Tastytrade trading strategies

June UPDATE — Turns out Karen is under investigation by the SEC. Read the details here and here. She has been featured on Tasty Trade twice and quite a few people have asked me about her recently. Her two interviews on Tasty Trade have had a combinedviews on You Tube.

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The two videos are embedded at the bottom of this post. Karen initially started with a relatively small investment pool and turned that capital into hundreds of millions of dollars. Her strategy entails collecting income from the options market but the risks she takes are substantial. She started withdollars which is still a sizeable amount of capital to start with. She doubled that money relatively quickly and was able to attract capital as she continued to double her returns.

Click Here For My Top 5 Technical Indicators. She professes to currently manage million dollars, after making nearly million in profits. Karen only trades options and started focusing on more than 30 underlying assets, which generally included stock indices. Karen currently has two funds. The second fund was created for clients as all of the profits of the first fund go directly into her charity.

Time decay is calculated by dividing the premium by the number of days left before the expiration of the option. The main premise of her strategy is to sell in to strength sell naked calls on up moves and buy into weakness sell naked puts on down moves. It strikes me that if the position continues to move against her, she continues to add to the position, taking on more and more risk. This is a tough strategy and losses pile up at an exponential rate.

She has a large amount of capital behind her and can theoretically continue to double down as the market moves against her. The risk of blowing out your account is pretty high. Karen uses Bollinger Bands which is a technical tool to find specific strike prices that are unlikely to be reached based on the current market environment. Bollinger bands are an indicator that shows 2-standard deviations around a day moving average.

By using this tool, Karen can find strike prices that are unlikely to be reached, to place trades that are approximately 56 days to expiration. Another tool Karen uses is charting implied volatility. She uses charts to measure the VXX and OTM volatility charts to find levels when implied volatility is rich or cheap.

The technique Karen uses to mitigate risk is avoiding her Lick Net Liquidating Value. The lick is applied to premium-paid upfront options cleared by an exchange. Karen strategy is very risky as implied volatility can rise and markets can accelerate wiping out huge amounts of capital generating significant margin calls.

A margin call is an amount of capital that will be required by the exchange to hold onto current positions. If the margin call is not made by an investor the position will be liquidated by the exchange involuntarily. Karen is very matter of fact about her business. She sees the returns as numbers but does not take trading personally. She has a strong trader mindset and seems confident in her style. There have been some people who think Karen is a fraud.

Her results are amazing. The skeptic in me wonders how genuine they are. The romantic in me wants to believe. September 3, at 9: In the TOS platform, if I sell a naked Put, the usual margin required is very large. How can she obtain those returns is beyond my understanding. Unless she has some special deal with TOS and is required less margin than usual. For example selling the October SPX Put right now And that return is only in that one position!

Not the overall portfolio. The math never worked for me. Like you, the romantic in me also wants to believe the story. She has customer portfolio margin and sells short strangles.

The margin required is much less than for Reg T accounts. Her magic is in how she manages the positions and her position sizing. This is the part she holds close to the vest but most can guess at least some of her tactics. Karen is on Portfolio Margin so her reduction in BPR is much much less, almost a third of that amount. Karen will be back on Tasty Trade February 11th for a live show at night. Portfolio margin is a reduced margin allowance set federally as a minimum ofaccount balance.

However Brokers can have more stringent requirements. Portfolio Margin is a more leveraged margin calculation that looks at the overall potential risk of an entire portfolio and assigns margin per position accordingly. The more money you have, the better your margin. She doesnt use TOS anymore is my guess…. I wish I were the romantic that Lazy Trader referenced but unfortunately he is right on the money with his example. It seems the comments to his posting are quick to brush it aside but there is no escaping his logic.

I am an Actuary and have been using a strategy almost identical to what is described in this article used by Karen for 12 years. To determine an optimal portfolio return, one needs to focus on maximizing capital or in this case margin which represents the minimal capital required. According to the CBOE website regarding margin, a one-sided trade may cost 3.

This assumes Reg-T margin. Switching to Portfolio Margin may significantly improve your results as well as writing on both sides. If you have such an account you can see for yourself. A new wrinkle is the portfolio stress test imposed on accounts by trading firms which serves to only increase margins. The amount of margin could be slightly lower but easily higher especially if the market moves on you.

Since you are carrying risk for 2 months out implies a tie down of capital for that period and if replicated continually, i. More wall street forex london-brick lane there is a predictability to this return over playing it out long which is what makes short option trading so much more desirable. Forex trading si guadagna BEWARE that if you are short on both sides of the market, selling strangles as it is, it is a mathematical certainty that you will be limited in your returns unlike going long.

After a sustained up move, the likely future direction is down and vice versa. Rather, she probably waits for an extended move in one direction before placing her trades. Buying calls on up moves and buying puts on down moves as you mentioned would be a trend following strategy.

Futures will give you a similar underlying but with margin similar to portfolio margin.

Also since 1 es future is 50 instead of contracts you will have more flexibility than spx. How about just sell call spread or put spread instead of naked call and tastytrade trading strategies Less capitals and less profit, but safer. It certainly is Jeff, I think like to have the higher Theta associated with the naked options but they of course carry much more risk.

She has returned more in years with higher volatility. I think inshe must have some trouble to deliver 2 digits returns. Karen the super trader is no fraud.

I googled her, found her name and name of the two funds. Her funds file every year with the SEC, all public records. You can view her filings.

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This story certainly comes over as genuine. One issue is surprising to me. That is much of was a time when the market made major crashes. And yet she claims she started this strategy in There is no way she could have made money selling naked or even covered puts in such a major down market. Had she reserved her trades tastytrade trading strategies only selling calls maybe.

Buying put options would have been a way to make a huge fortune in but this is not what she is claiming. Her system is the opposite of that to a significant degree. Since she claims her approach is conservative presumably the selling of options was hedged. If not both margins are higher and there is a huge risk with limited reward.

And why can I not find her on searches that option value selected php mysql more complete information?

What is her last name? Did I miss something? Generated 64K in 6 months. Maybe, at those difficult moments, moneysupermarket insurance travel asks the investors to add autocad export workspace settings into the account so she can survive.

I hear a lot of big numbers but just give the facts trading today black scholes option calculator on white. And why she would not give her last name and the name of the funds. It would be great marketing for her. Then a little further she says: All fair points Kirk. I think until people see her account statements, there will always be scepticism. I think the key is money management.

Be aware — she sells on both sides of the market but not necessarily at the using moving averages to buy stocks time so although it is a sort of strangle, it is not managed as a strangle.

Each side is managed independently. She sells at a delta of around 0. During the crash ofthis would have been the best time to do this because the implied vols would have been massive, ways to make money on ebay without selling that a 0. She has explicitly said that portfolio margin is a big factor in making these returns.

She also uses weekly options to manage positions. In the recent bull market it has invest before port of ls heist harder to make the gains as the VIX has been low for a long time. In this case they have resorted to using day maturities on the put side and weekly options on the call side or at least less than 30 days.

Thanks for the input Sandman. I think the idea of going out days makes a lot of sense as the gamma risk is a lot lower. The gamma on weekly options is a killer. I think there is more money worksheet for 1st grade a fair chance she may be a fraud and possibly even an invention of TastyTrade. Any manager worth her salt would be happy to provide audited returns, especially if only managing million.

Managers typically eager to accept more client money until the fund is so large that it hampers trading and is closed to new investors. Over a 10 years period this is almost sure happening and there is no way out as premiums go up and roll overs not affordable anymore.

She uses futures to hedge her positions. A hedge can pay more than the loss. After a market crash, reverse the hedge. Anyway what I wanted to say is that strtegy works but sooner or later you have to be prepared for some unexpected market moves in any direction and you must have a plan before you take a position. I thought I have one but huge bounce prove me wrong. Other than smaller sizing most traders over hedge on a draw down and that turns out to be their other biggest mistake.

The best thing to do is give your self a longer time to be correct and maintain the original position and direction. The whole option market works best as a hedge mechanism or defend defend defend…Now we want to make money out of that philosophy.

Doable but it requires a different mindset and approach. The higher the return, the higher the risk you have to take. Hopefully her investors realize that.

I watched the Karen Super Trader videos several times last year and believe she is real. Her strategy is along the lines of the Turtle Trader Rules. A few things I got from her video outside of the Turtle Trader Rules are: Retail accounts are monitored constantly by Brokers for risk management for the benefit of the Brokers, not for account holders.

For certain TDAmeritrade account size, there will be a human broker assigned to monitor the accounts daily. Must have sufficient capital. Each option play is settled 10 days or more before expiration either by high probability of expiring worthless or well hedged so that worst case is a small profit.

Call and Put option plays are treated separate and independent from each other.

Option strike price is at least one variation unit out of the money from current price. Put option is purchased with minimum 6 weeks from expiration and Call options are about 2 week minimum from expiration. Trade only Index options to qualify for benefit of the tax treatment: Need a lot of patience and self discipline coupled with strong risk management to get 15 to 30 percent annual gain.

This means her performance depends on the size of market volatility, not the direction. So far we only know her first name and that is very strange. Where to find her registration information? Without that, it is very fishy…. She has made so much money and continues to amass such good returns that she is sharing her wealth through her charitable missions.

Look up her name and you will find her website. Her story is incredible and not for everyone. I love how humble and simple she is in her approach. But make no mistake, she is no dummy. She knows how to manage her trades without letting emotions get in her way. Every options writer needs to know how to turn a losing trade into a win or a break even.

Does anyone know of a fund or manager that uses a similar strategy but with less risk to manage our funds? The results were so impressive, wealthy clients and others started throwing money at here is a very large way. These large trades are not uncommon in the larger indexes. These trades are easy to spot at SPX right now of in the range and range.

These trades are very easy to spot everyday. These are not Karens trades, as she trades naked strangles contracts at a time.

When your trading at SPX puts, your just managing winners. Is there any sense in doing an opposite strategy where you sell calls while following the down trend, and sell puts while following the up trend? I would imagine that you would have lower premiums with this type of strategy, but greater success, at least until you hit the point of mean reversion.

Karen The Supertrader

Yes you could do this. As you said you would have to watch for the mean reversion. Bear market rallies could kill your calls.

Selling Options Premium

Read the article below. This incident is self evident of the fact that people who get attracted to Options Selling by the words of so called experts should be on toes before committing any money to be handled. Or were you referencing this to the supposed returns Karen had racked up? Sorry if I misunderstood.

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Just a reminder that if you get to big the government will look at you. True or not, This is a negative. Blog My Story Work With Me Contact. Read This Free Report Volatility Trading Made Easy - Effective Strategies For Surviving Severe Market Swings. September 3, at Options Trading IQ says: September 4, at January 5, at 4: January 10, at 3: January 12, at 8: March 12, at March 13, at 2: May 10, at 2: June 12, at 3: June 26, at 7: September 16, at 9: September 17, at 1: October 8, at 9: January 7, at 8: How Not to Generate Alpha: May 8, at 4: May 20, at May 18, at 8: May 19, at May 20, at 8: June 14, at 6: June 24, at 9: July 11, at 7: July 20, at 6: August 4, at 5: August 5, at August 7, at 3: August 13, at August 22, at August 28, at 4: September 17, at 7: September 17, at 2: October 17, at 9: November 15, at 5: December 8, at 6: January 10, at 8: April 16, at January 18, at January 19, at February 3, at 3: February 10, at March 8, at 9: April 14, at 7: April 18, at June 18, at 9: June 24, at 8: September 20, at November 4, at 2: March 22, at March 22, at 8: June 1, at 9: June 2, at June 2, at 8: June 3, at 6: June 3, at SEC Complaint Against 'Supertrader' Karen Looks Like Mini-Madoff - Options on Futures futures.

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