You ever hear of one of Karen the Supertrader’s Clients suing her?

[Mahony]

Would one of you Einsteins please let me know how Sweet Bobby is going to blow up his account? Please see my risk profile below. Now you know how I sleep well at night. Dear Market, please crash!

Sincerely,

Sweet Bobby

Ok I'll bite. Sweet Bobby, in the 150 days from May 2018 the S&P lost 45% of it's value. At current prices a 45% drop in the S&P would put the price at ~1530.

Can you please calculate what your loss would be at an S&P price of 1530 given your current strategy?

 

[Sweet Bobby]

It would not be a loss. It would be a huge gain. I will calculate it when I’m in front of my computer.

 

[GRULSTMRNN]

I don't remember a single fund in recent history that went under because of gap risk but a gross mismanagement of emotions and arrogance. Add to the mix sometimes ill intent to deceive.

No. It wasn’t. She pushed her losses out. In the end all tail sellers blow up because gap events are fundamentally unhedgable. That’s why options exist. If markets didn’t gap, you could easily synthetically create options.

The only way to not blow out is to accept small returns or to have a method to predict potential gap events and get out.

 

[newwurldmn]

I don't remember a single fund in recent history that went under because of gap risk but a gross mismanagement of emotions and arrogance. Add to the mix sometimes ill intent to deceive.

Some funds blew up on the CHFEUR spread if I recall.

 

[Overnight]

... And I might as well put on the hedge, because it doesn’t cost me any capital and actually provides additional income. It is impossible to “blow out” my account, although there are a number of contrarian opinions on this forum.

So with that last line there, you are effectively saying that you will never lose more than your account value.

I find this very difficult to believe. So your statement is contrarian to every single risk disclaimer out there in the world of trading.

Can you explain in detail how you manage this?

So a hedge provides income, your original position provides income, and you cannot blow out your account. Sounds like holy grail stuff.

 

[Sweet Bobby]

So with that last line there, you are effectively saying that you will never lose more than your account value.

I find this very difficult to believe. So your statement is contrarian to every single risk disclaimer out there in the world of trading.

Can you explain in detail how you manage this?

So a hedge provides income, your original position provides income, and you cannot blow out your account. Sounds like holy grail stuff.

I can certainly lose if the market grinds slowly down. I. That case, I have plenty of time to adjust my positions and the losses are manageable. I pray for a crash of 20% and a huge spike in volatility. That’s when the big bucks fly my way.

 

[Pekelo]

I will calculate it when I’m in front of my computer.

So have you met your computer?

 

[GRULSTMRNN]

They must have been relatively small funds I reckon. Even FXCM did not blow up due to gap risk but due to gross mismanagement in that they allowed clients to continue to speculate in this cross at 100:1 or sometimes even 200:1 leverage even after the writing was on the wall.

Some funds blew up on the CHFEUR spread if I recall.

 

[Sweet Bobby]

So have you met your computer?

Yes, I have access to my laptop. As you can see, I am super happy if the market drops to 1,530! This is a risk profile of my entire portfolio. I think it is now evident that Sweet Bobby has indeed improved upon Karen's strategy. Karen, please contact me please. How does Daddy do it?

 

[Pekelo]

Can't you do the same on a stock for more premium?