Karen the Supertrader - TastyTrade Hybrid Experiment

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

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  1. My only question is if the market gap and it blow past your $3 stop loss when the market is closed (this happened before and sure will happen again in future), what is your plan to deal with this situation?
    #261     Jun 13, 2016
  2. Great question Galvinlee. If there is a big gap I fully expect it to blow right past my stop loss. The first thing I do is remain calm and look at what the analyze tab and the market is telling me. The great thing is that I have several options. Keep in mind, I am stressing the account for a 15% up move and a 20% down move with a 50 point increase in volatility. The key is to stay alive to trade another day.

    My available options are to close positions. Again, it depends on how much of a move occurred and what affect it would have on my overall account. Another option would be to roll the untested side either up or down to collect more premium. I also have the option to roll the entire position out in time. If there was a huge gap down, premium prices would be greatly inflated and it would be a good time to put new positions on.

    The key as I see it is to stay small. Size is what kills with this type of strategy. I look forward to seeing how my adjustment strategy works out.

    My account today is feeling the effects of a significant increase in volatility. This is no surprise since I had a large negative vega. So what did I do? I sold new positions, including a ratio straddle where I sold two at the money calls and one at the money put. If you look at my account after the last few days, I am clearly out of balance. That's ok. I don't have to correct everything in one day. My delta is now positive, so I need to add negative deltas to the account. I anticipate doing that until the account is back in line.

    I'm confident in my ability to navigate the choppy waters. Time will tell. Keep in mind that I know absolutely nothing.
    Thanks for the question!

    #262     Jun 13, 2016
    Pilot550 likes this.
  3. That spike in volatility was something, huh?

    Four trades today. I closed these two positions:

    SPY 01 JUL 16 214C(3)/170P(2)
    SPY 01 JUL 16 213.5C(3)/170P(2)

    The first was closed after being in the trade for 26 days with a $60 loss.

    The second was closed after being in the trade for 25 days with a $104 loss.

    Then I opened two new positions:

    SPY 29 JUL 16 221C(1)/190P(1) Strangle 46 20.00% 6/13/2016 $1.20 $118.00
    SPY 29 JUL 16 209.5C(2)/209.5P(1) Ratio straddle 46 24.00% 6/13/2016 $13.12 $1,309.00

    The first is a strangle and the second is a ratio straddle.

    Theta is 219, delta is 415, vega is -837, and gamma is 69.

    The account is down $1,667 for the day.

    I will be looking to put on negative deltas with any up move.

    Happy trading!

    #263     Jun 13, 2016
  4. newwurldmn


    How much do you lose on that
    #264     Jun 13, 2016
  5. isotope


    I don't mean to distract or digress.
    I just stumbled across this old ET post How much do you have to know?, which is a purely put writing strategy. The long term treasury notes in the strategy is of course subject to interest rate risk as pointed out in this article http://fortune.com/2013/02/15/10-year-treasuries-buy-today-cry-tomorrow/
    #265     Jun 13, 2016
  6. F_488


    Bobby good to see you posting your Trades again. Are you not worried about the Brexit Vote on the 23rd June. I think if the UK votes to leave Europe the markets will react very badly. The poles are saying the exit campaign is in front now.
    #266     Jun 14, 2016
  7. As you can see, my delta is not where it needs to be. I am going to get aggressive with getting it lower. When binary events such as this come up, it generally causes volatility to increase. With increased volatility, comes rich options premium. I will be actively trading through the entire ordeal.
    #267     Jun 14, 2016
  8. One trade today. I sold to open

    29 JUL 16 217.5C(2)/175P(1) for $1.41.

    It is really difficult to get my delta turned around without trading too big. If anyone has any thoughts on this, please let me know.

    Theta is 221, delta is 408, vega is - 856, and gamma is -74.

    The experiment is up $228 for the day.

    Happy trading!

    #268     Jun 14, 2016
  9. Pekelo


    Anybody care to comment on this guy? He uses Karen's method:

    Same guy rolling, aka locking in losses:

    #269     Jun 15, 2016
  10. I am familiar with him. Seems like a good guy. He runs the Tastytrade free forum. It is not associated with Tastytrade but just google Tastytrade free forum.

    He follows the logic from one of the Tastytrade research segments which found that selling one standard deviation strangles that collected premium in excess of 19.8% of the expected move had a very high probability of being winning trades. His Golden Gecko plays off of that. As I recall it is an iron condor with the short strikes at 1SD and the long strikes at 2 SD.
    #270     Jun 15, 2016
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