I wonder if that could be confirmed, both funds (Empirica and Universa) to have been profitable above average longterm. But my memories tell me otherwise. I could be wrong.
"Universa returned about 115 percent to investors in 2008" http://www.bloomberg.com/news/artic...manager-returning-23-anticipating-bear-market
Here is the crux of it, you cannot make it safer. The risk is always there. you can partially hedge but then you end of up with too many moving parts, lots of commission and underperforming the market. People used to ask me all the time how can I reduce the risk of selling credit spreads and I often told them the risk is there no matter what, only thing you can do when it is not a black swan is lose the ego and get out when it starts moving against you. limit the pain. When the market black swan comes, there is no way to reduce the risk. You cannot foresee something unpredictable and reduce the risk of the unknown and when you actually know it, it is too late. Boom! Attempts to make the strategy safer have been tried by people far smarter than both of us and they have usually blown out at some time. As I said before I am not against selling premium, but it is a strategy where any edge, if it exists at all, is picking the right circumstances to go in and do it (and this is different for every person), not to do it weekly as a constant strat irregardless (i know it aint a word but fits nicely) of market conditions.
First, selling 100 ES straddles is too much risk to undertake in my opinion but I know you were just asking a hypotehtical. Delta hedging is something maybe market makers do with their almost no transaction costs and constant hedging I assume. For anyone else, delta hedging is a way to make your broker rich in churning your account and serves no useful purpose. When I sell straddles ATM or directional, I have a market price level where if it hits either or the straddle gets to a certain value I bail. If the straddle decays nicely but I still want to do it, I will buy the wings only if I like the Iron Fly that would result. Honestly I rarely do this strategy because i want the right conditions to make me comfortable, everybody is different. I prefer when ES is setting up to range and vols have good chance to pull in (it is more a vol trade than a theta play). Now I perfer trading volatility and ignoring market direction all together because it makes it easier to monitor.
Well, I dont know. What I know is that Taleb is a millionnaire, and millions have been made as an option trader Tavakoli is a Consultant, Expert Witness, Author, Speaker. So if I had to trust ....
Oh man ... Tastytrade expertise... ' To reach $1 billion profit in option trading only by utilizing $ 250 millions... the fund needs to make 40 folds of profit ' . Tom needs to try again... slowly... Lol
They were pretty good actually. The guy made enough money in 1987 to support him the rest of his life. He made enough money in 2008 to live another 200 years if such option were available. Wish I could say the same for the rest of the industry.