Karen The Super Trader
To be clear: I have no current expectation to emulate her success.
tastytrade.com looks like a great resource, and Tom Sosnoff is certainly my breed of cat ........ but for now, at $90/mo, I'm not in. Perhaps tomorrow. I think they just raised their rates x10 a couple days ago, would have been within my means at $90/yr. And AAPL too, 8 months ago.
Her strategy is mainly comprised of selling strangles on SPX, NDX, and RUT.
Rob - yes, this is my understanding, they are selling straddles, each leg 5% probability of expiring ITM. So 1 in 10 positions should run into trouble. She said something like "once I get your money, you never see it back". Interesting how they adjust the positions
When they sell straddles, they get $ from the market. I would expect they need to return the money and actually pay more when the position runs into trouble. Somehow they avoid this acording to Karen
Do you think that she started out with collars, and then as her war chest became bigger... (It seams as though the broker house was always looking at the risk sheet every day).. she then went to short straddles.
yes, sell=short. 5% is 2 standard deviation move, not very often but when it comes it hurts a lot. How they manage to "not return the money"?
I have enclosed a picture of daily ES mini (SPX futures contract) and on Letter "A" if she identified that price as the low.... and she entered a trade at that time... What short straddle do you think she would have made... Your explanation would help me considerably....
oh, i am just a monkey, no smarteeeee. She said she looks rarely in the charts with BB only. The way I understood they sell straddles expiring in 50-60 days so at any point she would sell the straddle
Thanks Rob M for the clarification ..... I mis-heard or something .. I did understand the bit about "once you gimme yer money u don't get it back" as she collects premium from selling the position (so I patted myself on the back).
One said "strangle", one said "straddle" ..... please excuse me while I post the following for my own educational benefit:
Options Guy said:
A long strangle gives you the right to sell the stock at strike price A and the right to buy the stock at strike price B.
The goal is to profit if the stock makes a move in either direction. However, buying both a call and a put increases the cost of your position, especially for a volatile stock. So you’ll need a significant price swing just to break even.
The difference between a long strangle and a long straddle is that you separate the strike prices for the two legs of the trade. That reduces the net cost of running this strategy, since the options you buy will be out-of-the-money. The tradeoff is, because you’re dealing with an out-of-the-money call and an out-of-the-money put, the stock will need to move even more significantly before you make a profit.
Oh OptionsGuy.... come out come out where ever you are! All E In Free!!!!!!!
Big sorry - she is selling strangles, again each leg with 5%. It used to be one needs L5 and $100K account to sell calls
Otter - I had a quich scan of SPXPM options July 21 options. These are the same as SPX but expire at the end of the day and are elctrnically traded. Big surprise - the 5% puts were $10 (so 1000) and the 5% calls - 0.40 or $40. So why bother to sell the calls - double the risk for almost nothing
I need to verify these numbers, did not have much time
I have the capital and authority.... I'm two days too many going into what I perceived as a bottom... I would have sold the puts and bought the calls.... and exited not in 30 but this morning at 1330...
I will need to integrate with TOS and drop my home solution... It takes to long to integrate another bot concept for options .... I will want to go after APPL as well.
Might as well just eat the cost of yet another package... It's tax deductible on my company.
This is a wonderful story. The only thing I don't like is when Mr. Sosnoff keeps saying "this is proof that anyone can do this" many times throughout the video. Karen is obviously a very smart, intense, and meticulous individual, it is obvious to me she is not just anyone. She was willing to put the time and money in to learn the craft, where most do not. I have a friend that has had similar success as Karen and this person went so far as to quit his full time job to work at a trading firm two years only to see what the "floor" does before he quit and started trading on his own with his own capital.
The biggest truth I heard from Karen in this video is that you have to learn how to control your emotion. That greed and fear are very powerful feelings. To me that means you have to make rules and stand by those rules no matter what. My super trader friend follows the code so much so that if he takes a day off to go golfing he can come home and look at the market and tell exactly how much money he would've made of lost just by looking at the tape and the news for the day. Now after 10 years of day trading he has been able to automate almost all of what he does. So there is no emotion at all in his trading.
With that said. the best trade one can make is being able to take a loss which helped avoid a much bigger loss in the end. It sounds easy, but you would be amazed how many can't do it. Just ask the JPMorgan traders about that one. I bet they wish that they would've gotten out of their disastrous trade months ago and kept the loss at a cool billion instead of 2 billion plus now. So no, it is not easy and even the so called professionals have trouble sticking to their rules and screw up all the time.
I want to also point out that it definitely is not as easy as just selling deep out-of-the-money strangles and hoping they expire worthless. She definitely must adjust the position throughout the trade.
FYI... PnL graph for her trade is below. The ones above are from the long side. It is the short strangle in the playbook.
So many asked about the 95% probability of success that was mentioned and how to figure it out. The main way to figure that out on the TradeKing site is to use the probability calculator under the tools menu. Here is a link to a short video tutorial on how to use it.
Also, here is a video that explains how implied volatility of an option contract can provide a probability of success on a trade. This video is an hour long.