I like how she always talks about keeping it simple, but at some point she should listen to her own advice. When she trades at 5% ITM, that means it's going to happen, eventually. People like her talk about how, oh it's such a small chance to go wrong, I can just go all in no stops and everything will be fine. It's only 5% right? Well guess what, that 5% sometimes hits. Karen, if this is even for real, is a good times trader. 2009 - 2014, she's a genius. Simple, aggressive, and it works. For those of us who have been trading through several market cycles understand what is going to happen to this account eventually. She doesn't see it yet, but someday, unfortunately, she will... But anyway, good for her. Can't take anything away from her thus far. 40 million to 90 million is impressive regardless...
She has been trading since 2002 and was trading 6 figures at least in 2008. She got lots of new money after that, so she must have survived or even done well in 2008, so your assumption is wrong.... How she did that, we still don't know.... Oh yes, and we had multiple flash crashes since 2009, a 25% drop in a month in 2011, and she is still in the game....
Niederhoffer has been trading for a while too, it takes a real event to wipe a tail-seller out. More importantly, you don't know if she blew up and re-started the fund multiple times - "good" fund managers manage to raise money multiple times despite repeated blow-ups (again, see Niederhoffer). However, as I said before, I personally think that there are versions of tail-selling that are perfectly suited to retail investor. If you have access to PM and have the know-how, it's probably the best strategy one can engage in.
I don't know what real event you are expecting. Maybe you want an asteroid in collision course with Earth type of shit, because we had at least 3 real events (flash crash, 15% drop in a week,etc) in the last 5 years that would have shaken a normal tail-seller out. She is obviously using a technic what normal, Vic type of premium sellers don't... Nice assumption on the restarting on her funds though...
Come on, the industry is full of smart people and everyone is doing more or less the same thing. It's hard to imagine that she's doing something that revolutionary, especially with her AUM and background.
She's selling 85% Iron Condors, 56 days out, with no IV management on the entires, very little underlying selection, no stop losses, no adjustments, and no hedging. So? I give her credit for actually earning the money because doing it is of course a lot different then everybody else saying they "could have done it" so good for her. As for her so called "strategy" or people trying to paint her as a trading genius, come on... The only thing that separates her from the army of traders who also made over 100% in the last 4 years is that she has some rich ass friends. If she was managing 1 million, nobody would even bat an eye. They'd just say, she has no strategy and it'll blow up sooner or later. So at the end of the day nobody should care at all about her non existent strategy or her trading wisdom. All we care about is, how the @^#$ did she find these rich investors?
Seriously dude, do your own research. From Late July to early August in 12 trading days (basicly half a month) it went from 1350 to 1100. So it is 19% not 25%, happy now? (close enough for me, and it is a steeper drop than I stated) As for comparison, the market fell very similar in 2008 and we already know she survived that one. That was from 1300 to 1000 but it took 5 weeks instead of 2 weeks. In such a quick fall a Vic-like premium seller usually blows up. She didn't and THAT is the difference...
You keep insinuating like there is some sort of trading wisdom this Karen knows that we don't. Let me save you some pain: there is no secret-sauce in short vol. You can't "manage" leveraged short vol positions in Oct 2008 or Oct 1997 or Oct 1929. There is no way to "work your way out". You can't "move out a couple months" and "wait for the market to settle" when the market gaps down 3% daily like clockwork and IV goes through the roof. You won't dig yourself out of the hole by having "50% of your capital set aside to double down on your losers". When you hear this kind of non-sense from vol sellers your alarm bells should go off because you know they're talking out of their ass. When the hammer comes down they have huge losses, bid/ask spreads become very wide (or disappear altogether) and that's the end of the story. Here are three possible scenarios for Karen: - she was fortunate enough to not be short volatility at exactly the right times during the last 10 years like a monkey throwing darts at a board - she does not trade a short vol strategy (she's lying) - her results are fabricated (she's lying) Otherwise, there is nothing to learn here.
Or a combination of number 1 and number 3, that is she got lucky and the results are not fully presented. In addition to 1 and 3, she probably (a) manages the size intelligently combined with (b) her investors are somehow gated and can't pull the rug from under her at the worst time. It's a pure actuarial strategy, so as long as you hold enough reserves to survive the event, you gonna do ok.