Not when you were as awesome as a stock picker as he claimed to be!!
He claimed to have a model to outperform the market 100% of the time.
Why he choose to make up the risk reversal vs short futures is beyond me.
What does Karen the Supertrader and her results say about volatility? Oversold?
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Not when you were as awesome as a stock picker as he claimed to be!!
He claimed to have a model to outperform the market 100% of the time.
Why he choose to make up the risk reversal vs short futures is beyond me.
Exactly.
Every trade is dangerious if the size is wrong. You can generate very reasonable returns selling skew if you do it (a) when the time is right and (b) control the size.
It's an event-actuarial business, not any different then selling hurricane insurance - as long as you are capitalized well enough, you will survive the crash and if you have done the homework, you have a positive expectaton. The reason why that opportunity persists despite positive expectation is that the P&L profile assymetry is not acceptable to the majority of investors. Regulatory pressures don't really help the case either.
These types don't differentiate or make value assumptions. They simply sell the vol on the rollover via exp or stop loss.
Actually, on relative basis the skew is an attractive sell when other risk premia is not. Far OTM wings is an actuarial game, you are taking event risk colateralized by your magine and getting paid for it. Gamma and vega are much more controallable risk premia with very low probability of total ruin. While I can totally see doing something like that for my PA, I don't get is how Karen manged to convince investors to invest into something like this.
Yes. "Stupid girls get spanked". It's true in trading and everywhere else.
First, we already established that rich people can be dumb too.
Second, with her returns. She has been outperforming the market for 5 years....
Third, specially with her return in 2008. If that year didn't blow her up, investors can believe that nothing will.
Fourth, people like to follow others. So in her neck of the woods she can convince one influential person and that person can bring in others...
Also, if you don't invest ALL your wealth with her, you are only partially exposed to her strategy/risk...
The thing I wonder about is, why her AUM didn't grow from last year with such a good (24-27%) returns?
There was a guy in Chicago who had marketed a three year gain of ~250%. The gain wasn't organic; it was simply his increase in AUM due to adds. He literally took the growth in outside money and replaced the x-axis header with return on capital. Somehow it passed some superficial audit. The guy went bust a year later.
I wouldn't be surprised if this whole thing is a scam. Not that it can't happen -- I know a dozen traders who have done better, but it smells bad. Any kind of offering would be massively scrutinized, so it must be legit, but...
Why do people not understand this simple concept? if you don't get it, honestly, you shouldn't be trading. There's a reason it's called a 2 SD move. It's because IT DOES HAPPEN sometimes. If it doesn't happen it wouldn't be called a 2 SD move.
If I had a dime for every time I heard somebody say something like: "oh but I'm selling 2 SD's out, do you know how low the odds of that happening are"
Why yes Mr Genius I do. 2 SD's !!!
2 SD trading is no "safer" then 1 SD or ATM. The options market is relatively efficient. If you trade at 1 SD you'll make more on winners but have more losing trades. If you trade 2 SD you will hit a whole bunch of singles but you will get large busts from time to time. It all depends on where your specific strategy is comfortable and where your planned hedging and management of trades will provide the most bang for the least amount of bucks. Some strategies are easier hedged when the main spread is way out, and other times you get the most efficient hedging when you trade very close to the money.
This lady with a straight face went on a show and said, she doesn't hedge, she doesn't adjust, she isn't selective on entries, she doesn't manage trades, and she doesn't use stop losses.
If there is anybody here who thinks this is a good idea, IMMEDIATELY relinquish control of your trading account and give your money to somebody else to manage.
Oh yeah, and she also famously says "once I take in that premium from the sale, I'm not giving it back." Oh but lady, someday you will give it back regardless of how badly you don't want to.
If I had a dime for every time I heard somebody say something like: "oh but I'm selling 2 SD's out, do you know how low the odds of that happening are"
Why yes Mr Genius I do. 2 SD's !!!
2 SD trading is no "safer" then 1 SD or ATM. The options market is relatively efficient. If you trade at 1 SD you'll make more on winners but have more losing trades. If you trade 2 SD you will hit a whole bunch of singles but you will get large busts from time to time. It all depends on where your specific strategy is comfortable and where your planned hedging and management of trades will provide the most bang for the least amount of bucks. Some strategies are easier hedged when the main spread is way out, and other times you get the most efficient hedging when you trade very close to the money.
This lady with a straight face went on a show and said, she doesn't hedge, she doesn't adjust, she isn't selective on entries, she doesn't manage trades, and she doesn't use stop losses.
If there is anybody here who thinks this is a good idea, IMMEDIATELY relinquish control of your trading account and give your money to somebody else to manage.
Oh yeah, and she also famously says "once I take in that premium from the sale, I'm not giving it back." Oh but lady, someday you will give it back regardless of how badly you don't want to.