RETAIL OPTION TRADER Makes $105MM PROFIT in the NDX, SPX & RUT

[sle]

Quote from hoop121:
she might not have been short puts at the time of these drops.

The fact that she was lucky enough to not have a disastrous position previously does not mean that she will not be there in the future. It is Russian roulette - she might not have hit the right chamber, but sooner or later she will. Except, of course, since it's a "fund" the unlucky investors will subsidize her loss. It's about leverage, not the right entry points or proper strategy selection.

 

[hoop121]

Quote from sle:

The fact that she was lucky enough to not have a disastrous position previously does not mean that she will not be there in the future. It is Russian roulette - she might not have hit the right chamber, but sooner or later she will. Except, of course, since it's a "fund" the unlucky investors will subsidize her loss. It's about leverage, not the right entry points or proper strategy selection.

she never has more than 50% of capital at risk. so even in the event of a "chamber" event, she wouldn't take too much more of a hit than most other funds, anyways.

haters gonna hate. obviously, she's got something that works for her and she's good at it.

like caveman said, there's a lot more to the story. that's the only point i'm making as well.

perhaps she has risk measures and hedges for massive price drops that she's just not telling us about. who knows.

 

[daniel5198]

Quote from hoop121:

she never has more than 50% of capital at risk. so even in the event of a "chamber" event, she wouldn't take too much more of a hit than most other funds, anyways.

.

How can she define 50% of capital at risk? In a naked short position, there is no way of doing this.

 

[hoop121]

Quote from daniel5198:

How can she define 50% of capital at risk? In a naked short position, there is no way of doing this.

you're right, my bad. was thinking about when she was using the spreads.

 

[Van Halen]

Quote from hoop121:


i don't have my charting software in front of me, but can anyone tell if maybe the week or so before some of these large SD moves to the downside in 2008 or 2009 were over-extended moves to the upside?

 

[hoop121]

Quote from Van Halen:

haha, so that's a big negatory. who knows what's going on over there. she seems to be pretty excited about the opportunities when the VIX jumps back into the 20s though.

good luck to all in the new year. i'm out

 

[cvds16]

I remember in october 1997 when Europe opened 10% lower (it was the day when the dow went to -500 only to reverse in half an hour to positive), no way you can do any hedging or rolling in that kind of scenario, you just blow up if you are huge premium short... index or no index ... this whole strategy is just a disaster waiting to happen ... it just needs time to actually do blow up ...

 

[Options_Noob]

Quote from cvds16:

I remember in october 1997 when Europe opened 10% lower (it was the day when the dow went to -500 only to reverse in half an hour to positive), no way you can do any hedging or rolling in that kind of scenario, you just blow up if you are huge premium short... index or no index ... this whole strategy is just a disaster waiting to happen ... it just needs time to actually do blow up ...

I'm not a huge fan of selling OTM junk, but if you do, should always buy a few puts the next month out. The key is to hedge prior to the big move.

So lets say you sell an iron condor right now for March, if you buy OTM puts in April, they can certainly save your ass in a black swan type of event.

 

[hoop121]

Quote from Options_Noob:

I'm not a huge fan of selling OTM junk, but if you do, should always buy a few puts the next month out. The key is to hedge prior to the big move.

So lets say you sell an iron condor right now for March, if you buy OTM puts in April, they can certainly save your ass in a black swan type of event.

you're already hedged in an IC. no need to put on an additional diagonal spread type position.

but she's not even trading IC's anymore. she's just selling naked options. which is why people are making such a big deal about it being a disaster waiting to happen.

 

[galvinlee888]

Quote from cvds16:

I remember in october 1997 when Europe opened 10% lower (it was the day when the dow went to -500 only to reverse in half an hour to positive), no way you can do any hedging or rolling in that kind of scenario, you just blow up if you are huge premium short... index or no index ... this whole strategy is just a disaster waiting to happen ... it just needs time to actually do blow up ...

++1

She short the strike with approximately 10-15% lower/higher than current market price, and she is "lucky" that she never hit by any correction/crash since she start this magic recipe.


She is just another lucky girl as she only trade AFTER the big down since 2008. Nevertheless, there are ton of option sellers that claim > 50% return after 2009. If you look back the history, same thing happen from 2001 to 2007 that some of those options sellers that can achieve an insane sharp ratio (>3.5). However, most of those super trader disappear after 2008 for good reason.