Karen the Supertrader - TastyTrade Hybrid Experiment

Discussion in 'Journals' started by Sweet Bobby, May 18, 2016.

  1. #91     May 31, 2016
    d08 likes this.
  2. #92     May 31, 2016
  3. Yeah and I was an idiot for claiming no way she still doing this strategy for profit...
     
    #93     May 31, 2016
  4. Bobby...a federal agency found that she was fraudulently claiming profits when she really was not earning anything... You may make money doing this strategy but like all of us have been saying...this is a strategy for a specific type of market, not a strat you can do for the long-term and make money. Sooner or later volatility will chop off your legs.. or you just lie and defraud investors to make it look like you are making money while collecting fees...

    Quote:

    • Hope Advisers and Bruton engaged in a continuous pattern of trading to inflate their compensation from the funds. They not only delayed realization of trading losses but also intentionally sized certain trades so the funds realized a profit every month.
    • The scheme has enabled Hope Advisers to avoid realization of more than $50 million in losses in the hedge funds while earning millions of dollars in fees to which they were not entitled.
    • Without the fraudulent trades, Hope Advisers would have received almost no incentive fees from at least October 2014 through the present.

    After 16 years of being around traders, I still rely on my instincts to not trust anyone who claims to be making millions selling premium through all kinds of markets because they keep proving me right...Maybe they should change her name to Karen the Superfrauder...
     
    #94     May 31, 2016
  5. newwurldmn

    newwurldmn

    Thing is first 7 months of 2015 was a great vol selling period.
     
    #95     May 31, 2016
  6. isotope

    isotope

    When I sell options premium, I in essence enter into a volatility or variance swap contract with my customer (the counter party). The very reason I choose to enter into such an agreement is that I think market is going to be calmer than expected. The very reason my counter party chooses to enter into the same agreement is that s/he thinks market is going to be more volatile than expected.

    My pay off = contract notional * (strike vol - realized vol)

    The customer's pay off = contract notional * (realized vol - strike vol)

    In writing an option contract, the strike vol is the implied vol. I win the trade if implied vol exceeds realized vol. I lose the trade if realized vol exceeds implied vol. When the contract is established, neither my customer nor I know what the future realized vol will be. We both only have our opposite opinions.

    Since historical vol does not predict future realized vol, I have to resort to vol cones analysis, autoregressive model simulation, consulting Feng Shui masters, or consulting Paul the octopus. And none of these methods consistently yield fantastic returns.

    Selling premium when implied vol is high may not help my long term pay-off because high IV usually implies that I am more likely wrong in my opinion about future volatility. I am still selling premium because my customers need someone like myself to take their bets. In return, they pay me a tiny profit because many of you guys are competing for my business.
     
    Last edited: May 31, 2016
    #96     May 31, 2016
  7. I have read the complaint and it does not look good for Karen. The Karen videos did one thing for me - they got me engaged. I, along with many others, have devoted years of our lives trying to understand her strategy. One important thing that Karen said was "don't try to do what I do. You have to find what works for you."

    I took her advice to heart. I have tried and tried to explain what Karen says when she says she's using 50% of her account. In my paper trading, I could NEVER see that this was remotely possible. It was too big! In my opinion, it was too much risk. But several things that she said made absolute, perfect sense.

    Now, I have formulated my own strategy and I am in the process of testing it. I named it the Karen/Tastytrade hybrid because I drew inspiration from both sources. It's easy for someone to come on here and bash me and tell me that I'm stupid and I'm going to lose everything and that I'm dreaming unrealistic dreams. But if you look at what I'm doing, I'm taking a very different approach. Karen says that she does not watch her deltas and she's not concerned with maintaining a negative delta. I differ from Karen on delta. Karen says she's 50% invested. I am no where close to that. I manage winners at 50%. Karen often lets trades run to expiration. I never will. She sells puts and calls separately. I normally sell ratio strangles and I have even sold just puts and I have put on straddles. Depending on what's going on with my account, my strategies may change.

    I'm not trying to get on here and say that I'm the next SuperTrader. I have no stinking idea what I'm doing. I'm simply testing a strategy. More importantly, I'm learning. It helps me to be accountable to report my progress. If people don't want to read my posts, go back to your dangling babies and leave me the hell alone.

    My strategy is performing well thus far. I am tweaking it all the time. I eagerly look forward to choppy markets because I want to see how well I make adjustments.

    If Karen is indeed a fraud, she was a very convincing fraud. If she goes to jail and all of her investors go bankrupt that will be sad, but I've invested thousands of hours toward this study. And, her failures aren't going to stop me. I plan on learning something new tomorrow that will make me a better trader.

    Happy trading!

    Bobby
     
    #97     Jun 1, 2016
    iprome and isotope like this.
  8. isotope

    isotope

    Very well said again. I fully support your learning spirit. Keep up with your good work. I brought up the Bittman strategy the other day because I thought it would give you extra perspectives to the intriguing problem of selling volatility risk premium.

    When it comes to trade sizing and capital management, text book studies demonstrate that fractional sizing schemes out perform fixed sizing schemes. The Kelly Criterion is a popular fractional scheme.

    https://en.wikipedia.org/wiki/Kelly_criterion
    http://www.elem.com/~btilly/kelly-criterion/
    http://www.investopedia.com/articles/trading/04/091504.asp
     
    #98     Jun 1, 2016
    iprome and Sweet Bobby like this.
  9. CBC

    CBC


    Thanks for that tradexxx, quite an interesting read. I read the SEC complaint that had a link down the bottom of that page.

    I remember watching her video a long time ago and thinking to myself, yup Karen, your time is comming. Been waiting a long time to.

    Looks like that time is now.
     
    Last edited: Jun 1, 2016
    #99     Jun 1, 2016
  10. newwurldmn

    newwurldmn

    Talk about whackjob accounting. She sells an itm call and claims the whole premium as income. The assigned underlying is put into an unrealized loss bucket where she hopes it will recover.

    She basically had one investor.

    Whole operation is like a newbie elitetrader
     
    Last edited: Jun 1, 2016
    #100     Jun 1, 2016