IS this Karen Supertrader story legit?

There is a real easy way to test her method. Just sell a SPY strangle with say, APR2 155Px10 and 159Cx12 for $824 less comm. Close to even Deltas outside of 1SD so 80% chance of success. Adjust it as the next 11 days goes by if necessary and enjoy the fact that there is only a 10% chance of loss on either end...
And, of course we know it can't be in both places at once so makes it nicer. Hard to know how much adjustments help, just keep the Deltas neutral more or less...

First one to do this and document same gets a free six pak of Black Butte Porter from me...

Regards,

Jerry in Oregon

PS. I was born a skeptic, but her story has a ring of truth about it...
 
jerry2dt said:
There is a real easy way to test her method. Just sell a SPY strangle with say, APR2 155Px10 and 159Cx12 for $824 less comm. Close to even Deltas outside of 1SD so 80% chance of success. Adjust it as the next 11 days goes by if necessary and enjoy the fact that there is only a 10% chance of loss on either end...
And, of course we know it can't be in both places at once so makes it nicer. Hard to know how much adjustments help, just keep the Deltas neutral more or less...

First one to do this and document same gets a free six pak of Black Butte Porter from me...

Regards,

Jerry in Oregon

PS. I was born a skeptic, but her story has a ring of truth about it...
Click to expand...

No takers? No simulators out there? TOS paper trading? Nobody like beer???

Jerry
 
I don't drink beer no, but thanks. But I've been playing with the idea on sim for three months now. If you guys haven't seen it yet, there is a follow up segment on tastytrade and now posted on youtube where Karen's account is now $160 million plus. I would assume it's the rich elite piling on to her fund.

So far, the total p/l is about +4.4% starting with 100 million similar to what Karen said in her Tastytrade segment update. Had a big drawdown to 1% a month ago but held on and it balanced back. Now pushing the high side again. Another black swan move could certainly wipe out all the gains. I also tried the NDX but it was too hard so I gave up on it. I found the only way to keep it profitable in sim is when closing a leg with a # of contracts is to make sure it's limit bought all the way on the bid average spread as TOS doesn't seem to do it automatically. Have no way of knowing if it would close that easily in real money, at hundreds of contracts at a time.

At first I tried adjusting by full strangles, then now at 53 days out, putting the whole caboodle on, then minutely adding or removing puts or calls to adjust. Mostly haphazard as I have no idea how Karen actually precisely does this. But she did mention adjusting by single short calls or short puts.

I would think one would have to already be a billionaire to be comfortable doing this! Losing or gaining hundreds of k's in a day is just to much for a mere middle-class mortal imo (well maybe Ghadafi's kids with their mansions made of gold and stuffed walls of American dollars..) , not to mention a black swan millions wipeout. Anyways, it's been a fun game so far.
 

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krylite said:
I don't drink beer no, but thanks. But I've been playing with the idea on sim for three months now. If you guys haven't seen it yet, there is a follow up segment on tastytrade and now posted on youtube where Karen's account is now $160 million plus. I would assume it's the rich elite piling on to her fund.

So far, the total p/l is about +4.4% starting with 100 million similar to what Karen said in her Tastytrade segment update. Had a big drawdown to 1% a month ago but held on and it balanced back. Now pushing the high side again. Another black swan move could certainly wipe out all the gains. I also tried the NDX but it was too hard so I gave up on it. I found the only way to keep it profitable in sim is when closing a leg with a # of contracts is to make sure it's limit bought all the way on the bid average spread as TOS doesn't seem to do it automatically. Have no way of knowing if it would close that easily in real money, at hundreds of contracts at a time.

At first I tried adjusting by full strangles, then now at 53 days out, putting the whole caboodle on, then minutely adding or removing puts or calls to adjust. Mostly haphazard as I have no idea how Karen actually precisely does this. But she did mention adjusting by single short calls or short puts.

I would think one would have to already be a billionaire to be comfortable doing this! Losing or gaining hundreds of k's in a day is just to much for a mere middle-class mortal imo (well maybe Ghadafi's kids with their mansions made of gold and stuffed walls of American dollars..) , not to mention a black swan millions wipeout. Anyways, it's been a fun game so far.
Click to expand...

I have been experimenting with short strangles in real time trades and currently have had one on for the past 10 days, expiring next Fri., but may take it off sooner. The legs are 2 SD's wide now because I took every chance to push them out, taking profits and losses as necessary. This am one on the put side was too far out, little delta in it so took that profit and put another in to even out the D's. Also, just one SD at 68% does not give enough protection when 1 out of 15 trades blows one up.

I note that Karen has 4 traders and herself watching every tik and in my experience so far feel one must attempt the same. I note she trades the SPX and suspect she uses a very lo cost broker. Just one contract on it is for 100x1595=$159K. She also may have had a run of very nice luck when first selling strangles, and so had a bunch of capital. Maybe she'll write a book and explain everything in detail.

Best to all,

Jerry
 
jerry2dt said:
. . . sell a SPY strangle with say, APR2 155Px10 and 159Cx12 for $824 less comm. Close to even Deltas outside of 1SD so 80% chance of success. Adjust it as the next 11 days goes by if necessary and enjoy the fact that there is only a 10% chance of loss on either end...
. . .
Click to expand...

And watch your position get blown out of the water when the market gaps up/down on a black swan.
 
Trading undefined risk index options positions is just asking for trouble imo. Its a matter of time before there is another hft-generated flash crash or other such random event which would obliterate the P&L of most index strangles.
 
Based on her trading methodology, May 2013 would seem to have been a really bad month for Karen the Supertrader. She acknowledged in one of her interviews that market grind-ups were more difficult to deal with than declines. An example of a trade she may have done would have been to sell the Jun Spx 1685/1705 call spread on 4/25 for $0.62. The 1685 had a delta of 5 and an itm probability of 5.1%. By 5/15, the 1685 had a delta of 30 and itm of 29%, her stated threshold to adjust, and the spread was then $5.00. To attempt to recoup this loss, she would have had to roll the spread up, or out to Jul, but would have had to increase the position size by 5-8 times which would seemingly require significant leverage and added significant risk. Even if the original trade was an iron condor and she was able to roll the put side up to generate incremental profits, the loss on the call side would likely have still overwhelmed the position.
 
MACLondon said:
Trader - made $41 million profit in 3 years option trading - YouTube

Anyone have any thoughts on this woman? I smell a rat....
Click to expand...

Her rate of return for the past 3 years was a compounding 40-45% return. Her account size may have started with 100k as she was learning the game, but was soon ramped up into the millions after her first year of actually doing it for a living. If she's telling the truth, i would say i doubt she's lying because the guy interviewing her, Tom Sosnoff, caught notice of her while watching her trades within the brokerage. Seeing her risk profile and her success.
 
She ended up becoming a fund as more found her story. Her original start was the educational seminars and moonlighting as a trader. Then she quit and started with 100k and made 50k her first year. Her neighbor and a few friends gathered to 700k+ and then its been building ever since. But the press comes from her not even being in the industry and producing returns as she has, etc...
 
MACLondon said:
Agreed. Also interesting to see the classic signs of: No performance published, No chart, no further local press write up....etc etc...

Because i guess if the guy next door made 41million USD doing that in three years then went to the national press then nobody locally would be interested etc etc....nobody would have written much about it. She also makes some mistakes and then corrects herself in her video....she doesn't see sure of her strat and speak very opaquely. I guess we'll see if anybody else chimes in...
Click to expand...

Kare is actually a legit story. She started with $100,000 of her own money and proved to friends and investors that she can trade. So going to $41 million actually was a large investment from some rich people. With that said, she trades about 2 to 3 standard deviations at any one time. Is there premium???? Depends on how you look at it. 50% of her portfolio is always in the market at any one time. By placing MASSIVE trades, you can pick up a decent premium. She gets so far out in her trades that the probability of being ITM is probably around 3% to 4% and her breakeven is at 5%. It's all a numbers game really. If the /ES is trading around 1635 and she sells naked PUTS at 1395 to 1404 somewhere in that range, she can use $30,000 of buying power to pick up enough premium to giver her $3,000 in ROC (assuming the account size was $100,000, but she plays with a $100,000,000 portfolio). That's 30% of capital used and she uses 50% at any one time.
 
I must say I use Bollingers with the pipdaq setups and they work a treat so while I don't know this lady I wouldn't be surprised if she was legit...
 
The ins and outs of her strategies may be a bit beyond me at the present but I'll just say this; I watched several minutes of this video, and also one where a gentleman named Peter Schultz at Tradingpub uses her as some kind of "reference" to suggest that this can work for anyone, and all through this, no one will mention her full name. We dont really know who this person actually is. This guy even makes the point that he's protecting her privacy. If she wanted to remain private, would she be doing this "interview"? You cant earn a bazzilion dollars in a few years and remain anonymous in this, or any other country. I just dont think it's going to happen.
 
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Is Karen legit. I certainly believe she is, since I understand the strategy she is using: strangles at around 5%-10% Prob of expiring ITM; in other words, the probability of profit is around 84% (or 1 std deviation).

In addition, she is very aggressive risking 50%-70% of her account on trade positions (which overlap); and she will consider rolling a leg if it gets above 30 delta. I personally would not risk more than 25% of the account, however.

There are other posts interested in knowing if consistent income can be made in trading. With options, you can achieve consistent income far more easily than trading equities, futures, etc. which are directional trades (and therefore have a prob of profit of 50% at best).

How do I know? Because I am using options (similar to Karen) to make consistent income on a Weekly basis. It can be done.
 
Yes, and I do those trades also. It works just fine until the underlying gaps beyond the one or two deviations and wipes out what you've gained in the past 20 trades. A 5% chance is after all, a 1 in 20 probability. It has happened to me in the past year. Gotta watch for those outliers on the bell curve..

I note most pros always have protection in the form of a buy further out. That does no good after the fact, of course...
 
Hi
i agree that karen could be genuine. i have been trading options for several years and i believe that options are unique to other investments such as forex and spreadbetting as you can also sell options aswell as buy them. this seems to be karen's secret "selling premium". they say 90% of option buyers lose. we can then become sellers with a 90% chance of winning! I am learning new strategies but i have had 85% success selling puts.
 
Hi
I am interested in sharing options strategies. I have found success selling puts. not as exciting as buying options but it does allow you to achieve consistent returns. I have recently learned some new strategies involving "selling premium" and i am seeking one that gives larger returns than put selling.
 
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