Jeff, listen to the tape again but before you do, look up the lectures of sosnoff in tastytrade where they roll up the "unchallenged" part of the condor or strangle to generate credits. With that strategy as a backdrop, listen to her and u can discern that she as she plays defense by call roll up if mkt goes up, (she is looking at a big debit), she then gets credits to offset her losing side. How? by selling the put verticals that are unchallenged. REad bet the lines again, she oversells to "equalize " the credit/debit (OMG) Works ok if mkt stays up and does not whipsaw back down or mkt does not gap or vega/vix stays quiescent. Furthermore, all this nonsense of projecting a "virtual" sp value 10 points and selling strikes further down than that down is really a fancy way of hiding the fact that she sells " teenies". If I had such a reptilian lust for $ I'd do the same. I'd start w/ a pot of $, sell teenies, hope that I don't get whacked in 1-2 years, get in OPM, sell more teenies, bring in more OPM, then slowly get my original $ and my OPM cut then play solely with OPM until the black swan arrives. At that point, I would fire off a really sappy and nice "mea culpa" letter to my investors and fade away w my cut ...... Such is the nature of short juice strats....15 steps forward, 20 steps back.
This is all ringing déjà vu to me now that I am remembering the 1990's and the Don Fishback home study option course I bought. The course was preaching to sell shit (technical term) that has only a 5% probability of expiring in the money. I never really knew what the hell he was talking about, but now these Karen video's kind of rung a bell in the old noggin'. At that time there wasn't any fancy software to do the math probabilities for you, so you had to calculate by hand with these endless formula's taught in course. I was a beginner and to me this looked like voo-doo, so I ignored the whole concept and went on to the super-genius (ha..ha) method of buying straight premium, blowing out several accounts in the learning process. Amazing what rings our mental bell after all this time. Jeff
"Roll" can refer to different things. What do you mean when you say she rolls up? Secondly, she has been in business less than 4 years. The market crashed in 2008. Premium sellers would have been hurt.
Your probably right, because after just watching both videos a 6th time (day off from Xmas shopping), I just noticed that there was really no success until 2008 to 2012. 2002 to 2007 (5 years) was a learning process experimenting with various strategies and trade vehicles. 2008 and 2009 are questionable because the interviewer skims over that period and quickly jumps to 2010 to 2012 results. That really isn't enough time to be battle tested. Jeff
12-11-12 12:41 PM Quote from Stok: Selling out 8 weeks, strangles on SPX mainly. 5% chance of ITM for puts, 10% chance for ITM for calls. Once these get to 30% chance of ITM, she rolls up, closes some out. The whole interview seemed rubbish...I want to know her last name to see if she is real since she claims to manage two funds. -------------------------------------------------------------------------------- I have watched those videos about 6 times and I get the impression that her trades don't initially start off as short strangles, but as naked put sells, "or" naked call sells, and only turn into wide short strangles if the trade is going bad. (like she says, "once I get a credit I never give it back and will do whatever it takes to fix it"). Jeff
I thought she was ok up until the part in the video when she said she wants to get her debit back wherever she can get it. That is scary! When you sell a teenie that u now have to buy back for $3, and you want to get that $3 back come what may, you either have to sell a way back month which lengthens your duration (which means you are giving the market a ton of time to whipsaw back down ) or sell a front month a lot more times than prudence would dictate.
this is useless.. think of it like this.. if its a simple sell and adjust strategy .. its like drug smuggling.. you make tons of money till you get caught and go broke.. that being said.. market makers flatten the convexity that she is describing that she is exposed to. who do you think wins in the end? the neutral market maker wants positive convexity in tails/teenies.. why would you sell deep otm wings. you are basically selling tail events.. impossible to predict.. you wanna be a buyer of rare events.. o or options are so overpriced that the drug smuggling strategy works because you make enough money to make sense of the crime.. meaning your can buy a good lawyer.. or in trading .. the risk makes sense of the large draw down.. if you run up a 10k account to 1 million selling options.. and get a catastrophic draw down back to 150k.. it might feel bad but essentially you have made sense of the risk you took. this is just media sensationalism.. don't listen its poison.. it will ruin you as a trader.. the media is adequated to keep you paying attention.. not cut you in on whats really going on.. do you really think what keeps your attention is what is really going on? i'd rather be in business when something usual happens, rich when something really unusual happens, and making headway when the usual is occurring. who cares about a strategy with returns that are large when the survival rate of that strategy is 0
Watch the video it is quite amazing and scary. Unbelievable that this women could raise so much money. She is just selling Strangle 3 to 5d. Can't beleive she did not blow up in 2008, pure luck..
Definitely keep your TOS balance under SIPC limit. When her shit blows up, someone will be left holding the bag. Let it not be you!