Neiderhoffer
- Thread starter timvodas
- Start date
if you take too big risk in % terms, then your returns are at risk of being negative despite still having an edge in $ terms. vic probably knows that, his investors not, so we can call them unsophisticated at least.
it's just a "heads we win, tails you lose" game, leveraged to the levels which shouldn't be accepted by a sophisticated (not to mention ultra!) person who puts money in it.
i'd say vic's best edge is that he's smarter than his investors.
It is too bad that the real lesson for option trader will not be discussed on ET.
Here is what likely happened:
1) He sold RRs into the drop, as he should have, but probably used the wrong ratio and hedged wrong.
2) He didn't buy wings to at least mitigate 3rd and 4th moments.
3) Some strategies are succeptible to even 7th order moments. Until his position is dissected, we won't know if he did mostly the right thing, and got bit by a terribly small likelyhood event.
If he just went short naked puts, he should be put behind bars for being stupid.
nitro
Here is what likely happened:
1) He sold RRs into the drop, as he should have, but probably used the wrong ratio and hedged wrong.
2) He didn't buy wings to at least mitigate 3rd and 4th moments.
3) Some strategies are succeptible to even 7th order moments. Until his position is dissected, we won't know if he did mostly the right thing, and got bit by a terribly small likelyhood event.
If he just went short naked puts, he should be put behind bars for being stupid.
nitro
steve46, the only thing that was resolved was that you lied and got caught. The asshole is YOU.
Now I see you're making up more stories?? Incredible. You are the lowest form of slime.
steve46 lies about family members dying on 9/11:
http://elitetrader.com/vb/showthread.php?s=&postid=1192720&highlight=steve46+niece#post1192720
you are really twisting my comments. as rearden said, he prefers to be called vic. however, when writing about someone, as a blogger and defacto journalist, with a PhD one doesn't call that person Mr.--- first name( in Vic's case) or Dr. is proper.
not to mention that this blogger, in an authoritarian tone, is claiming unique knowledge-- and is being praised for same by a board moderator.
regards,
surf
Let me preface by saying that I know next to nothing about options trading. However, having read both his books and about him in the press, this is the general conclusion I arrived at as well.
during the sell-off per this discussion, my short credits went 2-3x as you said and more for the otm strikes. i did have longs purchased above and below, but not in a one to one ratio. i was marked with some nice losses and a sizable margin hit. since then i am up like nothing ever happened...so to my question for atticus:
was in your opinion vic trading with more "abandon" than anyone could have forseen? with all the phd's on board, they had no long offsets? did they simply sell a ton off options and that's it? i still find it hard to fathom after numerous blowups that his trading consisted of just more of the same. if so, he must have felt selling vol with no hedges (or not enough hedges), was the only trade for him. i ask these questions because as you know i sell a lot of options (on futures) and i feel the percentage on capital that i bring in is very large but also unsustainable in the long run. so really,what kind of returns would guys like vic be gunning for that seem to always end belly up?
If that is what he actually did, his investors should ask him to redeem himself through seppuku.
I think that Money Managers should be made to invest a substantial portion of their personal net worth in the funds under their management - especially if they have a history of blowouts through poor risk management.