A good summary of her strategy, although the blogger is wrong on her doubling her fund several times. That didn't happen, at least not by trading:
http://www.optionstradingiq.com/karen-the-supertrader/
Read the comments, one of them:
"Simple. She has customer portfolio margin and sells short strangles. The margin required is much less than for Reg T accounts. Her magic is in how she manages the positions and her position sizing. That's every trader's edge...if you can exploit it. This is the part she holds close to the vest but most can guess at least some of her tactics."
Another one:
"Karen is on Portfolio Margin so her reduction in BPR is much much less, almost a third of that amount. My fund trades this strategy as well, however, I only risk 10% of my account on this strategy because as the positions move on you, the margin requirement expands, sometimes 2 or 3 times. "
More:
"Karen trades what is sometimes referred to as a "mean reversion" strategy. After a sustained up move, the likely future direction is down and vice versa. She probably doesn't sell calls on every up day or puts on every down down. Rather, she probably waits for an extended move in one direction before placing her trades."
This last one can explain how she can avoid a really big loss. If in 2008 she was in cash on some of the biggest moving days and/or just let her calls expire, that explains
how she didn't blow up. She also could have reduced size, when volatility got crazy...
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After rereading my #48 post, the 50% return on the 100K of her own money refers to 2007.
