You meant the LAW didn't understand rolling? And neither did you. The strategy started in 2014 had no way of making profits, the whole role of it was rolling a giant loss out into the future instead of booking it right away...(while booking management fees for open position gains)
What if Karen the Super Trader had an effective hedge?
- Thread starter Sweet Bobby
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You meant the LAW didn't understand rolling? And neither did you. The strategy started in 2014 had no way of making profits, the whole role of it was rolling a giant loss out into the future instead of booking it right away...(while booking management fees for open position gains)
Do you think she would still be managing in excess of $100 million if her investors were pissed off? Highly unlikely. She has no current losses. She has fully recovered. This is so fun!
Well, the problem is she is selling the cheapest hedges out there...makes the strategy very expensive to hedge (and in my mind inherently flawed). The way I would approach it would be to short the SPX components' volatility, and hedge on SPY with less delta at a higher ratio (I'd need to crunch the numbers to get accurate deltas...obviously not doing that). Just think of the rebates!
But, skipping to the end of the story (and deltas dealing with a black, not grey, swan), you have to play ever smaller option values, which pushes up spread costs, and when it all comes out in the end you have to pay the spread with your edge...or you've successfully reconciled the maxims above with the reality of liquidity and you're a successful options market maker.
It's also worth noting she has a history of using professional expertise to obscure financial reality, whether criminal or not.
So, let's remember it's her records we're looking at.
Bobby, since you asked about a more expert forum, here is r/options discussing her:
"The problem is when her shorts went against her, she rolled in the current month and counted the new open positions as a profit for the month. Next month, if her shorts also went against her, she'd roll again and show a profit again.
The profits weren't real and she was charging fees against non-existent profits."
"The problem is when her shorts went against her, she rolled in the current month and counted the new open positions as a profit for the month. Next month, if her shorts also went against her, she'd roll again and show a profit again.
The profits weren't real and she was charging fees against non-existent profits."
I still haven't seen a link, and all we have is your word. But yes, it is possible since Madoff was asked in prison for investment advice, so everything is possible.
Possible because of the raging bull market, nevertheless we haven't seen any evidence of it. It is possible, because she had 180 MM AUM and she now has only 100MM.
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"Business" is a broad discipline. What area of business, e.g., finance? I don't know too many first-year finance Ph.D. students, at least at reasonably reputable schools, that have the time to trade as much as you apparently do.
So Bobby misread somewhere that Karen still has 100 MM AUM this year (at this point this is still questionable without further proof) and somehow he came to the conclusion that Karen is back in the game and making profits for the last few years.
Mind you at her best, she had 180 MM or so AUM, so compared to that AND that the market conditions were favorable to her strategy in the last 3 years, managing only 100 MM means she had only 60-70 MM 3 years ago. The Yahoo boys were easily making 20-30% annually and Karen is supposed to be the master, so a minimum of 20% return is expected of her when the market is up or sideways...
In short, having 100 MM when about 6 years ago she already had 180MM is not a step up. Specially when the market is in your favour...
My bet is that Bobby misinterpreted some article and got OVEREXCITED for no good reason. And no, Karen is not going to give interviews anytime soon. <<<her lawyer's expert advice possibly
TL;DR: Bobby, put down the coffee mug.
Mind you at her best, she had 180 MM or so AUM, so compared to that AND that the market conditions were favorable to her strategy in the last 3 years, managing only 100 MM means she had only 60-70 MM 3 years ago. The Yahoo boys were easily making 20-30% annually and Karen is supposed to be the master, so a minimum of 20% return is expected of her when the market is up or sideways...
In short, having 100 MM when about 6 years ago she already had 180MM is not a step up. Specially when the market is in your favour...
My bet is that Bobby misinterpreted some article and got OVEREXCITED for no good reason. And no, Karen is not going to give interviews anytime soon. <<<her lawyer's expert advice possibly
TL;DR: Bobby, put down the coffee mug.
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Penelope, you keep getting it wrong. She had $300 million under management. Look so her 2018 SEC filing. She indicates that she has over $100 million in the fund. It’s the largest box you can check. They don’t have a $300 million box. If you want me to, I can do a video tutorial showing you how to retrieve this information if you don’t know how.
I knew the fools would come out with their attacks! Not one meaningful post from you guys on hedging! By the way, my trading takes no more than 10 minutes per day. Sorry, I have to check out and study inferential statistics.