I think that is a good theory on what happened. I was thinking the same thing. In 2013 till oct 2014 the vix was very low and she may have taken too much risk to drive up returns
I did catch her 2nd interview when she mentioned in passing that a certian year is difficult so she had to move the strikes in which means the probability of touch on short strikes are even higher that what she was used to. It was a really tough watch for me since it went against all of what I was taught a long time ago- ie selling teenie options and yet there was this supertrader who made millions. I felt like " How stupid was I that I couldn't get close to her returns.." The strangest thing was when she mentioned that she sells on day x then buys it back around day x+20 or something.. that is when my BS radar started beeping. NO one would share a "personal grail" to that much specificity not to mention the theta curve is still relatively flat on those days to expiration.
Stocks basically went straight up in 2013. The S&P 500 was up over 30%, while the Russell was over 40% if memory serves. It was a bad year for option sellers who did bear call spreads, condors, etc. Not much premium and stocks kept moving up, taking out supposed resistance levels where sellers sold calls. I believe some option selling CTAs blew up that year.
No, you don't have to blow out. I have been trading them for 10 years, have done probably every kind of trade/combo there is at one time, and have never come close to blowing out an account or even lost that much. If you do not trade naked and you use only a small portion of your account for options, they are a great way to increase your returns a little. With options, a little is good but more is not better. And you are right, you do have to guess something correctly (direction or volatility or both) to make money. You don't need to guess correctly "consistently" but you do be better than chance at your guessing, and you definitely need to manage your money carefully.
How many gullible retail investors were lured into this ponzi scheme by those radio moderator douchebags?
C'mon. You have to be an adult to trade these things. People are responsible for their own financial well being, and they have choices. If they want to believe that a moderator with an obvious economic interest (stock in AMTD) is some kind of guru, it's their own choice.
Sorry that fat moderator guy with the balaclava was parading Karen around on his show as some sort of superstar, selling her "investment strategy" as some sort of holy grail. He was smiling in awe whenever she said "You know when the market moves against our positions, I just roll into the next month out". He didn't say a thing, not a critical word. He knew that was BS but he wanted to sell the cool-aid to his viewers so he just went with it: "Wow Karen that's amazing!" -- Seriously? You don't think a radio moderator has show some critical judgement with a guest on his show who makes outlandish claims about her return profile?
Despicable, yes, I grant you that. However, the people who follow in Karen's footsteps are thinking adults with free will, not victims of Sosnoff. He is not forcing them to do anything. He is trying to make money in his own way. A slimier way than most of us like, but no law against it. God, I hope he washes that hat once in a while. One wonders.
I saw this post on another forum over the weekend. It was dated November 2014. It 's interesting to read the author's comments and then see what recently happened. This guy saw it coming when no one else did. ...some comments I cut and pasted........ ------ The Shill Financial Network In fact, tastytrade (they do not use capital letters) is not "a real" financial network as they claim, but instead it is a very clever version of the gambler's shill or tout. A gambling joint uses shills to make winning at the gaming tables appear more likely than it actually is. Street peddlers running illegal three-card monte and shell-games are notorious employers of shills. The age old strategy of promoting the excitement, the action, and most of all the winning at the gaming tables has migrated to online brokers like TD Ameritrade. Tastytrade is working day and night to get mom and pop investors to ditch their tightfisted buy and hold the index fund mentality. You can forget Warren Buffett and the Bogleheads of Jack Bogle. Today on the tastytrade network it is all about the derivative plays, volatility, and the options action. Do you hear the sound of those chips dropping on every earnings play that comes along? "Trade small, trade often" is the often repeated slogan of tastytrade. As a poster boy for the sedentary pursuit of trading profits the pasty Sosnoff is a sickly, stuttering, egomaniacal master of the trading con. The con is that every mom and pop investor can be turned into a trading wiz by using the strategies, software and techniques that tastytrade espouses. Piss Poor Results Tastytrade has very few documented examples of how well its options trading strategies really fare when implemented. In the few cases we do have, the results have been piss poor. There is an old trading expression: "Eat like a bird, shit like an elephant." Unfortunately that is exactly what the tastytrade method did to Katie's account. Three big crappy trades, more than wiped out all the hard earned small bird gains. Not good. ------------' much more here........... http://johnsville.blogspot.com/2014/11/tastytrade-shill-with-skills.html?m=1