Karen the "Supertrader"

[optionbull]

Quote from Pekelo:

Now, why do you hate Karen so much?

(that is Busta asking, not me)

All I want to know can she lose more than what is in the accounts they hold at TOS ?

thnx

 

[sle]

Quote from sellindexvol66:
You guys who defend it are so simply inexperienced its ridiculous. Sure she may run the scheme so her fee's accrue that she will not have to sell her art and silver like a famous local in my neck of the woods had to ...but surely the day will come when Mr fat tail taketh.

There is no question that short-dated OTM putties are on the rich side and there is some statistical value in selling them. Somebody here has offered a proper analogy - as a seller, you are a provider of insurance. Unfortunately, you are providing insurance for a systemic event with very little to none diversification capability. It's the difference between selling life insurance and earthquake insurance - while you might be charging the right amount from the statistical point of view, a levered position can easily eat through your capital.

I will not offer an opinion on Karen being lucky or smart. What I want to know is where does she find so many idiots to invest in her fund?

 

[optionbull]

Quote from sle:

There is no question that short-dated OTM putties are on the rich side and there is some statistical value in selling them. Somebody here has offered a proper analogy - as a seller, you are a provider of insurance. Unfortunately, you are providing insurance for a systemic event with very little to none diversification capability. It's the difference between selling life insurance and earthquake insurance - while you might be charging the right amount from the statistical point of view, a levered position can easily eat through your capital.

I will not offer an opinion on Karen being lucky or smart. What I want to know is where does she find so many idiots to invest in her fund?

Why are they idiots, say 300k investment for someone worth 30mm + , its a great way to try to make 200% returns ? So if I lose 300k against the millions I have cap gains from the other funds im in ....

 

[optionbull]

Quote from optionbull:

Why are they idiots, say 300k investment for someone worth 30mm + , its a great way to try to make 200% returns ? So if I lose 300k against the millions I have cap gains from the other funds they probably are already in


1 and 10 event isnt bad for that sort of retun

sick thing is that the average guy that ants to risk a small amount really can NOT do it ?

 

[rt$]

Quote from Pekelo:

Correct.

Now she has 2 things going for her. One that she sells both sides (instead of just puts), second she does only half of the account or less first, so she has more gunpowder left in a bigger move....

On the other hand selling calls can backfire too, so it also increases risk. In January the market went up 7%, that is quite a big move, I am sure they had to keep adjusting like crazy...

How would her strategy do if another Black Monday of October 1987 happens?

The market was down like 25% on that Black Monday. I think it was down also the following day.

The market also was down the Friday before the Black Monday.

 

[Busta21]

Quote from optionbull:

All I want to know can she lose more than what is in the accounts they hold at TOS ?

thnx

Look, all I was saying is that there were a lot of negative points against her. By no means am I advocating her strategy, though, it is working at the present time and, for me at least, that is all that counts. Making $105 million is impressive.

 

[rt$]

Quote from sellindexvol66:

I have pretty extensive options experience. In order to make big returns selling vol she has to lever a lot. The only thing that gets "adjusted" when your strikes get blown hard in a move either calls or puts is your account size ..negatively impacted.

Her Strats has been proven to ultimately fail time and time again. You guys who defend it are so simply inexperienced its ridiculous. Sure she may run the scheme so her fee's accrue that she will not have to sell her art and silver like a famous local in my neck of the woods had to ...but surely the day will come when Mr fat tail taketh.

Would Black Monday in October 1987 when the market dropped like 25% count as Mr. Fat Tail?

I believe the market was down the Friday before the Black Monday. It might have down also on Tuesday, the day after Black Monday.

What kind of adjustments would Karen make if the market tanked 25% one day?

What kind of adjustments would Karen make if the market drops 25% and then another 20% the next day?

 

[Pekelo]

Quote from Busta21:

By no means am I advocating her strategy, though, it is working at the present time

Sounds like you worked for ING insurance. That too, worked for a while...

 

[sle]

Quote from Busta21:
Making $105 million is impressive.

I think what's impressive is her salesmanship, not trading. She was able to retain AUM through every large market event, even though other funds (even the ones that made money) suffered redemptions.

Quote from optionbull:

Why are they idiots, say 300k investment for someone worth 30mm + , its a great way to try to make 200% returns ? So if I lose 300k against the millions I have cap gains from the other funds im in ....

First of all, I really doubt she makes 200% annualized returns. A simple approximation - 5 delta 3 month strangle is about 50-70 bps of notional. Under portfolio margin you would end up posting at least about 10% of the notional as margin, which, under zero DD assumption makes her return [50bp-70bp]*10*4=[20% to 30%] of notional. Kinda makes perfect sense.

Now, to "idiots" - any HNW that decides to go that route should somehow feel negatively correlated with the market, meaning that if Karen blows up his money, he'd make money elsewhere in his investments. I can't imagine what sort of business that person runs, maybe a chain of funeral homes.

 

[optionbull]

Quote from sle:

I think what's impressive is her salesmanship, not trading. She was able to retain AUM through every large market event, even though other funds (even the ones that made money) suffered redemptions.


First of all, I really doubt she makes 200% annualized returns. A simple approximation - 5 delta 3 month strangle is about 50-70 bps of notional. Under portfolio margin you would end up posting at least about 10% of the notional as margin, which, under zero DD assumption makes her return [50bp-70bp]*10*4=[20% to 30%] of notional. Kinda makes perfect sense.

Now, to "idiots" - any HNW that decides to go that route should somehow feel negatively correlated with the market, meaning that if Karen blows up his money, he'd make money elsewhere in his investments. I can't imagine what sort of business that person runs, maybe a chain of funeral homes.

Thank you for the math, nice work. Although she uses front two month to sell the premia ?


HNW, 300k even for 30 percent returns after couple years compounding becomes interesting... get enough out before the 1 in 10 event, its a nice hobby