I'll let Jim Simons know about the scaling. Yeah Neke, I've been doing this for a little while so I'm aware of that. The point is, if you look at it on the aggregate, there are billions of dollars collectively going into this simply binary approach which is selling the risk premia in risk assets. Everyone knows its there, it's not an edge. There is also rich yields in selling heroine in affluent upscale neighborhoods. That is also not an edge but the risk premia sure is fat.
Schadenfreude Warning: "Karen the Supertrader"
- Thread starter Niten Doraku
- Start date
I'll let Jim Simons know about the scaling. Yeah Neke, I've been doing this for a little while so I'm aware of that. The point is, if you look at it on the aggregate, there are billions of dollars collectively going into this simply binary approach which is selling the risk premia in risk assets. Everyone knows its there, it's not an edge. There is also rich yields in selling heroine in affluent upscale neighborhoods. That is also not an edge but the risk premia sure is fat.
Tom Sosnoff certainly is in awe of her here in this video.
Will the University un-award her now?
I wonder if the charity was 'guilt feelings' or just part of the scam shuffling money around. I certainly 'hope' (pun intended) that once she is sentenced by the SEC that the university is made aware of her activities
<<I certainly 'hope' (pun intended) that once she is sentenced by the SEC that the university is made aware of her activities >>
Yeah, and I certainly 'hope' justice gets served!
Well she lost $100 mill in one month so that was 50% of her fund. I imagine a lot of high net worth individuals are quite unhappy now as they will be lucky to get 50% of their money back.
If she had just admitted the Oct 14 loss to her clients she would not be in trouble now.
I 'hope' she goes to prison, she knowingly duped her clients for more fees
What I don't understand about TastyTrade is Tom does not really believe in anyone's ability to read a chart. Tom wants you to rely purely on the 1 Std Dev and Normal Distribution holding up as well as the accuracy of Implied Vol yet he talks about "managing trades". A casino does not need to really "manage" or worry about how the math plays out at a roulette table other than setting a table max bet.
If Tom wants people to rely only on the math then why not sell spreads? Why sell options naked? With spreads your max risk is defined. Naked options require a much higher level of skill to manage.
The idea of monthly income just magically coming in every month as if Wall Street is your personal ATM machine is very attractive.
If you rely on the math only then you should expect to be killed at least twice a year. Let me give you a real world example:
Look at the July 15th 2016 PUTs in the SPY. Based on IV 1 Std Dev is $201.37. We will Sell the $201 Strike and BUY the $199 Strike. The chance of our short strike getting touched is 24.09%. Our chance of winning the trade is 75.91%. Our Max Profit not counting commissions is $26. If the short strike is touched and assuming you can get out of the spread right at $201 then the Loss could be limited to around $54. The Max Possible Loss is $174.
Assuming you have the skill or luck to get out right at $201 if the short strike is touched then the expectancy of this trade would look something like this
(75.91*$26)-(24.09*$54)=$627.80 on a yearly basis it would be (9.1092*$26)-(2.8908*$54)=$80.74 per year. Assuming you can maintain the ability or luck to get out at $201 then you would face a $78.05 draw down about twice a year. This is all based on 1 contract. Your skill in this trade is to exit the trade before you hit the max possible loss.
You would need thousands of dollars just to try to scratch out minimum wage assuming you can get a positive expectancy trade every month. Assuming the math holds up then things will get ugly AT LEAST twice a year. If you take one max loss hit then the entire potential positive expectancy goes out of the window. You better have the extra funds to give yourself a draw.
If you do not immediately book the loss and move on to the next trade/distribution you then try to "manage" the trade by rolling naked options like Karen and then you end up getting screwed. I like the guys at TastyTrade but why bring on mathematicians and make it seem like it is "only about the math" and then talk about "managing your trade"? There is nothing mathematical about subjectively managing a trade.
You can make money selling options however, it is anything but a smooth ride and free money. I am personally seeing better results with my own customized version of the ACD Method. The draw downs are certainly less brutal.
If Tom wants people to rely only on the math then why not sell spreads? Why sell options naked? With spreads your max risk is defined. Naked options require a much higher level of skill to manage.
The idea of monthly income just magically coming in every month as if Wall Street is your personal ATM machine is very attractive.
If you rely on the math only then you should expect to be killed at least twice a year. Let me give you a real world example:
Look at the July 15th 2016 PUTs in the SPY. Based on IV 1 Std Dev is $201.37. We will Sell the $201 Strike and BUY the $199 Strike. The chance of our short strike getting touched is 24.09%. Our chance of winning the trade is 75.91%. Our Max Profit not counting commissions is $26. If the short strike is touched and assuming you can get out of the spread right at $201 then the Loss could be limited to around $54. The Max Possible Loss is $174.
Assuming you have the skill or luck to get out right at $201 if the short strike is touched then the expectancy of this trade would look something like this
(75.91*$26)-(24.09*$54)=$627.80 on a yearly basis it would be (9.1092*$26)-(2.8908*$54)=$80.74 per year. Assuming you can maintain the ability or luck to get out at $201 then you would face a $78.05 draw down about twice a year. This is all based on 1 contract. Your skill in this trade is to exit the trade before you hit the max possible loss.
You would need thousands of dollars just to try to scratch out minimum wage assuming you can get a positive expectancy trade every month. Assuming the math holds up then things will get ugly AT LEAST twice a year. If you take one max loss hit then the entire potential positive expectancy goes out of the window. You better have the extra funds to give yourself a draw.
If you do not immediately book the loss and move on to the next trade/distribution you then try to "manage" the trade by rolling naked options like Karen and then you end up getting screwed. I like the guys at TastyTrade but why bring on mathematicians and make it seem like it is "only about the math" and then talk about "managing your trade"? There is nothing mathematical about subjectively managing a trade.
You can make money selling options however, it is anything but a smooth ride and free money. I am personally seeing better results with my own customized version of the ACD Method. The draw downs are certainly less brutal.
I not only backtested but also wrote call options. Abandoned them when short calls/puts weren't that profitable. I was wondering if the strategy could yield better results when I use your occasional long strategy, if so when/how should I go long.
Regards,
I still don't understand why you're shorting options? Is it the "income", "premium selling", or something else that's attracted you to it?
How do you evaluate when an option is worth being sold versus being bought?
Asking when to go long and for how long is the equivalent of saying "I'm usually long equities but when should I short equities to improve my long equity strategy?"
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+1I am going to post this in front of my monitor so every time I think I found a simple "get rich quick" scheme I need to read it.