What does Karen the Supertrader and her results say about volatility? Oversold?
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Do you mean when the SPY fell from 1345 to 1121 between 22 July and 10 August.
It's a long time since I was at school, but I reckon that's a 16% fall, and nowhere near your original estimate of 25%.
More seriously, if you continue to look at Karen's strategy through rose tinted glasses, then the market may well teach you a valuable lesson in due course.
The best way for you to convince the doubters, is for you to trade this strategy yourself, post the trades on ET, and the ProfitLoss will settle this debate!
There is already a Yahoo group for that, linked in this thread already....
As long as she is in the game, I am convinced....
As were the Madoff investors who were convinced he traded split strike conversions.
There's a lot of question marks with this lady, but one thing we can be absolutely sure of is she isn't trading how she claimed to be trading on the show. Wide wing condors with 50% capital deployment just do not yield 56% portfolio return in 2011.
If her results are legit and she actually did make that money I can fully understand her not wanting to divulge her strategy. I don't go around telling people how I get my returns. But then why say anything at all? Why the lies? Why go on a show and talk about a strategy that anybody who passed grade 9 math already knows just doesn't add up to what she claims? Why not just talk about her results, her philosophy, her discipline, her lifestyle, trading stories etc... and leave the details of her strategy completely out of it.
Now there's going to be a bunch of newbie traders thinking you can just go blast off a bunch of 2 SD condors every 56 day cycle and make a killing. HA ! She's gonna be responsible for blowing up the trading accounts of anybody who actually takes this crazy lady seriously...
If her results are legit and she actually did make that money I can fully understand her not wanting to divulge her strategy. I don't go around telling people how I get my returns. But then why say anything at all? Why the lies? Why go on a show and talk about a strategy that anybody who passed grade 9 math already knows just doesn't add up to what she claims? Why not just talk about her results, her philosophy, her discipline, her lifestyle, trading stories etc... and leave the details of her strategy completely out of it.
Now there's going to be a bunch of newbie traders thinking you can just go blast off a bunch of 2 SD condors every 56 day cycle and make a killing. HA ! She's gonna be responsible for blowing up the trading accounts of anybody who actually takes this crazy lady seriously...
I am not endorsing or bashing her, but here are some facts with screen shots.
Using SPX as an example, What if one were to sell calls / puts, covered or uncovered at or just outside two standard deviation levels? Maybe entering as price approaches one standard deviation level as a trigger or whatever mechanism one chooses to justify their risk / reward. The calls / puts sold would be expiring at the end of the month or at the start of the next month (weeklies).
Going back 14 years (2000) on the SPX there were no losers. Price flirted with those levels but never closed outside of those levels. The SPX being cash settled / european style in this example removes the early exercise element.
This is much different than just selling these levels at the start of each month for just pennies, but with the proper triggers it is obviously a profitable strategy.
I don't know what her triggers are nor do I care, but I just wanted to point out the statistical facts.
Attached are the times where price in the last 14 years touched or pierced two standard deviation levels but failed to close outside of it.
Aug-Sep 2001
Jun-Jul 2002
Jan 2008
Sep-Oct 2008
May-Jun 2010
Using SPX as an example, What if one were to sell calls / puts, covered or uncovered at or just outside two standard deviation levels? Maybe entering as price approaches one standard deviation level as a trigger or whatever mechanism one chooses to justify their risk / reward. The calls / puts sold would be expiring at the end of the month or at the start of the next month (weeklies).
Going back 14 years (2000) on the SPX there were no losers. Price flirted with those levels but never closed outside of those levels. The SPX being cash settled / european style in this example removes the early exercise element.
This is much different than just selling these levels at the start of each month for just pennies, but with the proper triggers it is obviously a profitable strategy.
I don't know what her triggers are nor do I care, but I just wanted to point out the statistical facts.
Attached are the times where price in the last 14 years touched or pierced two standard deviation levels but failed to close outside of it.
Aug-Sep 2001
Jun-Jul 2002
Jan 2008
Sep-Oct 2008
May-Jun 2010
Nobody is arguing with the profitability of selling premium. I have no doubt at all that she does very well in her trading, just as the rest of us degenerate premium sellers do year in and year out. For my part, I'm only questing her reported portfolio returns and the fact that they don't jive with the details of her trading system. I'm also questioning the long term viability of her strategy, or I should say complete lack of a strategy.
As they say, everybody is a genius in a bull market. Those of us who have traded through several market cycles however see the obvious pitfalls of her blind slap it on and see what happens strategy.
So again, she's not actually trading how she says she is. There's no way her clients would listen to that show and say, yeah keep going with my millions. Hell no. Rich people aren't dumb. They will listen to that show and see all the red flags everywhere with the risk she's taking on and want a sit down with this lady.
In private, I'm quite sure she has already reassured all her clients that she does use stops, she does hedge, she does do adjustments, she does select better entry points, she does manage winners, etc. At least, for 190 million of her clients money, I hope she does :eek:
She sells individual calls and puts in SPX.
She hasn't sold ICs since the 2007-2008 timeframe.
Her call/put selling strategy has been adapted to the market conditions over the years.