I read the legal report about that thief slut. She lost money by being a dumb idiot and betting against volatility by Short Straddling. This strategy profits if the market doesn't move... and you get blown to pieces if it moves (up or down). She was actually losing money the whole time... but on one day, the S&P move was so sudden and vicious it alerted authorities watching her account. On August 24th 2015, the S&P has this giant red candle (check the day chart). The S&P did a vicious 10% retrace, which means that her margin increased from $100m to $220m. She only had $200m of purchasing power. She theoretically lost over 100% of her purchasing power because this wick was so hard. But because she's a fund, there's no-one overseeing her account that Forces an automatic liquidation. Earlier in her career, she did not get out of her position and begin hedging to take her losses. Instead she kept rolling over the losses indefinitely. Clients thought she was killing it, and they kept paying her fees. Until August 24th happened. She's just another fraudster. If she took her loss (like she was supposed to) then she'd have taken a 50%-75% loss pretty early on and no-one would have kept giving her money.
I also thought Karen was a fraud until someone posted some info about her trading again. Looking at online docs it seems that some investors continue entrusting her with large sums for trading, even after she lost so much money in the past. Does anyone know how she was able to get more money, whether she has any newer prospectus, what is she selling/offering those investors, why she didn’t land in jail or at least wasn’t prohibited from ever trading again. etc? Personally I don’t have a problem with Sweet Bobby’s claims because everyone here is making some claims, while everyone attacks everyone for petty reasons. And as long as Rentec is raking in $billions, supposedly with little to no risk, some traders should also be able to snatch a $million here and there. It’s not like everyone here is a loser and the only reason to hang out is to call everyone else a loser... (?)
I see tastytrade.com as a good educational website for options trading. I have reviewed many of their videos. They do significant backtesting for their strategies as well as look for the underlying principles for why their idea should work. That said, I know nothing about Karen but have seen Tom ask hard questions or his on point observations, in a soft way, to some of his guest speakers. I do feel Tom needs to be more focused and consistent when discussing risk. Overall, tastytrade.com has definately accelerated my development as an options trader.
BTW, I have nothing against option sellers, as long as they do it in a responsible manner. In fact, there is a CTA I have raised money for that is a net put seller. For those that understand the risk for a part of their savings, it might be a good fit.
1. I have a thread titled Karen at court, that explains all your questions. In short, the language of her HF contract was made in such a way that the prosecution could have had a very hard time to prove malicious intent, specially that the average jury wouldn't understand how derivatives work. So it was in the interest of both sides to reach a settlement. 2. It isn't like we don't believe Bobby making money. What is very highly unlikely that in the current volatile market he made 70% just by selling naked options. As it turns out according to him and the posted risk profile he did buy way more calls and puts than what he sold. But that is not how Karen's strategy works, so he was misleading us to believe Karen's strategy would be profitable in such enviroment...
People, can we not make elementary mistakes about facts?? 1. Even according to your chart that was 3 days, not one. And no, authorities were not watching her account. That is not how it works. 2. That was 3 very long sticks, meaning traders had more time to react. She also uses portfolio margin. The scheme (fake) trades started as early as 2014 October, and not in 2015 August. In that October there was a -7% fairly regular and slow pullback that bounced back completely. Generally such a move wouldn't cause a big problem to her strategy (as evidenced by the Yahoo boys making money in that time frame) but my guess is that she was overextended because of greed. I simply don't see any other reason. That is when she started to roll the losing positions.... The August big drop was the event what caused the investors to take notice.
The guy who does that journal is an idiot. Rumor has it that he is going to INCREASE his trade size after being a net loser for six months. Duh. At least we will finally be rid of that clown after he blows up his account. Never an more aptly named journal.