IS this Karen Supertrader story legit?

[ACstudio]

PM'd you

I answered but not sure if it replied...let me know if you got it. But I might add a strategy that might work well given the situation is a covered LEAP.

Example...look for something with a lower IV rate and buy in the money calls for MAR or APR and sell front month calls against it and roll every month for credit.

Easy to get 20-30% return on capital per month. Risks are that volatility expands and price rises at the same time..... it may look like a loss until you roll up and out.

You can roll down in the same month if price moves against you but beware of getting too inverted...as the inversion becomes the risk minus credit received.

Look to roll in the last 5-10 days to expiration.

This allows you to use 2 transactions to put on a trade and then one per month thereafter to manage it. And if you can do 10 contracts and that's just one trade....you're gonna kill it.

Look for liquid ETF's maybe to avoid earnings and dividends...maybe lower volatility ranges. maybe oversold or beat down. (TLT sneaks in dividends but they are usually small)...but they need to be very liquid or you won't be able to trade the back month efficiently.

It's a bullish play to be sure but you are reducing your cost basis a lot every month....or you can do the opposite on the put side but it plays a little different. Play them either way as a vertical but the long call is in a month very far away giving you lots of time to collect premium on it.

 

[BurtsDog]

I am by no means the 'be all and end all' of options trading but trading the way I do works for me and works pretty consistently so I am willing to show some results once just to weigh in for probability trading and to show you Burtsdog why I trade options and why what Karen does is 1. no big deal, and 2. that it works.

I'd like to know where you got your 80% and 20% figures from? and the "gappy runaway" days you speak of just create opportunity for those that are flexible option 'traders' imo.

and as for your "Mad scramble to stem the bleeding" as you say... Here is some results of my trades not going according to my plan and the resulting losses whilst my options work their magic on getting the position back too or as close too profit.


This is the results when I use instant positions on random tickers using probability... THAT is why probability trading trumps other forms of trading imo.

I don't see where your screen shots are representative of a very bad day, like a 2008 style market crash (or worse, which we must assume is coming eventually). Please correct me if I am missing something.

 

[lloydbee]

I don't see where your screen shots are representative of a very bad day, like a 2008 style market crash (or worse, which we must assume is coming eventually). Please correct me if I am missing something.

Yes you are missing the not so recently installed 'circuit breakers' of post May 6 2010, and the flexibilty that we can enjoy from options and a 2008 style crash as you suggest (as also mentioned by the other option traders) would see me simply adjusting and making more money on the position than originally anticipated and me celebrating by buying another nice watch for my collection.
:clap:

The worst month of 2008 was Aug where the S&P dropped about 27% over the month which is not what I would call a wipe out situation, it is a money making opportunity, the joys of being volatility traders. Sure I might make an initial loss on any current positions but after adjustments and or adding further positions the losses can be quickly wiped out and replaced with fat profits.

eg: if I was in a sold vertical and woke to your 2008 situation a simple adjustment would see me praying that your 2008 scenario continues and I would probably turn an expected 10% ROI gain into a many hundred or even possible 1000s of % gain... so bring it on, I pray for those sorts of situations.

I ran this exact trade outcome for a friends trade on SLV and saw his 200 contract Vertical spread that had an ROI of 13% go from being -$6400 down on a Wed to being +$61'000 on Fri just 2 days later. These trades are what I dream of and are more than likely once a year or two type of trades if you even get that lucky.

I absolutely love market reversals on a sold vertical and spent a long time working out trades and adjustments for this type of scenario. We as options traders do not need to fear markets, we just react and adjust trades to suit price action which is why trading in options is the best derivative to trade.

 

[BurtsDog]

... me celebrating by buying another nice watch for my collection.

I appreciate the information and I will file it away for later reference. It's possible I am wrong. I don't mean any personal offense but at this point I am still not convinced. I think the people at TastyTrade, and Karen the 'supertrader' and people who do what they do are all involved in a sophisticated form of gambling. I hope you don't get burned. Good luck.

 

[lloydbee]

I appreciate the information and I will file it away for later reference. It's possible I am wrong. I don't mean any personal offense but at this point I am still not convinced. I think the people at TastyTrade, and Karen the 'supertrader' and people who do what they do are all involved in a sophisticated form of gambling. I hope you don't get burned. Good luck.

Honestly BDog, (no offense taken) options just are simply as good as I preach. Doing what I and some of the others do by trading probability can be the difference between making consistent money or not. It's just a matter of changing your (not you personally) mindset as far as risk/reward goes. If it is sophisticated gambling then pretty much everything in life is for example with people pouring their money in to property. Don't think of trading as gambling think of it as educated risk management because that in reality is what a true options trader is.

TastyTrade you can, and should take with a grain of salt. Using them for basic options training (on strategies) is not too bad BUT I would never take a trade of theirs and here is a perfect example.
Yesterday (see for yourself online.... Last Call - 10/24/2014 ) as they were flicking through some earnings play, one of them was AMZN @ $313.69, expected move on earnings after the close was +-$23.98.

Sosnoff's trade was to SELL an OCT4 270 Put @ .94 to finance buying the BUY an OCT4 320/322.50 Call spread @ $1.08, total cost of his trade was $0.14 with the talk that with earnings if it sank he'd lose a little (max 0.48) but he had a bullish expectation and if it went up he'd make a little (max profit $2.36). Tomorrow I'd expect him to close for a minimal loss.

I looked at this trade and placed an entry, my usual probability trade and SOLD a super safe OCT4 360/365 Call spread @ $0.19. I was going to add a closer Call position with higher return but was busy with another trade. On opening tonight though it will be worthless and once again I'll be keeping all the money I took in and notching up yet another easy winning trade.

What Karen does, does work but for an average sized account it's hardly awesome money. I personally wouldn't get out of bed for a 20% YTD return and I am more than happy to raise my risk/reward to better those results. Instead of being the Options sceptic give me some of your time and I will offer some of mine and I will show you week after week for a month or two and show you what she does and how it all works out time and time again. Consistency wins.

 

[lloydbee]

Just quietly with my trades that I posted on page #19, 3 of the 5 are expiring worthless this week
FILLED 10/17/2014 VERTICAL SELL AA OCT4 14 14/13 PUT
FILLED 10/17/2014 VERTICAL SELL SPX OCT4 14 1745/1740 PUT
FILLED 10/17/2014 VERTICAL SELL NFLX OCT4 14 325/320 PUT

and the OCT5 and NOV2 SPX are ALSO already worthless and I might close to clear up the margin.

This is why I f@%#&! love trading, talking, living options.

enough said!

 

[RStu]

llyodbee
Thanks for you sharing your view and strategy/style on trading options. After spending years believing I, or anyone, could pick market direction on stocks or Forex, either with Fundamental or Technical Analysis, I finally had the light bulb go on...after realizing that the success rate of the best of the best active stock and Forex traders, statistically hit a maximum success rate of 50%.

Approximately a year ago I returned to options and I have been following / employing a similar trade style and strategy on the SPX with great success.

It is good to see there are other conscientious individuals trying to spread the good word about how to be successful trading probabilities and not just flipping a coin and hoping.

Wishing you great success

 

[BurtsDog]

the best of the best active stock and Forex traders, statistically hit a maximum success rate of 50%.

That doesn't tell the whole story. For example, a successful system trader does not attempt to guess direction. His system reacts to changes in direction. Even if he sells at a loss 50% of the time (or more) his gains typically far exceed his losses as his system allows him to ride trends until price changes kick him off. This is why some of the richest men in the world are trend following system traders who trade futures and Forex.

 

[RStu]

That doesn't tell the whole story. For example, a successful system trader does not attempt to guess direction. His system reacts to changes in direction. Even if he sells at a loss 50% of the time (or more) his gains typically far exceed his losses as his system allows him to ride trends until price changes kick him off. This is why some of the richest men in the world are trend following system traders who trade futures and Forex.

I agree with you. I was not attempting to tell the whole story or throw dispersion on individuals who have been, or still are successful at trend trading, but rather simply comment on lloydbee's strategy, as after years of hard work and study, I finally understand how he is successful at employing his strategy.

 

[ACstudio]

Gambling----

There is risk in nearly every opportunity we take part in.

But let's just say that the options world is a giant casino. Here are the interesting things about this type of casino. At this casino you can take either side of any bet you want. There are no dealers. If you want to be the dealer you can take that side. So if you know there are bets that people make that cost them more money the longer they hold them. Since you know that time moves forward you can take the other side of that bet and get paid more the longer you hold it. And by doing this you limit the amount of money you can make by how much you sell them. By limiting your upside and selling the dream of unlimited gains to the other guy there will always be a house edge to the guy selling that dream.

Also in this casino you can manage your risk by taking both side of a bet in any way you want. There are strategies for any risk/reward ratio you want and you can always use 2 things to your advantage....1. time always moves forward...so by limiting your upside you can always maintain that edge. 2. Expected move (volatility) tends to be overstatedin in high implied volatility ranking ...this is the carrot provided to entice sellers to take the other side of the bet while giving up the potential for unlimited upside.

I'm not trying to be a cheerleader for one side or the other. But I do think anyone can benefit from understanding these concepts. Even if you are a technician or fundamentalist or just follow guru advice, these principles can still work to your advantage.

 

[BurtsDog]

I'm glad you are making money doing what you are doing and I hope that it continues. My intention was not to 'badmouth' options. I occasionally trade diagonal spreads, but I keep it small because I know it's gambling and not all that different from someone who buys naked options. You still have to be right on direction, distance and duration. Maybe not to the same degree, but you still do and that's asking a lot over the long run, even with repair strategies. I'm heading down the path of algorithmic trading where the big money is if you can pull it off. I question the long term effectiveness of trading option spreads as evidenced by the fact that, even after his payday from selling his share of Thinkorswim to Ameritrade, Tom Sosnoff was not able to front the 20 million startup capital required to launch his own business, TastyTrade. An options expert, who's focus is spreads, and who has been trading options for 30 years didn't have the cash to start his own business? That tells you something.

"Sosnoff added that he committed a 'significant' amount of his own funds to Tastytrade and that this also helped him secure the 20 million in venture funding." - Wall Street Journal

 

[ACstudio]

"Sosnoff added that he committed a 'significant' amount of his own funds to Tastytrade and that this also helped him secure the 20 million in venture funding." - Wall Street Journal

haha good one. Why in the world would he use all his own money on a capital venture when he can hedge off some of the risk somewhere else? I'm sure he got the better end of the deal. The fact that he put up a significant amount at all is testament to his confidence in the venture.

 

[BurtsDog]

I find it hard to believe that a guy like Tom would be dragging himself to some job every day if trading options could be counted upon to make millions and millions of dollars in the long run. It's gambling. Otherwise he would have hundreds of millions of dollars by now.

 

[CostaKapo]

I find it hard to believe that a guy like Tom would be dragging himself to some job every day if trading options could be counted upon to make millions and millions of dollars in the long run. It's gambling. Otherwise he would have hundreds of millions of dollars by now.

That's assuming that he is not at a point in his life where he wants to just enjoy himself, his daughter and his friends. The guy has millions of dollars and he does what he wants. Not everyone is out to make hundreds of millions - that being said, who says he doesn't have hundreds of millions? Long Term Capital Management traded hundreds of millions in spreads on a weekly basis. Not the best example to use given what transpired there but it doesn't negate it either.

 

[ACstudio]

That's assuming that he is not at a point in his life where he wants to just enjoy himself, his daughter and his friends. The guy has millions of dollars and he does what he wants. Not everyone is out to make hundreds of millions - that being said, who says he doesn't have hundreds of millions? Long Term Capital Management traded hundreds of millions in spreads on a weekly basis. Not the best example to use given what transpired there but it doesn't negate it either.

Exactly....he's one of the only people I've come across that I think actually wants to give back. Tasty loses money every day. His trading helps pay the bills. Notice there is next to NO advertising, no spam, no fees or any other kind of BS. In fact you get fee reductions because of the deal he made with TDA if all you do is create an account w/ Dough...you don't even have to use it. There is BOB The Trader but that is geared toward large accounts....and that's about it except for asking that people use them when signing up to TDA. And they rarely even ask that.

He is probably one of the most genuine and honest people I have come across in this business. They provide tons of research that cost them bundles and give it away. Nobody else does that.

I'm the biggest skeptic there is but I really think he is doing a good thing.

And everything is a gamble if you want to look at it that way. You're gambling that all your time and effort will pay off where so many others have failed...but we all wish you the best of luck and happy trading.

 

[ACstudio]

And as far as "dragging himself to work"....you should watch them some time. These guys live to trade. When his heart monitor flatlines and the room is silent....the silence will be broken by the TOS bell ringing off fills.

And a note on the "Otherwise he would have hundreds of millions of dollars by now."

Here is a little history. He was one of the founders of TOS and the primary shareholder. The company was very profitable. AND when he sold to TDA for 606 Million $ the deal was that it would be paid in TDA stock. (pause for a minute....this was at the beginning of 2009) This was a near deal breaker. He would not take cash...he wanted TDA stock....at the beginning of 2009. I'll let you do the math here....see where TDA was trading in JAN of 2009 (ticker AMTD) and check where it traded anytime after that. SCOOPED.
And if he still is holding any of it then he has been selling calls against it ever since....you can do the math....but rest assured....he's doing fine.

 

[louistrader]

And as far as "dragging himself to work"....you should watch them some time. These guys live to trade. When his heart monitor flatlines and the room is silent....the silence will be broken by the TOS bell ringing off fills.

And a note on the "Otherwise he would have hundreds of millions of dollars by now."

Here is a little history. He was one of the founders of TOS and the primary shareholder. The company was very profitable. AND when he sold to TDA for 606 Million $ the deal was that it would be paid in TDA stock. (pause for a minute....this was at the beginning of 2009) This was a near deal breaker. He would not take cash...he wanted TDA stock....at the beginning of 2009. I'll let you do the math here....see where TDA was trading in JAN of 2009 (ticker AMTD) and check where it traded anytime after that. SCOOPED.
And if he still is holding any of it then he has been selling calls against it ever since....you can do the math....but rest assured....he's doing fine.

Thinking of all of those shares...I would love to log into that account and look at the P/L.

 

[lloydbee]

Hi am sailu.new to penny stocks market please give me your advise about on XR-ENERGY.I did not know properly about the XR-Energy.

This has NOTHING to do with this thread... move right along

 

[BurtsDog]

If you pay careful attention to the last 'Karen the supertrader' video there is more than a suggestion that Tom actually lost money trading in 2013.

I stand firm in my opinion that trading options is straight up gambling. It doesn't matter if you are buying them or selling. I hope all of you guys make a ton of money but my advice is to keep it light and understand how dangerous what you are doing is. You cannot even remotely compare this kind of gambling to something like trend trading. They are not even in the same universe. If trading options was the surefire way to wealth then all the big hedge fund managers would be doing it so massively that we would see volumes in the tens of millions and open interest in the hundreds of millions. What Karen is doing is gambling. She seems to be getting away with it for now so more power to her and I wish her the best.

 

[ACstudio]

If you pay careful attention to the last 'Karen the supertrader' video there is more than a suggestion that Tom actually lost money trading in 2013.

I stand firm in my opinion that trading options is straight up gambling. It doesn't matter if you are buying them or selling. I hope all of you guys make a ton of money but my advice is to keep it light and understand how dangerous what you are doing is. You cannot even remotely compare this kind of gambling to something like trend trading. They are not even in the same universe. If trading options was the surefire way to wealth then all the big hedge fund managers would be doing it so massively that we would see volumes in the tens of millions and open interest in the hundreds of millions. What Karen is doing is gambling. She seems to be getting away with it for now so more power to her and I wish her the best.

You don't even see what you are saying do you? The fact that you have to read into his comments to arrive at some speculation as to whether or not Tom makes any money should be a clue. You are forced to speculate.... because at no time does he or has he ever stood up and said "Hey buy my newsletter because I did X% gains last year....follow me and get rich...blah blah blah" like all these other drones. Not one of us here gives a rat whether he makes tons of money. Tasty does the research and shows the numbers and we see the relationships and it's hard to argue with empirical evidence.

As far as "gambling" goes....I'll say it again....e v e r y t h i n g you do has risk. Every business I've ever run, every job any of us have ever had...everything you do where you have something to gain has some sort of risk embedded. But every one of us that use these strategies can put a number to our probabilities of profit and our return on capital for every trade we do. We can know down to the penny what our risk and probabilities are at any given time. I can look at anyone else's portfolio or position or picks and put a number on those too.

You throw out the this gambling term like it's derogatory and go on about how you have some idea on how you can double your money overnight. Really? Show me the statistical evidence of that beyond a normal bell curve distribution of success and failure. Show me one place in life where the upside is unlimited and your probabilities are not very, very low. None of the strategies we play is a home run, get rich play. The type of trading we do takes the other side of that bet for those who want unlimited profit potential. And again...I'll take the other side of any unlimited profit play...because the probabilities are on my side. Not just in trading...anywhere.

If you can't articulate your argument with real statistics or something beyond " in my opinion that trading options is straight up gambling." Then you add nothing to this conversation. And if you think it's gambling and it's bad...then try taking the other side of our trades....you'll start to learn very quickly how the numbers play out. I'll fade anybody....I fade Tom's plays all the time....especially if he's being directional. But I would never take the other side of his trade... I use strategy...with numbers and such.... Me and Lloyd could fade each other on a directional play and both of us make money....wrap your mind around that one.

So until you have some understanding of the domain we are in your advice is really very pointless. No insult to you or your endeavors...I'll repeat myself again...none of us care what you do...more power to you. But we'll be fine I'm sure.