwed?
 
Quote from MathAndLogic:

Assume in 2008 she had 1m;
assume in 2011 she had 40m (the video claimed that in 3 years she turned 750-800k into 41m);

There are 35 months in 3 years;

assume her monthly return is x;

then we have (1 + x)exp36 = 40;

solving ;

thus x=0.108; or she makes 10.8% consistently on average every month for 36 months;

she uses strangle; thus each side makes 5.4% each month on average for 36 months;

she uses indices, say SPY. Current SPY is $161 and 5.4% is $8.69; and in order to have $8.69 call or put, do you have to be in or out of money?

Now, tell me it is possible to get OUT of money , one month out, $8.69 option on SPY as she claims? (Same analysis for SPX)

Or am I drunk and my math is all screwed?
More...

I haven't followed this thing closely, but have we ever heard a differentiation between how much of her fund came from trading performance versus new money? They seemed to always be very vague about that point when I listened to her youtube
 
Quote from MathAndLogic:

Assume in 2008 she had 1m;
assume in 2011 she had 40m (the video claimed that in 3 years she turned 750-800k into 41m);

There are 35 months in 3 years;

assume her monthly return is x;

then we have (1 + x)exp36 = 40;

solving ;

thus x=0.108; or she makes 10.8% consistently on average every month for 36 months;

she uses strangle; thus each side makes 5.4% each month on average for 36 months;

she uses indices, say SPY. Current SPY is $161 and 5.4% is $8.69; and in order to have $8.69 call or put, do you have to be in or out of money?

Now, tell me it is possible to get OUT of money , one month out, $8.69 option on SPY as she claims? (Same analysis for SPX)

Or am I drunk and my math is all screwed?
More...

They're including contributions in those totals i.e. it's not all "returns".
 
It's been awhile since seeing the videos but pretty sure she's selling strangles so relying strictly on Theta (time decay). However you figure the return, you need to relate the return to the size of her account, not the price of SPY. Let's say one has a 100,000 account and at the end of a year you've grown same to $110k. 10% return, right? Doesn't matter if you were in SPY,AAPL,GOOG or 15 others. Has nada to do with prices.

A quick look today at SPY shows you can sell a strangle with about a 75% chance of OTM consisting of 1x2 puts/calls expires JUL 20th (23days). . Adjustments? No way to calc how this would effect the trade...

Each one puts $94 into your acct so, 94/23x365=$1491. This trade ties up
$5150 of buying power so 1491/5150=28.99% ARR. Excluding commish pf course. Weeklies would boost the return I believe.

AAPL currently much better for this if you do the math and stay away from earnings date. As previously pointed out, if my math is crazy, point same out.

Regards,

Jerry
 
It's hard to tell exactly what she is doing because she did not exactly say it The devil is in the details
She says she is selling out of the money puts ok and what else ?
she did not say
She may have done strangles but I don't think she did that in the spx because that eats up a lot of buying power
If I were to guess I would say spreads
Although you have to sell a lot of spreads if it's only $5 wide but that far out you could probably sell wider spreads to reduce your commissions
You could get 30 cents for a $5 wide spread so if you had a 100 k account and you put up 50% like she says for 50k you could get 100 spreads and collect $3000 so if you can do that every month for a year that's more than 50% return Of course you have to subtract commissions but still not a bad return
One thing I did not hear her say and the guy did not ask her is when does she close the trade
Is it a month later ? if that is the case she would not get the full premium since she has to buy it back and it still has some value and also another round of commissions
If she waits till expiration than she can only trade 6 months out of the year so that will reduce the profits by half
 
I'll have to take time to watch her videos again and take notes. Try to ferret out what she actually said. And then there's the more recent gal on Tasty T who has the wealthy husband and is doing somewhat the same thing..

Jerry
 
Quote from status1:

It's hard to tell exactly what she is doing because she did not exactly say it The devil is in the details
She says she is selling out of the money puts ok and what else ?
she did not say
She may have done strangles but I don't think she did that in the spx because that eats up a lot of buying power
If I were to guess I would say spreads
Although you have to sell a lot of spreads if it's only $5 wide but that far out you could probably sell wider spreads to reduce your commissions
You could get 30 cents for a $5 wide spread so if you had a 100 k account and you put up 50% like she says for 50k you could get 100 spreads and collect $3000 so if you can do that every month for a year that's more than 50% return Of course you have to subtract commissions but still not a bad return
One thing I did not hear her say and the guy did not ask her is when does she close the trade
Is it a month later ? if that is the case she would not get the full premium since she has to buy it back and it still has some value and also another round of commissions
If she waits till expiration than she can only trade 6 months out of the year so that will reduce the profits by half
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SHE CLEARLY MENTIONS NO SPREADS BUT NAKED . . CREDIT SPREADS ALSO EAT UP MARGIN...
 
During the flash crash, there's no way their short put positions didn't get overrun and assignments occurred beyond their control. To not explain what happened in detail on a day like that when no retail platform could respond at that pace to the downside wreaks of fraud.
 
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