Re: [SuperTraderKarenStudy] Re: Is Karen in trouble


May 31, 2016

 


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#7261 May 31, 2016

Oh boy....



Regards,

Scott Levitt

>.Need to book an appointment with me? Schedule a time here:.calendly.com/scottlevitt



>> UPDATE>> Checkout my newest company: Simple Canvas Prints ( www.simplecanvasprints.com )



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#7262 May 31, 2016

Forgetting the con for a moment - more stunning is that they claim she'd be only break even after 18-20 months of trading.That seems like a stretch - the market is perfectly flat these past months.. Perfect conditions for her.



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#7263 May 31, 2016

So rolling and hedging and calendaring with other people's money is illegal? ��Most investors guess should have been informed of these standard practices in options trading - she assumed it was nothing big probably - maybe not charge if the nlv was negative?

Sanju

On May 31, 2016, at 8:01 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



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#7264 May 31, 2016

ok boys and girls time to go home. ��She is a madoff.....next we find out Tom and Tony are getting fees from all of trading small and often...

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 18:27:47 -0700Subject: Re: [SuperTraderKarenStudy] Is Karen in trouble

��

Forgetting the con for a moment - more stunning is that they claim she'd be only break even after 18-20 months of trading.That seems like a stretch - the market is perfectly flat these past months.�� Perfect conditions for her.



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#7265 May 31, 2016

Hi,

I not talking here if she made a con or not as I don't know that, but something seems not right!!!



In essence, these trades continuously converted any realized losses into realized gains in the current month, and losses which would be realized in subsequent months, ��



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#7266 May 31, 2016

If you look back she was fined for a registration issue a few months back. ��Look like the SEC guys got in deeper and found more issues. ��It also appears her largest investor (Mr. A) is not very happy with her. ��My Maddoff comment was a joke. ��I look forward to finding out the facts. ��What really concerns me from the report is that she was losing money every month for over a year. ��Like Tyler pointed out it has been very flat period of Tim. ��I am losing faith.....hope Tasty trade makes a comment



To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 01:51:54 +0000Subject: Re: [SuperTraderKarenStudy] Is Karen in trouble

��

Hi,





I not talking here if she made a con or not as I don't know that, but something seems not right!!!







In essence, these trades continuously converted any realized losses into realized gains in the current month, and losses which would be realized in subsequent months, ��



----------------------------

#7267 May 31, 2016

Reading it now... ��is it time to change the name of the Yahoo group?





To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 21:01:31 -0400Subject: [SuperTraderKarenStudy] Is Karen in trouble

��

I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��

One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



----------------------------

#7269 May 31, 2016

I think this is a load pf crap by some SEC investigator lookimg to make a name who doesent understand her strategy. ��

-------- Original message --------From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>Date: 5/31/16 10:01 PM (GMT-05:00)To: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble



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#7270 May 31, 2016

Antonio, it appears to me from the report what she did..here is the key info:

To illustrate with a specific example, the HI Fund began the monthof February 2015 with a net unrealized loss of $44 million. Much of this lossbecame realized early in the month.��

On February 24, 2015, Hope caused the HI Fund to sell 7,000 calloptions (i.e., first leg options) on S&P 500 E-mini futures with a strike price of$2,000, for a sales price of $39,228,812.50. These first leg options expired onFriday, February 27 (i.e., 3 days later).��

That same day, Hope caused the HI Fund to buy 7,000 call options(i.e., second leg options) on S&P 500 E-mini futures with the same strike priceas the first leg options. The total purchase price was $39,556,075. Thesesecond-leg options expired on Friday, March 6 (i.e., 10 days later).��

On February 24, 2015, the closing market price for the underlyingfutures was $2,113.75, meaning that the first and second leg options were deepin the money.78. Because the first and second leg options were deep in the moneyon February 24, and because the options expired in such a short period of time,the HI Fund had almost no exposure to market movements in the futuresunderlying the options. In other words, the HI Fund stood almost no chance ofmaking or losing money on this paired Scheme Trade regardless of whichdirection the futures market moved.��

On February 27, the first leg options that Hope had sold expired, and Hope realized a gain from the sale of those options in the amount of$39,228,812.50 (i.e. the sales price of those options).80. Because those options expired in the money, the underlying futureswere assigned, such that the HI Fund.s account was treated as being .short.7,000 S&P 500 E-mini futures as of that day.��Hope did not record any realizedloss from that assignment, however, even though, as a result of the assignment,Hope had essentially sold short the futures at a price below the current marketprice and would eventually need to cover the position in some manner. Instead,the open futures position was treated as an unrealized loss.��

In account statements sent to investors at the end of February,2015, Hope reported that the HI Fund had net realized gains of $1,729,670 forthe month.��

Hope charged the HI Fund a fee of $345,934 (i.e., 20% of thereported realized gain), half of which was sent to the Hope Foundation.��

On March 6th, the second leg options expired in the money, theoptions were exercised, and the Fund was .delivered. 7,000 futures.��

The futures delivered as a result of the expiration of the second legoptions covered the HI Fund.s short futures position that had resulted from the expiration of the first leg options. Because the positions in the underlyingfutures cancelled each other out, the HI Fund did not realize any gain or loss onthose futures.

That is why she was selling calls with 14 DTE...lol ��I am in shock if these allegations are true. ��I think this has nothing to do with her strategy. ��She was collecting fees on winning trades and kept rolling her loses. ��If I was an investor I would be pissed. ��IMHO. ��

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 01:51:54 +0000Subject: Re: [SuperTraderKarenStudy] Is Karen in trouble

��

Hi,





I not talking here if she made a con or not as I don't know that, but something seems not right!!!







In essence, these trades continuously converted any realized losses into realized gains in the current month, and losses which would be realized in subsequent months, ��







----------------------------

#7271 May 31, 2016

Start reading paragraph 58. ��If she did the trades as they alleged and she took fees then she is in trouble.

I think I know what happened. ��She had a huge loss one month and has had gains since but not enough to recover the losses. ��And she did the scheme trades to get her a tx fee in the mean time while she made up the losses. ��But tshe was supposed to wait for the high water mark and didn't.

-Tyler

---------------From: ckalb ckalb@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:24 PMSubject: RE: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

>��I think this is a load pf crap by some SEC investigator lookimg to make a name who doesent understand her strategy. ��

-------- Original message --------From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>Date: 5/31/16 10:01 PM (GMT-05:00)To: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble



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#7272 May 31, 2016

correct Tyler.....if she has reported the loses and taken no fees then it would be all good. ��What makes me sad is that she was a CPA...she should know better IMHO

To: supertraderkarenstudy@yahoogroups.com; supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 02:30:50 +0000Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��

Start reading paragraph 58. ��If she did the trades as they alleged and she took fees then she is in trouble.

I think I know what happened. ��She had a huge loss one month and has had gains since but not enough to recover the losses. ��And she did the scheme trades to get her a tx fee in the mean time while she made up the losses. ��But tshe was supposed to wait for the high water mark and didn't.

-Tyler

---------------From: ckalb ckalb@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:24 PMSubject: RE: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

��I think this is a load pf crap by some SEC investigator lookimg to make a name who doesent understand her strategy. ��

-------- Original message --------From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>Date: 5/31/16 10:01 PM (GMT-05:00)To: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble



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#7273 May 31, 2016

Karen says that she never lets her positions go in the money. I dont understand how she could have sustained such a big loss to not be able to recoup it in a few months.She must have been using quite a high percentage of her margin...AndrewOn 01/06/2016 12:33 PM, "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:

.correct Tyler.....if she has reported the loses and taken no fees then it would be all good.. What makes me sad is that she was a CPA...she should know better IMHO

To: supertraderkarenstudy@yahoogroups.com; supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 02:30:50 +0000Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

.

Start reading paragraph 58.. If she did the trades as they alleged and she took fees then she is in trouble.

I think I know what happened.. She had a huge loss one month and has had gains since but not enough to recover the losses.. And she did the scheme trades to get her a tx fee in the mean time while she made up the losses.. But tshe was supposed to wait for the high water mark and didn't.

-Tyler

---------------From: ckalb ckalb@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:24 PMSubject: RE: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

.I think this is a load pf crap by some SEC investigator lookimg to make a name who doesent understand her strategy. .

-------- Original message --------From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>Date: 5/31/16 10:01 PM (GMT-05:00)To: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble



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#7274 May 31, 2016

Stupid on so many levels of true. ��I have my positions in the money all the time. ��Twice in my life I have had ten percent nlv losses but recovered all of it to return to the high water mark within four months.

And I use some really high call leverage. ��So for her not to recover must be doing some crazy margin usage.

-Tyler

---------------From: Andrew Tran theonlyandrewtran@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:36 PMSubject: RE: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

>��Karen says that she never lets her positions go in the money. I dont understand how she could have sustained such a big loss to not be able to recoup it in a few months.She must have been using quite a high percentage of her margin...AndrewOn 01/06/2016 12:33 PM, "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:

��correct Tyler.....if she has reported the loses and taken no fees then it would be all good.�� What makes me sad is that she was a CPA...she should know better IMHO

To: supertraderkarenstudy@yahoogroups.com; supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 02:30:50 +0000Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��

Start reading paragraph 58.�� If she did the trades as they alleged and she took fees then she is in trouble.

I think I know what happened.�� She had a huge loss one month and has had gains since but not enough to recover the losses.�� And she did the scheme trades to get her a tx fee in the mean time while she made up the losses.�� But tshe was supposed to wait for the high water mark and didn't.

-Tyler

---------------From: ckalb ckalb@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:24 PMSubject: RE: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

��I think this is a load pf crap by some SEC investigator lookimg to make a name who doesent understand her strategy. ��

-------- Original message --------From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>Date: 5/31/16 10:01 PM (GMT-05:00)To: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble







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#7275 May 31, 2016

I read through it pretty quick.... So maybe I misunderstood this but it sounded like a withdrawing investor was NOT responsible for current unrealized losses and those would just be passed to the remaining investors. How exactly would that work? ��It seems like there would have to be some type of MTM for a withdrawing investor.��

Sent from my iPhone

On May 31, 2016, at 9:01 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



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#7276 May 31, 2016

She was calculating the nlv at the end of the month as very high so the fund nlv was increasing when in reality it wasn't.

So new investors will eventually be caught holding the hot potato.

-Tyler

---------------From: Scott Bassett smbassett@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:42 PMSubject: Re: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

>��I read through it pretty quick.... So maybe I misunderstood this but it sounded like a withdrawing investor was NOT responsible for current unrealized losses and those would just be passed to the remaining investors. How exactly would that work? ��It seems like there would have to be some type of MTM for a withdrawing investor.��

Sent from my iPhone

On May 31, 2016, at 9:01 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



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#7277 May 31, 2016

Lots of speculation. ��Hopefully we will gets the truth someday.





On May 31, 2016, at 8:42 PM, Scott Bassett smbassett@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��I read through it pretty quick.... So maybe I misunderstood this but it sounded like a withdrawing investor was NOT responsible for current unrealized losses and those would just be passed to the remaining investors. How exactly would that work? ��It seems like there would have to be some type of MTM for a withdrawing investor.��

Sent from my iPhone

On May 31, 2016, at 9:01 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



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#7278 May 31, 2016

Yea, didn't it say Investor A basically withdrew funds from one fund and invested in the other. ...was that to pass the unrealized loss to the bag holders?

Sent from my iPhone

On May 31, 2016, at 10:44 PM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��She was calculating the nlv at the end of the month as very high so the fund nlv was increasing when in reality it wasn't.

So new investors will eventually be caught holding the hot potato.

-Tyler

---------------From: Scott Bassett smbassett@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:42 PMSubject: Re: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

��I read through it pretty quick.... So maybe I misunderstood this but it sounded like a withdrawing investor was NOT responsible for current unrealized losses and those would just be passed to the remaining investors. How exactly would that work? ��It seems like there would have to be some type of MTM for a withdrawing investor.��

Sent from my iPhone

On May 31, 2016, at 9:01 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith







----------------------------

#7279 May 31, 2016

Lots of speculation. ��Hopefully we will gets the truth someday.



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#7280 May 31, 2016

I think she was talking at the event in Chicago in a few weeks. ��Think she shows up?lol

On May 31, 2016, at 8:44 PM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��She was calculating the nlv at the end of the month as very high so the fund nlv was increasing when in reality it wasn't.

So new investors will eventually be caught holding the hot potato.

-Tyler

---------------From: Scott Bassett smbassett@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:42 PMSubject: Re: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

��I read through it pretty quick.... So maybe I misunderstood this but it sounded like a withdrawing investor was NOT responsible for current unrealized losses and those would just be passed to the remaining investors. How exactly would that work? ��It seems like there would have to be some type of MTM for a withdrawing investor.��

Sent from my iPhone

On May 31, 2016, at 9:01 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



----------------------------

#7281 May 31, 2016

The SEC only conducts civil enforcement. ��If criminal actions are warranted then the criminal part is referred to the department of justice or the attorney general office in the region. ��I would think with so few investors no criminal action will be taken. ��She will have to pay big fines and make the investor whole. ��I would also expect she would be restricted from trading for a period of time or just trade her own money. ��Stevie Cohen comes to mind.

On May 31, 2016, at 8:46 PM, Scott Bassett smbassett@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Lots of speculation. ��Hopefully we will gets the truth someday.



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#7282 May 31, 2016

It sounds as if she was using the cash value of the account.. If she used net liq she would have been fine. ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Tuesday, May 31, 2016 7:54 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble



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#7284 May 31, 2016

Antonio - Her fees were not based on Net Liq ... They were based on REALIZED GAINS ... By selling the In the money Options at the end of the month that EXPIRE at the end of that ��month , that counted as a realized gain [ the option premium ] and the subsequent assigned short futures was still UNREALIZED ... ��She also bought the calls that expired the following month and was assigned long which made the short futures a wash ..... Then she repeated the same process at the end of the month again so as not to show LOSSES ... Wash , rinse ,repeat as we used to say ...���� Lets see what the Jury says , but Money and Ego can ��make good people do crazy things ... Makes me hesitant to ever want to manage / trade other ��peoples money ...Victor��



From: "antonio porres aporresm@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Tuesday, May 31, 2016 9:51 PM Subject: Re: [SuperTraderKarenStudy] Is Karen in trouble

��Hi,

I not talking here if she made a con or not as I don't know that, but something seems not right!!!



In essence, these trades continuously converted any realized losses into realized gains in the current month, and losses which would be realized in subsequent months, ��



----------------------------

#7285 Jun 1, 2016

Hi Chris,



I do. I am going to be in his next conference in Chicago in 2 weeks. Karen is supposed to be one of the speakers there.



Cheers,



Elad.



From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Wednesday, June 1, 2016 5:11 AM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��Anyone follow Dan Sheridan? ��

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 22:07:01 -0400Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��Reading it now... ��is it time to change the name of the Yahoo group?





To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 21:01:31 -0400Subject: [SuperTraderKarenStudy] Is Karen in trouble

��

I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��

One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith







----------------------------

#7286 Jun 1, 2016

Wow- These are very serious allegations, it would also seem to explain why Karen has been quiet for so long. Here I was, thinking it was modesty.��If she's going to be in Chicago, she will surely be doing some last-minute edits to her presentation.��Ron.��

On Jun 1, 2016, at 1:14 PM, Elad Katzir eladkatzir@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Hi Chris,



I do. I am going to be in his next conference in Chicago in 2 weeks. Karen is supposed to be one of the speakers there.



Cheers,



Elad.



From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Wednesday, June 1, 2016 5:11 AM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��Anyone follow Dan Sheridan? ��

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 22:07:01 -0400Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��Reading it now... ��is it time to change the name of the Yahoo group?





To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 21:01:31 -0400Subject: [SuperTraderKarenStudy] Is Karen in trouble

��

I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��

One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



----------------------------

#7288 Jun 1, 2016

What was new for me was the following:1. Sell deep ITM call options against futures that expire in a couple days.2. When those options expire, the cash collected is a "recognized gain".3. You get assigned short futures, which are an "unreleased loss"4. When she closes out the matching long calls that are deep ITM, she picks up a recognized loss.

This is the games.If this is true, there is no way to hide this.. It'll be super obvious to any investigator.I would never have known of this accounting approach, but even if I did - no way to hide it.



----------------------------

#7289 Jun 1, 2016

The legal documents said the fund had 0 return since october 2015

it is understandable.

October rally, January Selloff, and Rally from feb till now.

She may realized lots of gains on one side and keep rolling the other side..

And she told clients that they have huge realized gains and believe the other side will turn to positive in a few months.

However, fund accounting calculates net p&l.

This strategy actually is very hard to explain to people who have no idea of options..

I once traded Iron condor (short strangles) for my Mom during 2013. The one sided rally made the first half of 2013 very tough. I spent a whole night to educate my mom why she could make money later in the year. Of course, my Mom let me keep rolling and finally, by the end of 2013, the call side .realized big gains and ended the year with nice returns.. I do not believe many clients can give you enough time to roll and wait.



----------------------------

#7290 Jun 1, 2016

Tyler,

"Sell deep ITM call options against futures that expire in a couple days."

That's a huge divergence from the simple stuff Karen was doing when she did her famous interviews.

Makes all of our prognosticating look kind of ridiculous. Who would've though she would go in that direction?

Where did you get that info, btw, just curious.

Last - I'm not willing to say Karen did anything illegal..

That's just me.

RM

.



----------------------------

#7291 Jun 1, 2016

it was buried in the sec filing - starting around paragraph 58. .made for some good reading..

the sad part was that every month she did this scheme trade, it cost her about $300K in tx fees + slippage to pull it off.. That is .3%.. She gave away 3.6% over a year just to do accounting.



----------------------------

#7292 Jun 1, 2016

Jie, did you try to tell your mother as you rolled those loses that in fact you had gains...and give me my 20%. ��That is the issue....

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 14:32:24 -0400Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

The legal documents said the fund had 0 return since october 2015

it is understandable.

October rally, January Selloff, and Rally from feb till now.

She may realized lots of gains on one side and keep rolling the other side.��

And she told clients that they have huge realized gains and believe the other side will turn to positive in a few months.

However, fund accounting calculates net p&l.

This strategy actually is very hard to explain to people who have no idea of options.��

I once traded Iron condor (short strangles) for my Mom during 2013. The one sided rally made the first half of 2013 very tough. I spent a whole night to educate my mom why she could make money later in the year. Of course, my Mom let me keep rolling and finally, by the end of 2013, the call side ��realized big gains and ended the year with nice returns.�� I do not believe many clients can give you enough time to roll and wait.







----------------------------

#7294 Jun 1, 2016

Rob, all of our chat is speculation. ��But if you read what is alleged in the complaint, to me it appears clear that what she did was a violation. ��But I know less than Tom.

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 14:33:33 -0400Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

Tyler,

"Sell deep ITM call options against futures that expire in a couple days."

That's a huge divergence from the simple stuff Karen was doing when she did her famous interviews.

Makes all of our prognosticating look kind of ridiculous. Who would've though she would go in that direction?

Where did you get that info, btw, just curious.

Last - I'm not willing to say Karen did anything illegal.��

That's just me.

RM

��



----------------------------

#7295 Jun 1, 2016

Ahhh, thanks Tyler.



----------------------------

#7296 Jun 1, 2016

Chris,

Agreed..

Wonder if she simply didn't know or understand - not that that's a legal defense by any stretch.

It's not that long ago when when was just a simple ole Iron Condor seller.

Oh well, we'll all see how it plays out I guess.

RM



----------------------------

#7298 Jun 1, 2016

Well, if she wasn.t a certified CPA, I would say she didn.t know. and the fact that she already got a 100k in 2015 for not using M2M values.. so yeah, she knew.



----------------------------

#7299 Jun 1, 2016

Craig, 100% agree......

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 13:56:47 -0500Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble [1 Attachment]

Well, if she wasn.t a certified CPA, I would say she didn.t know. and the fact that she already got a 100k in 2015 for not using M2M values.. so yeah, she knew.







On Jun 1, 2016, at 1:48 PM, Rob McCance rob.mccance@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



Chris,

Agreed.��

Wonder if she simply didn't know or understand - not that that's a legal defense by any stretch.

It's not that long ago when when was just a simple ole Iron Condor seller.

Oh well, we'll all see how it plays out I guess.

RM



----------------------------

#7300 Jun 1, 2016

I believe that all the accounting schemes can somehow be justifiable potentially. If you guys remember, she was already fined for 100k by the sec for not marking to market in the past. She probably found this "calendar" accounting solution to still obtain a similar result in terms of fee charged per month while at the same time complying with the mark to market rule.

The goal from a manager perspective is clear here. Since she charges only on profits (performance fee) she needs to show positive gains ��at the end of every month (btw I am pretty sure that charging only on realized is not fully legal) in order to have a positive cash flow for her firm and pay bills. The real question is: if in bona fide, why not charging a management fee and avoid all these accounting schemes? Not as profitable for her on a monthly basis, but definitely more understandable for investors and cheaper for the fund (3.6% a year is a lot anyway if that's what it cost)



What makes me think the most is the issue about the redemption clause by which investors that redeem funds invested are not passed the losses. This makes it look like a sort of pyramid scheme as the last one who stays takes inherits the losses theoretically pertaining to others.

I really hope I'm wrong but it doesn't look good at all :(

Federico

On Jun 1, 2016, at 8:44 PM, Chris Fitz chrisfitz65@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Rob, all of our chat is speculation. ��But if you read what is alleged in the complaint, to me it appears clear that what she did was a violation. ��But I know less than Tom.

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 14:33:33 -0400Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

Tyler,

"Sell deep ITM call options against futures that expire in a couple days."

That's a huge divergence from the simple stuff Karen was doing when she did her famous interviews.

Makes all of our prognosticating look kind of ridiculous. Who would've though she would go in that direction?

Where did you get that info, btw, just curious.

Last - I'm not willing to say Karen did anything illegal.��

That's just me.

RM

��



----------------------------

#7301 Jun 1, 2016

Her argument will be that the SEC and US government are at fault for writing bad accounting rules.

She will say that she followed gaap + common best practice accounting rules.And that she paid for the cost of the accounting with the slippage each month.



----------------------------

#7304 Jun 1, 2016

PS ... Mark to market [or net liq ] is obviously the correct and honest way to tell investors the state of a fund ... If stock XYZ was bought at a $100 and it went down to a penny and a fund was still holding it ��, investors should know about it even though the loss wasn't realized ... ��Get real��



From: "Tyler Jewell tylerjewell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Wednesday, June 1, 2016 3:14 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Her argument will be that the SEC and US government are at fault for writing bad accounting rules.

She will say that she followed gaap + common best practice accounting rules.And that she paid for the cost of the accounting with the slippage each month.







----------------------------

#7305 Jun 1, 2016

Totally agree!We know, she knows.��Simple.��

On Jun 1, 2016, at 9:57 PM, Vic Ferrari vico213@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��PS ... Mark to market [or net liq ] is obviously the correct and honest way to tell investors the state of a fund ... If stock XYZ was bought at a $100 and it went down to a penny and a fund was still holding it ��, investors should know about it even though the loss wasn't realized ... ��Get real��



From: "Tyler Jewell tylerjewell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Wednesday, June 1, 2016 3:14 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Her argument will be that the SEC and US government are at fault for writing bad accounting rules.

She will say that she followed gaap + common best practice accounting rules.And that she paid for the cost of the accounting with the slippage each month.



----------------------------

#7306 Jun 1, 2016

This turned out to be much longer than I anticipated. Hopefully, I'm making sense. Below, I try to summarize the complaint and give a general strategy for defense.��

Someone alluded to the central issue earlier. IMO the central issue is whether the defendant's accounting (Karen) is fraudulent to the extent it makes clients pay fees for which under other accounting practices (according to "Net Asset Value" accounting, see below) the clients would have no obligation to pay fees. Fraudulent, being a "false representation of past or present material fact, knowing it to be false (scienter)," ��(para. 112, 118, 123, 130). The complaint alleges the fraud was hidden in the mechanics of the trades themselves.

As I read the complaint, there is nothing illegal about how Karen made the trades, unwise maybe. However, the complaint alleges ��it's how those trades were communicated to the clients in relation to the "high water mark" gains. High water mark means "profits" exceeded last month "profits." If the previous month beat the "high water mark" clients would pay a fee of 20% of net realized gains (para. 29). Karen excluded unrealized gains and losses from her monthly "high water mark" target (para. 32). So, the question that relates to the central issue is how does a "reasonable" person gauge "profits". Call this "creative wash sales."

The complaint uses scare words like "scheme trades" as if the trades themselves are illegal. They aren't. IMO, this case boils down to how does a fund option investor faithfully communicate profits and losses to their clients? Did Hope / Karen engage with purpose to deceive clients thus making sure fees were collected or were the trades calculated to eventually profit? The SEC must prove intent to defraud.��

So, defense Strategy One: Show the trades were trades designed to profit the fund, not as a means to fraud. Most of us here are looking at the mechanics of the trades and asking, "Why would she do that?" The SEC want to show that that the trades were such that no profit could ever come from them. They say as much in para. 78 and conclude that in para. 87.

Defense Strategy Two:��

It looks to me like the central case boils down to paragraphs 45 - 48. The SEC is trying to establish that Hope's operating statements to its clients and its subsequent practice in accounting are in contradiction.��

To explain:

-Para 45: Hope gets 20% fee from clients if profit is above the previous period. (That is, profit calculated by ONLY realized gains and losses as disclosed by Hope in para 35.) This profit is termed by Hope as "Net Capital Appreciation." This is important.��

-Para 46: The complaint defines "Net Capital Appreciation" as being an increase in the "Net Asset Value" of the fund over the same period. In other words NCA and NAV mean the same thing. NCA = NAV

-Para 47: Then the calculation of the Net Asset Value is asserted to be BOTH the realized and unrealized losses and gains.��

-Para 48: BOOM! Says the SEC. Since Net Asset Value is BOTH, then Hope was engaged in fraudulent accounting intending to dupe its investors into giving them fees since Hope only reported realized gains and losses. (para 115��

However, there is an equivocation that the defense should exploit. If there is no standard, accepted definition for calculation of "Net Capitol Appreciation" then Karen should be free to define the term. She then has a duty to disclose that definition to her clients. As mentioned above, she did. The plaintiff concedes that in paragraph 35. However, in paragraph 46 the plaintiff / SEC defines the term "NCA" for Karen as the Net Asset Value and proceeds to instruct as to how the Net Asset Value is determined. The conclusion is Karen's practices are at variance with NAV accounting and this constitutes fraud.��

This appears to be a classic equivocation on terms to define X as Y and conclude a Z. The complaint throughout, disregards entirely what appears to be Hope's / Karen's terminology using the term Net Capitol Appreciation and uses Net Asset Value as a hammer from then on.

Therefore, Hope / Karen must show that her Net Capitol Appreciation accounting and her disclosure to the clients is standard which negates any purpose to misrepresent. The trades themselves are used as support to the the central issue, so of course it would help to knock out the supports too.��

I don't have time, but I would like to find out how other option fund managers communicate profits and losses to their clients. What is the "standard" accounting? The SEC will surely like to show that Karen's accounting deviates materially from the standard if that standard is NAV reporting.��

The complaint makes it a tough call as a good complaint should. One good thing for Hope / Karen, is that their accounting excluded BOTH unrealized gains AND unrealized losses in any given period. This can show consistency and not an attempt to inflate profits. However, apart from some evidence of option funds standard accounting which correlates with Hope / Karen's, her best course may be to settle especially in light of Section F.��

As a side note, if anybody can shed light on this: Is anyone aware of any previous action(s) against Hope (Karen) where it /she would consent to jurisdiction in Georgia?��



THM







----------------------------

#7308 Jun 1, 2016

One data point: Larry McMillan, a well known options educator and trader, also manages options trading accounts. His reporting and fees are based on NAV=realized+unrealized gains and losses. All open positions are marked to market at the end of the month.��

Max

��

On Jun 1, 2016, at 3:40 PM, "T Howells tcmoller@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��

This turned out to be much longer than I anticipated. Hopefully, I'm making sense. Below, I try to summarize the complaint and give a general strategy for defense.��

Someone alluded to the central issue earlier. IMO the central issue is whether the defendant's accounting (Karen) is fraudulent to the extent it makes clients pay fees for which under other accounting practices (according to "Net Asset Value" accounting, see below) the clients would have no obligation to pay fees. Fraudulent, being a "false representation of past or present material fact, knowing it to be false (scienter)," ��(para. 112, 118, 123, 130). The complaint alleges the fraud was hidden in the mechanics of the trades themselves.

As I read the complaint, there is nothing illegal about how Karen made the trades, unwise maybe. However, the complaint alleges ��it's how those trades were communicated to the clients in relation to the "high water mark" gains. High water mark means "profits" exceeded last month "profits." If the previous month beat the "high water mark" clients would pay a fee of 20% of net realized gains (para. 29). Karen excluded unrealized gains and losses from her monthly "high water mark" target (para. 32). So, the question that relates to the central issue is how does a "reasonable" person gauge "profits". Call this "creative wash sales."

The complaint uses scare words like "scheme trades" as if the trades themselves are illegal. They aren't. IMO, this case boils down to how does a fund option investor faithfully communicate profits and losses to their clients? Did Hope / Karen engage with purpose to deceive clients thus making sure fees were collected or were the trades calculated to eventually profit? The SEC must prove intent to defraud.��

So, defense Strategy One: Show the trades were trades designed to profit the fund, not as a means to fraud. Most of us here are looking at the mechanics of the trades and asking, "Why would she do that?" The SEC want to show that that the trades were such that no profit could ever come from them. They say as much in para. 78 and conclude that in para. 87.

Defense Strategy Two:��

It looks to me like the central case boils down to paragraphs 45 - 48. The SEC is trying to establish that Hope's operating statements to its clients and its subsequent practice in accounting are in contradiction.��

To explain:

-Para 45: Hope gets 20% fee from clients if profit is above the previous period. (That is, profit calculated by ONLY realized gains and losses as disclosed by Hope in para 35.) This profit is termed by Hope as "Net Capital Appreciation." This is important.��

-Para 46: The complaint defines "Net Capital Appreciation" as being an increase in the "Net Asset Value" of the fund over the same period. In other words NCA and NAV mean the same thing. NCA = NAV

-Para 47: Then the calculation of the Net Asset Value is asserted to be BOTH the realized and unrealized losses and gains.��

-Para 48: BOOM! Says the SEC. Since Net Asset Value is BOTH, then Hope was engaged in fraudulent accounting intending to dupe its investors into giving them fees since Hope only reported realized gains and losses. (para 115��

However, there is an equivocation that the defense should exploit. If there is no standard, accepted definition for calculation of "Net Capitol Appreciation" then Karen should be free to define the term. She then has a duty to disclose that definition to her clients. As mentioned above, she did. The plaintiff concedes that in paragraph 35. However, in paragraph 46 the plaintiff / SEC defines the term "NCA" for Karen as the Net Asset Value and proceeds to instruct as to how the Net Asset Value is determined. The conclusion is Karen's practices are at variance with NAV accounting and this constitutes fraud.��

This appears to be a classic equivocation on terms to define X as Y and conclude a Z. The complaint throughout, disregards entirely what appears to be Hope's / Karen's terminology using the term Net Capitol Appreciation and uses Net Asset Value as a hammer from then on.

Therefore, Hope / Karen must show that her Net Capitol Appreciation accounting and her disclosure to the clients is standard which negates any purpose to misrepresent. The trades themselves are used as support to the the central issue, so of course it would help to knock out the supports too.��

I don't have time, but I would like to find out how other option fund managers communicate profits and losses to their clients. What is the "standard" accounting? The SEC will surely like to show that Karen's accounting deviates materially from the standard if that standard is NAV reporting.��

The complaint makes it a tough call as a good complaint should. One good thing for Hope / Karen, is that their accounting excluded BOTH unrealized gains AND unrealized losses in any given period. This can show consistency and not an attempt to inflate profits. However, apart from some evidence of option funds standard accounting which correlates with Hope / Karen's, her best course may be to settle especially in light of Section F.��

As a side note, if anybody can shed light on this: Is anyone aware of any previous action(s) against Hope (Karen) where it /she would consent to jurisdiction in Georgia?��



THM



----------------------------

#7310 Jun 1, 2016

THM,

excellent points. ��Several things I did not think of...always three sides to every story...lol ��Thanks for sharing.

Just one question. ��Under civil fraud I thought the government's case��require no proof of specific intent to defraud?







----------------------------

#7312 Jun 1, 2016

Hi Chris,

Thanks for the compliment on the analysis.��

You are correct in that civil fraud doesn't require specific intent or as the modern penal code states "purpose". However, the SEC still has to prove either intent to defraud or knowledge that will or is likely to, lead to loss. "Scienter" is a more general term than specific intent. I may have used the phrase "intent to defraud" with scienter in mind and not specific intent. ��In the complaint, where the scienter element is referenced, the counts delineate the state of mind required as intent or "reckless disregard for truth" which encompasses the above.��

And yea, I know she had that 100 K fine and the SEC jurisdiction. I'm just wondering if she will, or if she is able, to contest venue or personal jurisdiction in her response. I'd probably file for a motion to transfer venue or contest PJ if she is able. ��

Tom��



On Wednesday, June 1, 2016 2:36 PM, "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��THM,

excellent points. ��Several things I did not think of...always three sides to every story...lol ��Thanks for sharing.

Just one question. ��Under civil fraud I thought the government's case��require no proof of specific intent to defraud?



----------------------------

#7313 Jun 1, 2016

While everyone thinks she is toast, I think her argument is likely going to make it very difficult for the SEC to make their case.This will be settled out of court.

1. GAAP account allows for this calculation of recognized vs. unrecognized.. She is just following the rules.2. She had in her fund docs that NAV was only calculation of recognized gains ... now most responsible people would calculate NAV to be both.

If being certified fund operator has mandates that NAV is calculated as mark to market with unrealized gains, then they have her.. But if those rules / ethics are grayish in their statement, then a good lawyer will just argue that she is playing by the rules - and that the guilty party are the rules, not her.

Her limited partners / investors will flee, though.



----------------------------

#7315 Jun 1, 2016

Yep, I -- sadly -- have been an initiator & a part of transactions in the past where there was an intentional breach of contract used as a tactic because the remedy for that breach was less than the gain for making the breach.. I never feel good about it - but whenever this happens, I do it with transparency.. I tell the opposing party exactly what is about to happen.. I just recently did that with Gartner - we signed an agreement for this year.. And then circumstances changed and had my company breach our contract with them when they would not offer a termination.. Conflict can be appropriate and it's ok for people to disagree.

So, while the complaint paints a very bad picture - I can envision legal scenarios where she ends up with some fines, no criminal prosecution referral, and maybe even some of her customers stick around.



----------------------------

#7319 Jun 1, 2016

I agree there are a myriad of options wrt defense strategies. Given she a CPA I'm sure it will be very convincing and she might be perfectly able to convince the judge/jury that she did everything by the book.��However, I hold her to a higher standard: she is big on charities and does a ton of good work. For someone like that to have a moral code of 'I did it buy the book', is setting the bar very low. Too low. If the NetLiq is decreasing I wouldn't expect people to ask for performance fees.��Certainly not people like Karen who do all that great work in Africa.��



----------------------------

#7320 Jun 1, 2016

f/u to what Andrew mentioned:Why is the position converted to Calender spread Deep ITM? ��first leg and second leg as mentioned in the document?and, if its about rolling loss making positions, it would be way OTM?







On Wednesday, 1 June 2016 8:06 AM, "Andrew Tran theonlyandrewtran@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��Karen says that she never lets her positions go in the money. I dont understand how she could have sustained such a big loss to not be able to recoup it in a few months.She must have been using quite a high percentage of her margin...AndrewOn 01/06/2016 12:33 PM, "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:

��correct Tyler.....if she has reported the loses and taken no fees then it would be all good.�� What makes me sad is that she was a CPA...she should know better IMHO

To: supertraderkarenstudy@yahoogroups.com; supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Wed, 1 Jun 2016 02:30:50 +0000Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��

Start reading paragraph 58.�� If she did the trades as they alleged and she took fees then she is in trouble.

I think I know what happened.�� She had a huge loss one month and has had gains since but not enough to recover the losses.�� And she did the scheme trades to get her a tx fee in the mean time while she made up the losses.�� But tshe was supposed to wait for the high water mark and didn't.

-Tyler

---------------From: ckalb ckalb@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Tuesday, May 31, 2016 7:24 PMSubject: RE: [SuperTraderKarenStudy] Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

��I think this is a load pf crap by some SEC investigator lookimg to make a name who doesent understand her strategy. ��

-------- Original message --------From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>Date: 5/31/16 10:01 PM (GMT-05:00)To: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble







----------------------------

#7321 Jun 1, 2016

thanks. ��this makes sense.



On Thursday, 2 June 2016 12:02 AM, "Jie Situ situ.trojan@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��The legal documents said the fund had 0 return since october 2015

it is understandable.

October rally, January Selloff, and Rally from feb till now.

She may realized lots of gains on one side and keep rolling the other side.��

And she told clients that they have huge realized gains and believe the other side will turn to positive in a few months.

However, fund accounting calculates net p&l.

This strategy actually is very hard to explain to people who have no idea of options.��

I once traded Iron condor (short strangles) for my Mom during 2013. The one sided rally made the first half of 2013 very tough. I spent a whole night to educate my mom why she could make money later in the year. Of course, my Mom let me keep rolling and finally, by the end of 2013, the call side ��realized big gains and ended the year with nice returns.�� I do not believe many clients can give you enough time to roll and wait.



----------------------------

#7322 Jun 2, 2016

From The Street.com:



It wasn't innovative strategy��behind Karen the SuperTrader's consistent��returns after all, the U.S. Securities and Exchange Commission says, but a much more tried-and-true technique: fraud.

Karen Bruton, the Nashville-based hedge fund manager behind the Web moniker and her Hope Advisors, which oversees more than $175 million for clients, improperly used��options trades to defer losses into future periods, resulting in juicy incentive fees fromclients��when��none should have been paid, the agency said��in a complaint in federal court in Atlanta this week.

Hope Advisors has been barred under an order from accessing $7 million in its two hedge funds and restricted from taking any new investments from clients, the SEC said in a statement. Bruton and Hope Advisors both consented to the order without admittingor denying the allegations, according to the SEC.

The two "disregarded investors by engaging in a pattern of deceptive trades so they could continue earning large incentive fees," Walter Jospin, director of the SEC's Atlanta regional office, said in the statement.

Last year, Hope Advisors was fined $100,000 by the Commodity Futures Trading Commission for registration and reporting violations.

The new allegations paint a very un-uber portrait��of Bruton, 66, a self-taught options trader who mesmerized fans and flummoxed skeptics with her life story of parlaying a $10,000 initial investment into a fortune and seemingly endless stream of profits. A NorthCarolina native, she garnered the honor of distinguished alumna in 2014 from Wake Forest University, where she had earned a master's degree in business administration.

The website tastytrade.com nicknamed Bruton��"Karen the Supertrader" in February 2014, when she agreed to an

interview on her strategies."I have a high level of confidence in what we do, because it's proven, and we do it over and over and over," Bruton said in the interview.In an e-mailed statement, Hope Advisors said it was "cooperating fully with the SEC's inquiry, even though we strongly disagree with the allegations in its complaint."

According to the SEC, Bruton used about half of her main fund's fees to finance a charity, Just Hope, which in turn plowed its savings back into the main fund. On its own

website, Just Hope says it��has��financed such endeavors as a banana farm in Honduras, mulching classes in Togo and goat-husbandry mentoring in Sierra Leone."We stand by our investment model, which has allowed us to give 50% of our profits to charity," Hope Advisors said in the��statement. "We are confident our approach was appropriate."

Bruton, a certified public accountant with an inactive license, spent more than 25 years as a corporate executive, including a stint with a limestone company, before retiring in 2007. That's when she decided to try her hand as a full-time options trader,she told tastytrade. During her first year, she said, her strategies garnered $50,000 in profits.

The success started to come undone��in late 2014, when volatility in financial markets saddled Bruton's funds with paper losses of about $100 million, according to the SEC. Instead, Hope Advisors told clients that the funds had posted millions of dollarsin profits, resulting in incentive fees of more than $600,000.For months afterward, Bruton used a series of paired "scheme trades" that served little purpose other than to roll over losses into the following month, the agency alleges.

As an example, after the firm's main fund realized huge losses in February 2015, it sold options on the Standard & Poor's 500 Index as the end of the month approached and quickly realized a gain of $39.2 million. Investors received account statements showinga profit for the month.What wasn't disclosed was that the fund had simultaneously entered into a paired options trade that matured in early March for a loss of $39.6 million, according to the SEC.

From November 2014 through March 2016, Hope Advisors collected more than $6 million in incentive fees from its main fund, the agency alleges. Without the fraudulent trades, Hope Advisers would have received almost no incentive fees since��late 2014, the SECsaid.







From: supertraderkarenstudy@yahoogroups.com supertraderkarenstudy@yahoogroups.com> on behalf of loke r loke4300@... [supertraderkarenstudy]supertraderkarenstudy@yahoogroups.com>

Sent: Thursday, June 2, 2016 2:26 AM

To: supertraderkarenstudy@yahoogroups.com

Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble��







----------------------------

#7323 Jun 2, 2016

Here's a guy who thinks he has a handle on this in "plain english"

Karen .The Supertrader. Goes Rogue









Karen .The Supertrader. Goes RogueFamed Tastytrade icon Karen .The Supertrader. has gone rogue. On May 31, 2016 the SEC filed a complaint against ...













From: "Alan R ajrand@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Thursday, June 2, 2016 6:58 AM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��From The Street.com:



It wasn't innovative strategy��behind Karen the SuperTrader's consistent��returns after all, the U.S. Securities and Exchange Commission says, but a much more tried-and-true technique: fraud.

Karen Bruton, the Nashville-based hedge fund manager behind the Web moniker and her Hope Advisors, which oversees more than $175 million for clients, improperly used��options trades to defer losses into future periods, resulting in juicy incentive fees fromclients��when��none should have been paid, the agency said��in a complaint in federal court in Atlanta this week.

Hope Advisors has been barred under an order from accessing $7 million in its two hedge funds and restricted from taking any new investments from clients, the SEC said in a statement. Bruton and Hope Advisors both consented to the order without admittingor denying the allegations, according to the SEC.

The two "disregarded investors by engaging in a pattern of deceptive trades so they could continue earning large incentive fees," Walter Jospin, director of the SEC's Atlanta regional office, said in the statement.

Last year, Hope Advisors was fined $100,000 by the Commodity Futures Trading Commission for registration and reporting violations.

The new allegations paint a very un-uber portrait��of Bruton, 66, a self-taught options trader who mesmerized fans and flummoxed skeptics with her life story of parlaying a $10,000 initial investment into a fortune and seemingly endless stream of profits. A NorthCarolina native, she garnered the honor of distinguished alumna in 2014 from Wake Forest University, where she had earned a master's degree in business administration.

The website tastytrade.com nicknamed Bruton��"Karen the Supertrader" in February 2014, when she agreed to an

interview on her strategies."I have a high level of confidence in what we do, because it's proven, and we do it over and over and over," Bruton said in the interview.In an e-mailed statement, Hope Advisors said it was "cooperating fully with the SEC's inquiry, even though we strongly disagree with the allegations in its complaint."

According to the SEC, Bruton used about half of her main fund's fees to finance a charity, Just Hope, which in turn plowed its savings back into the main fund. On its own

website, Just Hope says it��has��financed such endeavors as a banana farm in Honduras, mulching classes in Togo and goat-husbandry mentoring in Sierra Leone."We stand by our investment model, which has allowed us to give 50% of our profits to charity," Hope Advisors said in the��statement. "We are confident our approach was appropriate."

Bruton, a certified public accountant with an inactive license, spent more than 25 years as a corporate executive, including a stint with a limestone company, before retiring in 2007. That's when she decided to try her hand as a full-time options trader,she told tastytrade. During her first year, she said, her strategies garnered $50,000 in profits.

The success started to come undone��in late 2014, when volatility in financial markets saddled Bruton's funds with paper losses of about $100 million, according to the SEC. Instead, Hope Advisors told clients that the funds had posted millions of dollarsin profits, resulting in incentive fees of more than $600,000.For months afterward, Bruton used a series of paired "scheme trades" that served little purpose other than to roll over losses into the following month, the agency alleges.

As an example, after the firm's main fund realized huge losses in February 2015, it sold options on the Standard & Poor's 500 Index as the end of the month approached and quickly realized a gain of $39.2 million. Investors received account statements showinga profit for the month.What wasn't disclosed was that the fund had simultaneously entered into a paired options trade that matured in early March for a loss of $39.6 million, according to the SEC.

From November 2014 through March 2016, Hope Advisors collected more than $6 million in incentive fees from its main fund, the agency alleges. Without the fraudulent trades, Hope Advisers would have received almost no incentive fees since��late 2014, the SECsaid.







From: supertraderkarenstudy@yahoogroups.com supertraderkarenstudy@yahoogroups.com> on behalf of loke r loke4300@... [supertraderkarenstudy]supertraderkarenstudy@yahoogroups.com>

Sent: Thursday, June 2, 2016 2:26 AM

To: supertraderkarenstudy@yahoogroups.com

Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble��



----------------------------

#7325 Jun 2, 2016

I totally agree.�� Whether the losses were realized or unrealized, obviously the fund is in a drawdown and the whole idea of a highwater mark is not to charge performance fees in that case.

For me there are two main points about this story.�� The first one is whether she is a Madoff-like psychopath who purposely aimed to defraud out of personal greed and/or ego.�� Countless people advertise to do good work in the name of great causes (e.g. charity, religion, generalized altruism) only to have their deception later revealed.�� If this is one of those cases then it belongs in the annals of _American Greed_.�� She would be the absolute antithesis of that portrayed here:

2014 Distinguished Alumni Karen Bruton

2014 Distinguished Alumni Karen Bruton She made millions as a conscientious trader and impressive money manager. But, it wasn't enough. Karen Bruton (MBA '84) realized the greatest gift was not t...







----------------------------

#7326 Jun 2, 2016

OTM options would not result in assignment, which is necessary for the scheme to work.

Jeff Paynejpayne.rdb@...OptionsBistro.com



----------------------------

#7327 Jun 2, 2016

Hello Mark,

I'm learning towards....."...we truly have absolutely no idea how "Karen the Supertrader" actually trades.."

Maybe Tom is closer to figuring it out than we think. Ha ha! [just kidding Tom]



----------------------------

#7328 Jun 2, 2016

Whether or not what Karen did was "by the book", the spirit of what she did was just plain wrong. ��And doing charity work doesn't make it right.

So disappointing on so many levels ...��



From: "Rob McCance rob.mccance@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To: supertraderkarenstudy@yahoogroups.comSent: Thursday, June 2, 2016 9:35:52 AMSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Hello Mark,

I'm learning towards....."...we truly have absolutely no idea how "Karen the Supertrader" actually trades.."

Maybe Tom is closer to figuring it out than we think. Ha ha! [just kidding Tom]



----------------------------

#7329 Jun 2, 2016

The thing that keeps coming to mind is that Karen said she was 50% invested. ��I still can't wrap my mind around that. ��She must have been taking too much risk. ��She talked about testing her position to the downside by going 100 points down (sometimes 200 points down depending on volatility) and then taking 88% of that. ��The one thing that we never heard her talk about is making a volatility adjustment on the analyze tab.

Thanks to Tom for showing me how to do this. ��If she never made an adjustment, I can easily see how she would have experienced huge losses! ��Making an adjustment for a volatility increase to the downside makes a huge difference in your profit/loss with a big move to the downside.

Here's my takeaway. ��I think our group has done a very good job of analyzing Karen's strategy! ��Though each of us trades a little differently, it may be possible that Some like Tom and Keith might have better strategies than Karen. ��

With that said, I think it worthwhile to continue our quest for learning and tweaking in order to make us better traders. ��Let's not give up just because Karen has stumbled.

Happy trading.

Bobby

Sent from my iPhone

On Jun 1, 2016, at 7:28 AM, rvdb trade01234@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��

Wow- These are very serious allegations, it would also seem to explain why Karen has been quiet for so long. Here I was, thinking it was modesty.��If she's going to be in Chicago, she will surely be doing some last-minute edits to her presentation.��Ron.��

On Jun 1, 2016, at 1:14 PM, Elad Katzir eladkatzir@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��Hi Chris,



I do. I am going to be in his next conference in Chicago in 2 weeks. Karen is supposed to be one of the speakers there.



Cheers,



Elad.



From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Wednesday, June 1, 2016 5:11 AM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��Anyone follow Dan Sheridan? ��

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 22:07:01 -0400Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��Reading it now... ��is it time to change the name of the Yahoo group?





To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Tue, 31 May 2016 21:01:31 -0400Subject: [SuperTraderKarenStudy] Is Karen in trouble

��

I read a news report on this, but I haven't read the full SEC filing. ��I will be busy once I get home!

www.sec.gov/litigation/complaints/2016/comp-pr2016-98.pdf

Sent from my iPhone

On May 31, 2016, at 8:53 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��

One trade today

BTC SPX June wk 4 1540 Puts @ .20

Been a slow��week and half for me as far as selling goes looking to sell into any down move.

I'll play along with Tom and��call a SPX 2087 close tomorrow��

Good trading allKeith



----------------------------

#7330 Jun 2, 2016

Bobby,

Great points.

Regarding this: "Let's not give up just because Karen has stumbled."

No worries on that. I'm completely convinced that one can make a good profit by selling ~45-56 DTE, 5 delta SPX PUTs on high VIX days, and taking them off at ~50%.

This in no way has been tarnished by any recent Karen news.

Only thing I'm doing is refining my method. Lately I've been working on.just.going flat after closing a position and patiently waiting, flat, for the next day that fits the entry parameters.

This reduces the 100% market exposure of other methods and puts you on the sidelines for most netLiq drawdowns.

Work in progress...

RM



----------------------------

#7331 Jun 2, 2016

From doing this for the past 2 years on a small scale (trade full time but other strategies mostly),. I can say that waiting for high IV can sometimes be problematic.. If you go back the last 20 years almost every huge drawdown (oct 2014, aug 2015, jan 2016, etc etc) starts with a 1.7 or greater standard deviation move down in a day before the bottom falls out.. Many people who lay out their positions as soon as the IV pops get their clocks cleaned because IV continues to explode after that.. Of course if you sold the bottom, of a down move you win big but predicting that is near impossible and most close their positions at the wrong time.. But they also missed all the .easy money. selling puts as the market grinds slowly up.. ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 10:49 AMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble







----------------------------

#7332 Jun 2, 2016

Why is everyone crucifying Karen even before the verdict is out? ��

I'd wait for her version of what had happened.

And, from what i gather : she was into selling deep OTM. ��The recent crashes would not have affected her much. ��She might have gotten into trouble for being adventurous ��in her trades and probably following her own rules. ��

Not sure how she got into deep ITM trades when she would initiate trades 12% below the market. ��AND to top it, she would wait for a rally [up/down] to leg into to position. ��

I had watched her interview on YT multiple times and her style of trading had inspired me to try a similar approach. ��Until now all i had was text book knowledge of options.

I'd be interested in knowing what went wrong if the news is true. ��







On Thursday, 2 June 2016 8:19 PM, "Rob McCance rob.mccance@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��Bobby,

Great points.

Regarding this: "Let's not give up just because Karen has stumbled."

No worries on that. I'm completely convinced that one can make a good profit by selling ~45-56 DTE, 5 delta SPX PUTs on high VIX days, and taking them off at ~50%.

This in no way has been tarnished by any recent Karen news.

Only thing I'm doing is refining my method. Lately I've been working on��just��going flat after closing a position and patiently waiting, flat, for the next day that fits the entry parameters.

This reduces the 100% market exposure of other methods and puts you on the sidelines for most netLiq drawdowns.

Work in progress...

RM



----------------------------

#7333 Jun 2, 2016

Rob,

I think a lot of us will be interested in your results.

Jeff



----------------------------

#7334 Jun 2, 2016

Chris,

I feel the same. While I would like to wait for IV pops to sell premium, I find it very hard to wait. I have made good money in times of low IV and slow grind up markets. I feel like I am missing out by sitting in cash on the sidelines. I think the key is to find a happy medium. I do not think you want to be fully levered when the market is on the upper end of the range and lower IV. You want to save some bullets for when IV does pop. However, I am not sure being 100% out during low IV is best either. I comes down to risk reward I guess and how each person assesses the "pot odds" risk.��

Tyson



----------------------------

#7335 Jun 2, 2016

Agreed, you need all that .easy money. to offset losses when IV spikes. ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 11:42 AMTo: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Is Karen in trouble



----------------------------

#7337 Jun 2, 2016

My prediction:1. No criminal charges2. Negotiated settlement / fee to make this go away long before a jury trial3. Her investors will not be made whole - she will still be rich4. Her reputation will be smeared a bit

The only damning part is that she defined a strategy and then used heavy media acclaim to discuss that she is only OTM options.. If there is a single - just a single - real transaction where she purposely started a position ITM - even if it was legal for accounting purposes, she went off her specified strategy.. And that is the damning part of the reputation.



----------------------------

#7338 Jun 2, 2016

I agree except number 4 I would say is smeared A LOT. ��It.s not just employing an ITM strategy; it.s that she has apparently been taking substantial losses since Oct .14. ��Not proven yet, but certainly looks likely if she.s been doing this calendar scheme.

Jeff Paynejpayne.rdb@...OptionsBistro.com



----------------------------

#7339 Jun 2, 2016

I don't mind hege fund managers who incur losses.. We all have periods where our portfolios underperform. .good strategies should have a period where they can recover from that.

i would pull my money out because of the accounting tactics.. I would also pull my money out because she deviated from her defined strategy.. I would have never invested in her fund because she adds on additional leverage when things go against here, compounding losses. .but for those people that did invest, they probably should be ok with the losses from time to time as long as she has a recovery strategy.



----------------------------

#7340 Jun 2, 2016

Yea, I would agree also with Jeff. Smeared enough that the name of the group will probably have to be changed. Because clearly we aren't trading the way of the Supertrader...



On Thursday, June 2, 2016 9:21 AM, "Jeff Payne jpayne.rdb@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��I agree except number 4 I would say is smeared A LOT. ��It.s not just employing an ITM strategy; it.s that she has apparently been taking substantial losses since Oct .14. ��Not proven yet, but certainly looks likely if she.s been doing this calendar scheme.

Jeff Paynejpayne.rdb@...OptionsBistro.com



----------------------------

#7341 Jun 2, 2016

I always felt there was much more to her "system" than she let on, but figured it was in her methods of hedging risk. It is hard to argue after reading the details of the SEC complaint that the monthly "scheme trade" as they call it was done for any other reason than to "create" an artificial monthly profit. Even if she didn't gain from that personally (which she did) I would view it as being disengenuous if I were an investor. Unfortunately, there is a direct tie to doing this monthly trade sequence (with a pretty significant % of the portfolio) and her receiving personal compensation...that is the more damning piece for me in all of this.��

The way I trade I sometimes have very large swings in net liq and take comfort in the fact that I can ride out the swings. Since I have no doubt she is much smarter than I am and very experienced with option trading, it seems curious that she would carry this amount of unrealized loss for so long without working it off or allowing some of it to be realized. Maybe all the hype of the super trader made her more concerned with never having significant losing periods, and she was forced to pull fees if the books showed profitable months to keep up the charade. Who knows....all speculation at this point, but for me it has sure taken some of the shine off what she has accomplished.

Dwayne��

Sent from Yahoo Mail for iPhone

On Thursday, June 2, 2016, 10:31 AM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I don't mind hege fund managers who incur losses.�� We all have periods where our portfolios underperform. ��good strategies should have a period where they can recover from that.

i would pull my money out because of the accounting tactics.�� I would also pull my money out because she deviated from her defined strategy.�� I would have never invested in her fund because she adds on additional leverage when things go against here, compounding losses. ��but for those people that did invest, they probably should be ok with the losses from time to time as long as she has a recovery strategy.







----------------------------

#7342 Jun 2, 2016

Did Tom and Tony ever talk about Karen on the show?. I dont watch all the segments, but the ones I have seen, not a mention. .

Seems like they don.t want to touch this, which seems logical, at the same time it would be a valuable lesson about not getting too big, right?



----------------------------

#7344 Jun 2, 2016

Tom and Tony have huge ego's and would rather hear the sound of there own voices than actually sit and listen without interrupting her.

Keith



----------------------------

#7346 Jun 2, 2016

I think it's pretty irresponsible to ignore it, given how much they've hyped and promoter her as their biggest celebrity trader. They're the ones that gave her the "super" moniker, aren't they?

Sent from my iPhone

On Jun 2, 2016, at 1:39 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Tom and Tony have huge ego's and would rather hear the sound of there own voices than actually sit and listen without interrupting her.

Keith



----------------------------

#7347 Jun 2, 2016

At the debut of Karen, Tom did mention that he could never do what Karen does - she takes on enormous amount of risk.. They brush on it lightly from time to time (at least during the year that supertrader was debut) trying to be respectful of Karen.. After all, Karen did and continues to generate a lot of buzz for TT, even though what she does is generally against what they are promoting - there would be no TT if all people do is sell the tail-ends of SPX.. .Also, Karen continues to generate a reasonable profit during those difficult years while TT was in the dumpster... There isn.t much they can say, the proof is in the P/L.. .Other people on the network has taken a milder and mixed approach (including myself) and sell a portion of their portfolio doing Karen.s strategy ~50 DTE periodically in spite of the IVR.. Whatever strategy you take on the rest of your portfolio would be complementary to the Karensque portion.. That in itself has significantly alter Karen.s approach.. You are essentially .hedging. using smaller parts (individual stocks) against the big boys (indexes) of your portfolio. ��Hope this helps, wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 1:40 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble



----------------------------

#7348 Jun 2, 2016

If she was losing money from 10 / 2014 they had to know ... She trades through TOS ��[ maybe she switched] ... If so , ��they must of known her Net Liq was at a loss, ��the last year and a half ��and she was doing the ITM Calls trades ... Tastygate lol ... When was the last interview ?��



From: "quantabe@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Thursday, June 2, 2016 6:20 PM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble

��At the debut of Karen, Tom did mention that he could never do what Karen does - she takes on enormous amount of risk.�� They brush on it lightly from time to time (at least during the year that supertrader was debut) trying to be respectful of Karen.�� After all, Karen did and continues to generate a lot of buzz for TT, even though what she does is generally against what they are promoting - there would be no TT if all people do is sell the tail-ends of SPX.�� ��Also, Karen continues to generate a reasonable profit during those difficult years while TT was in the dumpster.���� There isn.t much they can say, the proof is in the P/L.�� ��Other people on the network has taken a milder and mixed approach (including myself) and sell a portion of their portfolio doing Karen.s strategy ~50 DTE periodically in spite of the IVR.�� Whatever strategy you take on the rest of your portfolio would be complementary to the Karensque portion.�� That in itself has significantly alter Karen.s approach.�� You are essentially .hedging. using smaller parts (individual stocks) against the big boys (indexes) of your portfolio. ��Hope this helps, wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 1:40 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble



----------------------------

#7349 Jun 2, 2016

Vic,

How would they know what Karen's P&L is? ��They don't run TOS anymore. Is there some agreement with TDA that I'm not aware of?��

On a related note, they were deferential to Karen when she was on the show, but whenever a caller would chime in about Karen's style they would caution against her style because of the risk she would take on. In fact that is how I first heard about her, listening to their cautions. I then went back to listen to Karen's interviews.��

THM



On Thursday, June 2, 2016 3:35 PM, "Vic Ferrari vico213@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��If she was losing money from 10 / 2014 they had to know ... She trades through TOS ��[ maybe she switched] ... If so , ��they must of known her Net Liq was at a loss, ��the last year and a half ��and she was doing the ITM Calls trades ... Tastygate lol ... When was the last interview ?��



From: "quantabe@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Thursday, June 2, 2016 6:20 PM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble



��At the debut of Karen, Tom did mention that he could never do what Karen does - she takes on enormous amount of risk.�� They brush on it lightly from time to time (at least during the year that supertrader was debut) trying to be respectful of Karen.�� After all, Karen did and continues to generate a lot of buzz for TT, even though what she does is generally against what they are promoting - there would be no TT if all people do is sell the tail-ends of SPX.�� ��Also, Karen continues to generate a reasonable profit during those difficult years while TT was in the dumpster.���� There isn.t much they can say, the proof is in the P/L.�� ��Other people on the network has taken a milder and mixed approach (including myself) and sell a portion of their portfolio doing Karen.s strategy ~50 DTE periodically in spite of the IVR.�� Whatever strategy you take on the rest of your portfolio would be complementary to the Karensque portion.�� That in itself has significantly alter Karen.s approach.�� You are essentially .hedging. using smaller parts (individual stocks) against the big boys (indexes) of your portfolio. ��Hope this helps, wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 1:40 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble







----------------------------

#7350 Jun 2, 2016

Our Tom said she first came on their radar , cause her risk parameters were too high on TOS , and that's how they discovered her ... Not sure of the extent of their affiliation presently ��but they do events in conjunction with TD and TOS .... They used to prominently display the Karen Videos on the home page ��and coincidentally they recently disappeared ... They certainly never advocated her style of trading ��... I'm sure being known as The Super Trader did not help her decision making process as well ...��



From: "T Howells tcmoller@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Thursday, June 2, 2016 7:38 PM Subject: Re: [SuperTraderKarenStudy] Is Karen in trouble

��Vic,

How would they know what Karen's P&L is? ��They don't run TOS anymore. Is there some agreement with TDA that I'm not aware of?��

On a related note, they were deferential to Karen when she was on the show, but whenever a caller would chime in about Karen's style they would caution against her style because of the risk she would take on. In fact that is how I first heard about her, listening to their cautions. I then went back to listen to Karen's interviews.��

THM



On Thursday, June 2, 2016 3:35 PM, "Vic Ferrari vico213@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��If she was losing money from 10 / 2014 they had to know ... She trades through TOS ��[ maybe she switched] ... If so , ��they must of known her Net Liq was at a loss, ��the last year and a half ��and she was doing the ITM Calls trades ... Tastygate lol ... When was the last interview ?��



From: "quantabe@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Thursday, June 2, 2016 6:20 PM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble



��At the debut of Karen, Tom did mention that he could never do what Karen does - she takes on enormous amount of risk.�� They brush on it lightly from time to time (at least during the year that supertrader was debut) trying to be respectful of Karen.�� After all, Karen did and continues to generate a lot of buzz for TT, even though what she does is generally against what they are promoting - there would be no TT if all people do is sell the tail-ends of SPX.�� ��Also, Karen continues to generate a reasonable profit during those difficult years while TT was in the dumpster.���� There isn.t much they can say, the proof is in the P/L.�� ��Other people on the network has taken a milder and mixed approach (including myself) and sell a portion of their portfolio doing Karen.s strategy ~50 DTE periodically in spite of the IVR.�� Whatever strategy you take on the rest of your portfolio would be complementary to the Karensque portion.�� That in itself has significantly alter Karen.s approach.�� You are essentially .hedging. using smaller parts (individual stocks) against the big boys (indexes) of your portfolio. ��Hope this helps, wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 1:40 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble



----------------------------

#7355 Jun 3, 2016

Hi again Vic,��

I remember watching the video when Tom S said what "our Tom" (there you go Tom, your new moniker!) referred to about Karen's risk parameters. I would think that would be prior to 2009 when the TT dudes owned and operated TOS as a brokerage. After that I don't think they would have access to Karen's trades because they sold the rights of TOS to TDA. So, they are just like us, they would be asking, what are you doing selling ITM? ��

Thanks for the dialogue!THM



On Thursday, June 2, 2016 6:16 PM, "Vic Ferrari vico213@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��Our Tom said she first came on their radar , cause her risk parameters were too high on TOS , and that's how they discovered her ... Not sure of the extent of their affiliation presently ��but they do events in conjunction with TD and TOS .... They used to prominently display the Karen Videos on the home page ��and coincidentally they recently disappeared ... They certainly never advocated her style of trading ��... I'm sure being known as The Super Trader did not help her decision making process as well ...��



From: "T Howells tcmoller@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Thursday, June 2, 2016 7:38 PM Subject: Re: [SuperTraderKarenStudy] Is Karen in trouble



��Vic,

How would they know what Karen's P&L is? ��They don't run TOS anymore. Is there some agreement with TDA that I'm not aware of?��

On a related note, they were deferential to Karen when she was on the show, but whenever a caller would chime in about Karen's style they would caution against her style because of the risk she would take on. In fact that is how I first heard about her, listening to their cautions. I then went back to listen to Karen's interviews.��

THM



On Thursday, June 2, 2016 3:35 PM, "Vic Ferrari vico213@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:



��If she was losing money from 10 / 2014 they had to know ... She trades through TOS ��[ maybe she switched] ... If so , ��they must of known her Net Liq was at a loss, ��the last year and a half ��and she was doing the ITM Calls trades ... Tastygate lol ... When was the last interview ?��



From: "quantabe@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Thursday, June 2, 2016 6:20 PM Subject: RE: [SuperTraderKarenStudy] Is Karen in trouble



��At the debut of Karen, Tom did mention that he could never do what Karen does - she takes on enormous amount of risk.�� They brush on it lightly from time to time (at least during the year that supertrader was debut) trying to be respectful of Karen.�� After all, Karen did and continues to generate a lot of buzz for TT, even though what she does is generally against what they are promoting - there would be no TT if all people do is sell the tail-ends of SPX.�� ��Also, Karen continues to generate a reasonable profit during those difficult years while TT was in the dumpster.���� There isn.t much they can say, the proof is in the P/L.�� ��Other people on the network has taken a milder and mixed approach (including myself) and sell a portion of their portfolio doing Karen.s strategy ~50 DTE periodically in spite of the IVR.�� Whatever strategy you take on the rest of your portfolio would be complementary to the Karensque portion.�� That in itself has significantly alter Karen.s approach.�� You are essentially .hedging. using smaller parts (individual stocks) against the big boys (indexes) of your portfolio. ��Hope this helps, wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Thursday, June 2, 2016 1:40 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble







----------------------------

#7364 Jun 3, 2016

Trastytrade has taken down the video of Karen's last interview and put up this notice.

Like many, we are concerned about the SEC investigation into the accounting and reporting practices of Karen Bruton and her firm Hope Advisors. Ms. Bruton is not an employee of tastytrade and last appeared and was interviewed on the network 2 years ago, as a guest. In light of the investigation, we have removed all past videos airing Ms. Bruton for the time being. We at tastytrade believe in full and transparent disclosure by money managers and will continue to advocate on behalf of the retail trading community.



Jack Follick



----------------------------

#7366 Jun 3, 2016

I know if I was Karen I would tell Tom to kiss my A** next time you want an interview

Keith



----------------------------

#7367 Jun 3, 2016

Keith, you made me spit out my ginger ale.

Bobby

Sent from my iPhone

On Jun 3, 2016, at 8:38 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��I know if I was Karen I would tell Tom to kiss my A** next time you want an interview

Keith



----------------------------

#7368 Jun 3, 2016

Here's the full schedule for the Dan Sheridan conference. ��It does not make reference to Karen being a super trader.

She's going to be speaking on iron condors too!

www.sheridanmentoring.com/annual-options-seminar-2016/?inf_contact_key=e6d89b6383b789cd6f8c991c418fae59da60fbf070898a09baf1ca79060b850f

Bobby

Sent from my iPhone

On Jun 3, 2016, at 8:51 PM, bethandbob203@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Keith, you made me spit out my ginger ale.

Bobby

Sent from my iPhone

On Jun 3, 2016, at 8:38 PM, keith dutter matt19.2526@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I know if I was Karen I would tell Tom to kiss my A** next time you want an interview

Keith



----------------------------

#7369 Jun 3, 2016

Oh please ....

Sent from XFINITY Connect Mobile App------ Original Message ------

From: keith dutter matt19.2526@... [supertraderkarenstudy]To: supertraderkarenstudy@yahoogroups.comSent: June 3, 2016 at 8:40 PMSubject: Re: [SuperTraderKarenStudy] Is Karen in trouble>��I know if I was Karen I would tell Tom to kiss my A** next time you want an interview

Keith



----------------------------

#7370 Jun 3, 2016

Sorry, just calling it like I see it

Keith



----------------------------

#7371 Jun 3, 2016

Keith,

Ha ha and no doubt!

Got back in today when we were down at 2087.

Not exactly the huge VIX spike I was looking for, 14.6 when I pulled the trigger, but good enough to bump the premiums up.

Have a good weekend,

RM



----------------------------

#7381 Jun 4, 2016

Why, Keith?

---In supertraderkarenstudy@yahoogroups.com, matt19.2526@...> wrote :

I know if I was Karen I would tell Tom to kiss my A** next time you want an interview

Keith



----------------------------

#7384 Jun 4, 2016

Well I would think as I often do that you would wait until.she was proven to have committed any wrong doings. I'm not saying she's guilty.or innocent.these are SEC allegations. I mean you got some huge crooks out there walking the streets that have done a whole lot worse (John Corzine & Charlie Rangel.to name a couple ) but because they have political ties.no retribution..Now it's always nice to jump on the bandwagon as this is the way todays society is based especially with the main stream media the way it is. If there's blood in the water the cries go out to hangem first and check to see weather there guilty later. It seems to be Tom was quick to distance.himself from Karen in the wake of the allegations, I don't care for Tasty Trade never did this is just one more reason for me not to listen to anything that ego maniac has to say.

I would add if the Street article is correct it would seem Karen had strayed a long way from her trading plan in regarding to picking strikes and taking profits, maybe that's what happens when your account get's so big you think you can't lose. That's my 2 cents I will not comment further on this.

Keith



----------------------------

#7391 Jun 4, 2016

Thank you for your very clear explanation. It actually helped me in thinking again about the importance of stress testing. When things are 'humming along' it is easy to get too aggressive and not realize how big a hole you might be in. ��

Karen S

Sent from my iPhone

On Jun 4, 2016, at 5:20 PM, radjamax@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Hi all,��

The real story here is very simple, and many of you are pretty much on point. Here is a rundown of what happened

1. When Karen started the fund, her lawyer gave her different ways of accounting for the profit and loss. The first one is the NAV which accounts for both realized and realized p/l and is done monthly. This is a typical method for actively traded funds with liquid/easy to value investments (equities, options, futures etc). However, there IS a downside to this method. What happens at end of year for tax accounting is that the taxable income is based ONLY on realized p/l (unless you elect a mark to market approach for taxes which is a complete mess tax-wise). So it can create some "unclean" accounting because at the end of the year, the TAXABLE profit will not equal the actual profit to the investor.��Karen, being a CPA did not like this so she chose the 2nd method.��

2. The method Karen chose is the realized gain/loss accounting. This is actually very common in hedge fund also, but more so with those that invest in illiquid investments. For example, many VC funds do this because their investments in companies (think Uber for example), do not really generate a true profit until they sell the investment (IPO or acquisition). And it would not make sense for investors to pay tax year after year on some phantom gains without actually receiving any money. So the method Karen chose was not wrong or illegal in any way. It was just not really the most common or appropriate method for a liquid market based fund (because there is no reason to not use the NAV based p/l in her case).��

3. It's important to remember that under normal circumstances, regardless of whether a fund uses the NAV method of the realized p/l method, the end result to the investor SHOULD be the same. Especially in her case, trading options with less than 60 DTE, any unrealized losses would normally soon become realized as those positions are closed and/or expire. So at the outset, and for many years, this did not present any real problems. In fact, as you can see by the 2013 CFTC complaint, they audited Karen and made her show the unrealized p/l on her statements yet did not pursue any other enforcement action. In that consent order it specifically said that it was fine for her to use that method, BUT she also needed to let her investors know what the carried unrealized p/l is to comply with full disclosure of performance. That is very telling as of course if the method she was using was illegal or flat out wrong, she would have been shut down at that audit.��

4. What happenedin October is very simple. Unfortunately, the market had been moving up, and as you all know the adjustments to the call side being tested can and do include selling puts also. This works effectively if the volatility stays low and market keeps moving up or flattens out. But where you run into trouble is when this upward moving market suddenly dips with a big vol increase, which is exactly what happened with the Oct 2014 dip. So now Karen had sold many puts at low vol in an up market, and they suddenly generated significant paper losses. In retrospect, it's clear that Karen did not have adequate risk management in place and you are spot on regarding her not stress testing her position with a vol increase in Analyze tab. Quite frankly that's a rookie mistake. Remember too that the Karen strategy works LEAST well in up-trending markets and having grown her fund to a large size, she was under pressure from investors to beef up returns (since 2012, 2013 and 2014 were bigup years in the market she was basically not generating any alpha i.e not outperforming the market). So this caused her to take on larger positions than what she was doing in the past. This is pretty common actually. The two most commonly cited "blow ups" of Karen-esque funds (LTCM and Victor Neiderhoffer) suffered the same issue because they became very big, were under pressure to generate profits that was harder to do with the larger ��size, and started to deviate from their core strategy. Same thing happened here.��

5. When the big unrealized losses in October appeared, Karen was faced for the first time with the prospect of no fees coming in. This was also a mistake in how the fund was set up because she should have been charging a base management fee (2%) that would cover her expenses during any down months. However, because her fee structure was incentive only she could not do that. Therefore, knowing full well how her incentive fee structure was based on realized gains, she engaged in trades that created gains for the month to generate fees. Again, this was not done out of malice or profiteering. Because the idea was that it was temporary since the unrealized losses would be made back. ��From her perspective, it was incentive fees that would have been charged later anyway, so she was just "spreading them out" and pulling in money to pay her traders, staff etc.��

6. Where things started to fall apart is because these trades took up margin and also had a slippage/tx cost, it started to eat into her profits and prevented her from executing her strategy properly. This is known as "going on tilt" and is common also for many traders. You have a good plan, but once you deviate and things start to fall apart you can't get back on track.��

7. As of right now there is about $50 mil in unrealized losses, the fund has not blown up, it is not doing well but it's not a Ponzi scheme and it will continue to trade. Unfortunately, due to the bad press it's likely that many investors will leave and Karen will end up managing her own money only. There will not be any jail time as nothing criminal was done.��

8. One last thing. The redemption issue that was brought up is really the only big problem here. That is absolutely unexcusable and the attorney that drew up those documents honestly is incompetent because that method of redemption is completely inappropriate (those funds that do use realized p/l for accounting have ��a redemption structure which incorporates the unrealized gain/loss thus preventing specifically this kind of problem where an investor can over-redeem their account relative to it's actual NAV-based value). Likely this is the part that will really get Karen because it will be difficult to defend.��

All in all, I think that there are some really useful lessons here for those that are trying to replicate this method.��

FIRST: The method works. Karen successfully used it from 2008 to 2014. A 6 year streak is NOT dumb luck especially considering 2008/2009 was still very volatile. Those that traded in 2014 and 2015 and now have also seen the concept work well during that time.��

SECOND: Risk management is key. You need to stress your positions on a DAILY basis at the very least. Be aggressive in your model (i.e stress test with bigger drops and more vol jump that you want to). A few more contracts won't make a huge difference in your return, but they can put you under much more quickly. Know what your position size needs to be and don't go over it no matter how tempting it is. you might get lucky and the market goes your way, but if it doesn't you'll start taking big losses. When Karen said she was at 50% margin in an UN-stressed market, that was a clue that it was too much. If you thoroughly examine her method and trade her way but keep risk limited based on appropriate stress test parameters, at low vol on ToS you will see that she should have been at 20-30% margin no more. ��

THIRD: It's not the puts that will kill you! It's the calls. When market goes up and your call side gets stressed, you have to make up that premium at much lower IV. That means you have to sell a lot more calls OR sell puts at the worst possible time(market up and low IV) which leaves you extremely vulnerable to a drop, just like what happened to Karen in Oct 2014. The lesson here is calls don't generate that much premium anyway, so sell LESS of them, and be very careful adjusting your position on the call side.��

FOURTH: If you are inclined to manage other people's money, do NOT let that pressure make you deviate from your plan. If you have ��investors not happy with returns, let them leave! With this strategy, you need to accept that in a bull market you will likely not beat the market and may underperform. It's tough (especially in a long bull like 2011-2014) but that's the only way you can stay within acceptable risk to avoid getting killed when the market turns.��

So there it is. What happened and the lessons. I think we can all learn a lot here. The good thing is that once again an OTM put seller has gotten bad press. So there will be much less people looking ��to replicate this and drive down premium on the very options we're trying to sell.��







----------------------------

#7392 Jun 4, 2016

Thanks Radjamax for your summary.You provided lots of food for thought for my future trades. I think a lot of people are using the 50% margin benchmark at the moment. Maybe we may have to be more conservative?Does anyone here use 20-30% margin as your max? If so were you able to achieve the 20-25 % annual ROC goal?AndrewOn 05/06/2016 10:53 AM, "Karen kserengeti@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> wrote:

.Thank you for your very clear explanation. It actually helped me in thinking again about the importance of stress testing. When things are 'humming along' it is easy to get too aggressive and not realize how big a hole you might be in. .

Karen S

Sent from my iPhone

On Jun 4, 2016, at 5:20 PM, radjamax@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

.Hi all,.

The real story here is very simple, and many of you are pretty much on point. Here is a rundown of what happened

1. When Karen started the fund, her lawyer gave her different ways of accounting for the profit and loss. The first one is the NAV which accounts for both realized and realized p/l and is done monthly. This is a typical method for actively traded funds with liquid/easy to value investments (equities, options, futures etc). However, there IS a downside to this method. What happens at end of year for tax accounting is that the taxable income is based ONLY on realized p/l (unless you elect a mark to market approach for taxes which is a complete mess tax-wise). So it can create some "unclean" accounting because at the end of the year, the TAXABLE profit will not equal the actual profit to the investor..Karen, being a CPA did not like this so she chose the 2nd method..

2. The method Karen chose is the realized gain/loss accounting. This is actually very common in hedge fund also, but more so with those that invest in illiquid investments. For example, many VC funds do this because their investments in companies (think Uber for example), do not really generate a true profit until they sell the investment (IPO or acquisition). And it would not make sense for investors to pay tax year after year on some phantom gains without actually receiving any money. So the method Karen chose was not wrong or illegal in any way. It was just not really the most common or appropriate method for a liquid market based fund (because there is no reason to not use the NAV based p/l in her case)..

3. It's important to remember that under normal circumstances, regardless of whether a fund uses the NAV method of the realized p/l method, the end result to the investor SHOULD be the same. Especially in her case, trading options with less than 60 DTE, any unrealized losses would normally soon become realized as those positions are closed and/or expire. So at the outset, and for many years, this did not present any real problems. In fact, as you can see by the 2013 CFTC complaint, they audited Karen and made her show the unrealized p/l on her statements yet did not pursue any other enforcement action. In that consent order it specifically said that it was fine for her to use that method, BUT she also needed to let her investors know what the carried unrealized p/l is to comply with full disclosure of performance. That is very telling as of course if the method she was using was illegal or flat out wrong, she would have been shut down at that audit..

4. What happenedin October is very simple. Unfortunately, the market had been moving up, and as you all know the adjustments to the call side being tested can and do include selling puts also. This works effectively if the volatility stays low and market keeps moving up or flattens out. But where you run into trouble is when this upward moving market suddenly dips with a big vol increase, which is exactly what happened with the Oct 2014 dip. So now Karen had sold many puts at low vol in an up market, and they suddenly generated significant paper losses. In retrospect, it's clear that Karen did not have adequate risk management in place and you are spot on regarding her not stress testing her position with a vol increase in Analyze tab. Quite frankly that's a rookie mistake. Remember too that the Karen strategy works LEAST well in up-trending markets and having grown her fund to a large size, she was under pressure from investors to beef up returns (since 2012, 2013 and 2014 were bigup years in the market she was basically not generating any alpha i.e not outperforming the market). So this caused her to take on larger positions than what she was doing in the past. This is pretty common actually. The two most commonly cited "blow ups" of Karen-esque funds (LTCM and Victor Neiderhoffer) suffered the same issue because they became very big, were under pressure to generate profits that was harder to do with the larger .size, and started to deviate from their core strategy. Same thing happened here..

5. When the big unrealized losses in October appeared, Karen was faced for the first time with the prospect of no fees coming in. This was also a mistake in how the fund was set up because she should have been charging a base management fee (2%) that would cover her expenses during any down months. However, because her fee structure was incentive only she could not do that. Therefore, knowing full well how her incentive fee structure was based on realized gains, she engaged in trades that created gains for the month to generate fees. Again, this was not done out of malice or profiteering. Because the idea was that it was temporary since the unrealized losses would be made back.. From her perspective, it was incentive fees that would have been charged later anyway, so she was just "spreading them out" and pulling in money to pay her traders, staff etc..

6. Where things started to fall apart is because these trades took up margin and also had a slippage/tx cost, it started to eat into her profits and prevented her from executing her strategy properly. This is known as "going on tilt" and is common also for many traders. You have a good plan, but once you deviate and things start to fall apart you can't get back on track..

7. As of right now there is about $50 mil in unrealized losses, the fund has not blown up, it is not doing well but it's not a Ponzi scheme and it will continue to trade. Unfortunately, due to the bad press it's likely that many investors will leave and Karen will end up managing her own money only. There will not be any jail time as nothing criminal was done..

8. One last thing. The redemption issue that was brought up is really the only big problem here. That is absolutely unexcusable and the attorney that drew up those documents honestly is incompetent because that method of redemption is completely inappropriate (those funds that do use realized p/l for accounting have .a redemption structure which incorporates the unrealized gain/loss thus preventing specifically this kind of problem where an investor can over-redeem their account relative to it's actual NAV-based value). Likely this is the part that will really get Karen because it will be difficult to defend..

All in all, I think that there are some really useful lessons here for those that are trying to replicate this method..

FIRST: The method works. Karen successfully used it from 2008 to 2014. A 6 year streak is NOT dumb luck especially considering 2008/2009 was still very volatile. Those that traded in 2014 and 2015 and now have also seen the concept work well during that time..

SECOND: Risk management is key. You need to stress your positions on a DAILY basis at the very least. Be aggressive in your model (i.e stress test with bigger drops and more vol jump that you want to). A few more contracts won't make a huge difference in your return, but they can put you under much more quickly. Know what your position size needs to be and don't go over it no matter how tempting it is. you might get lucky and the market goes your way, but if it doesn't you'll start taking big losses. When Karen said she was at 50% margin in an UN-stressed market, that was a clue that it was too much. If you thoroughly examine her method and trade her way but keep risk limited based on appropriate stress test parameters, at low vol on ToS you will see that she should have been at 20-30% margin no more. .

THIRD: It's not the puts that will kill you! It's the calls. When market goes up and your call side gets stressed, you have to make up that premium at much lower IV. That means you have to sell a lot more calls OR sell puts at the worst possible time(market up and low IV) which leaves you extremely vulnerable to a drop, just like what happened to Karen in Oct 2014. The lesson here is calls don't generate that much premium anyway, so sell LESS of them, and be very careful adjusting your position on the call side..

FOURTH: If you are inclined to manage other people's money, do NOT let that pressure make you deviate from your plan. If you have .investors not happy with returns, let them leave! With this strategy, you need to accept that in a bull market you will likely not beat the market and may underperform. It's tough (especially in a long bull like 2011-2014) but that's the only way you can stay within acceptable risk to avoid getting killed when the market turns..

So there it is. What happened and the lessons. I think we can all learn a lot here. The good thing is that once again an OTM put seller has gotten bad press. So there will be much less people looking .to replicate this and drive down premium on the very options we're trying to sell..







----------------------------

#7394 Jun 5, 2016

I am always hovering around 90 percent because I am selling five calls for every put. You can read about my strategy in the archives.

I am selling options just a couple dte. ��The rising markets with low iv do not impact me the same way Radjamax fears. ��The issues Karen runs into are due to being many dte where it becomes much more challenging to adjust.

I always start out at maximum leverage and then slowly reduce on each adjustment if an adjust is necessary.

My total puts are a fraction of what Karen sells and I also layer on a long put ladder that caps any potential losses from a crash scenario.

-Tyler



----------------------------

#7396 Jun 5, 2016

Radjamax,

First off, very nice summary.

A couple of questions and comments:

1) Why is Mark to Market accounting "a complete mess tax-wise?" ��I personally use this method of tax accounting for my trading account and I find it to be incredibly simple (especially not having to deal with convoluted wash sale rules). ��

2) After she was fined (in 2013?) and required (on a monthly basis, I believe) to disclose unrealized losses with full disclosure of performance, it seems investors should have known they were being charged fees even though the fund was below its high water mark. ��However, investors who caught this and understood that fees were charged on realized gains, probably had no idea the realized gains were being manipulated by these Scheme Trades for the sole purpose of collecting fees and at a HUGE monthly cost to the fund (~$350K in commissions/slippage per month). ��To me this is a huge breach of fiduciary responsibility.��

3) You conclude that "the method works" if you manage risk properly. ��But it begs the question: what returns are possible and are they even worth it if you sell far OTM options "and manage risk properly." ��In other words, do the risk controls (i.e. reducing size) leave any alpha in this strategy?

4) The redemption loophole could very easily have been abused to perpetrate a Ponzi Scheme. ��I am not saying it was but it will be very interesting to see who redeemed and when.





From: "radjamax@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To: supertraderkarenstudy@yahoogroups.comSent: Saturday, June 4, 2016 8:20:11 PMSubject: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Hi all,��

The real story here is very simple, and many of you are pretty much on point. Here is a rundown of what happened

1. When Karen started the fund, her lawyer gave her different ways of accounting for the profit and loss. The first one is the NAV which accounts for both realized and realized p/l and is done monthly. This is a typical method for actively traded funds with liquid/easy to value investments (equities, options, futures etc). However, there IS a downside to this method. What happens at end of year for tax accounting is that the taxable income is based ONLY on realized p/l (unless you elect a mark to market approach for taxes which is a complete mess tax-wise). So it can create some "unclean" accounting because at the end of the year, the TAXABLE profit will not equal the actual profit to the investor.��Karen, being a CPA did not like this so she chose the 2nd method.��

2. The method Karen chose is the realized gain/loss accounting. This is actually very common in hedge fund also, but more so with those that invest in illiquid investments. For example, many VC funds do this because their investments in companies (think Uber for example), do not really generate a true profit until they sell the investment (IPO or acquisition). And it would not make sense for investors to pay tax year after year on some phantom gains without actually receiving any money. So the method Karen chose was not wrong or illegal in any way. It was just not really the most common or appropriate method for a liquid market based fund (because there is no reason to not use the NAV based p/l in her case).��

3. It's important to remember that under normal circumstances, regardless of whether a fund uses the NAV method of the realized p/l method, the end result to the investor SHOULD be the same. Especially in her case, trading options with less than 60 DTE, any unrealized losses would normally soon become realized as those positions are closed and/or expire. So at the outset, and for many years, this did not present any real problems. In fact, as you can see by the 2013 CFTC complaint, they audited Karen and made her show the unrealized p/l on her statements yet did not pursue any other enforcement action. In that consent order it specifically said that it was fine for her to use that method, BUT she also needed to let her investors know what the carried unrealized p/l is to comply with full disclosure of performance. That is very telling as of course if the method she was using was illegal or flat out wrong, she would have been shut down at that audit.��

4. What happened in October is very simple. Unfortunately, the market had been moving up, and as you all know the adjustments to the call side being tested can and do include selling puts also. This works effectively if the volatility stays low and market keeps moving up or flattens out. But where you run into trouble is when this upward moving market suddenly dips with a big vol increase, which is exactly what happened with the Oct 2014 dip. So now Karen had sold many puts at low vol in an up market, and they suddenly generated significant paper losses. In retrospect, it's clear that Karen did not have adequate risk management in place and you are spot on regarding her not stress testing her position with a vol increase in Analyze tab. Quite frankly that's a rookie mistake. Remember too that the Karen strategy works LEAST well in up-trending markets and having grown her fund to a large size, she was under pressure from investors to beef up returns (since 2012, 2013 and 2014 were big up years in the market she was basically not generating any alpha i.e not outperforming the market). So this caused her to take on larger positions than what she was doing in the past. This is pretty common actually. The two most commonly cited "blow ups" of Karen-esque funds (LTCM and Victor Neiderhoffer) suffered the same issue because they became very big, were under pressure to generate profits that was harder to do with the larger ��size, and started to deviate from their core strategy. Same thing happened here.��

5. When the big unrealized losses in October appeared, Karen was faced for the first time with the prospect of no fees coming in. This was also a mistake in how the fund was set up because she should have been charging a base management fee (2%) that would cover her expenses during any down months. However, because her fee structure was incentive only she could not do that. Therefore, knowing full well how her incentive fee structure was based on realized gains, she engaged in trades that created gains for the month to generate fees. Again, this was not done out of malice or profiteering. Because the idea was that it was temporary since the unrealized losses would be made back. ��From her perspective, it was incentive fees that would have been charged later anyway, so she was just "spreading them out" and pulling in money to pay her traders, staff etc.��

6. Where things started to fall apart is because these trades took up margin and also had a slippage/tx cost, it started to eat into her profits and prevented her from executing her strategy properly. This is known as "going on tilt" and is common also for many traders. You have a good plan, but once you deviate and things start to fall apart you can't get back on track.��

7. As of right now there is about $50 mil in unrealized losses, the fund has not blown up, it is not doing well but it's not a Ponzi scheme and it will continue to trade. Unfortunately, due to the bad press it's likely that many investors will leave and Karen will end up managing her own money only. There will not be any jail time as nothing criminal was done.��

8. One last thing. The redemption issue that was brought up is really the only big problem here. That is absolutely unexcusable and the attorney that drew up those documents honestly is incompetent because that method of redemption is completely inappropriate (those funds that do use realized p/l for accounting have ��a redemption structure which incorporates the unrealized gain/loss thus preventing specifically this kind of problem where an investor can over-redeem their account relative to it's actual NAV-based value). Likely this is the part that will really get Karen because it will be difficult to defend.��

All in all, I think that there are some really useful lessons here for those that are trying to replicate this method.��

FIRST: The method works. Karen successfully used it from 2008 to 2014. A 6 year streak is NOT dumb luck especially considering 2008/2009 was still very volatile. Those that traded in 2014 and 2015 and now have also seen the concept work well during that time.��

SECOND: Risk management is key. You need to stress your positions on a DAILY basis at the very least. Be aggressive in your model (i.e stress test with bigger drops and more vol jump that you want to). A few more contracts won't make a huge difference in your return, but they can put you under much more quickly. Know what your position size needs to be and don't go over it no matter how tempting it is. you might get lucky and the market goes your way, but if it doesn't you'll start taking big losses. When Karen said she was at 50% margin in an UN-stressed market, that was a clue that it was too much. If you thoroughly examine her method and trade her way but keep risk limited based on appropriate stress test parameters, at low vol on ToS you will see that she should have been at 20-30% margin no more. ��

THIRD: It's not the puts that will kill you! It's the calls. When market goes up and your call side gets stressed, you have to make up that premium at much lower IV. That means you have to sell a lot more calls OR sell puts at the worst possible time (market up and low IV) which leaves you extremely vulnerable to a drop, just like what happened to Karen in Oct 2014. The lesson here is calls don't generate that much premium anyway, so sell LESS of them, and be very careful adjusting your position on the call side.��

FOURTH: If you are inclined to manage other people's money, do NOT let that pressure make you deviate from your plan. If you have ��investors not happy with returns, let them leave! With this strategy, you need to accept that in a bull market you will likely not beat the market and may underperform. It's tough (especially in a long bull like 2011-2014) but that's the only way you can stay within acceptable risk to avoid getting killed when the market turns.��

So there it is. What happened and the lessons. I think we can all learn a lot here. The good thing is that once again an OTM put seller has gotten bad press. So there will be much less people looking ��to replicate this and drive down premium on the very options we're trying to sell.��







----------------------------

#7398 Jun 5, 2016

Andrew

I'm using about 14% currently but I've taken a lot of positions off the last couple of weeks and VIX is super low currently, now that 15% is already stressed 20% to the downside so in actual dollars I'm using about 8%..I try and keep the margin below 50% stressed all the time even when we get those big moves down like we saw in Jan / Feb that doesn't always happen and I've gotten it up in the 80% range a time or two. But I'm a lot more conservative now than I was 3 years ago or even a year ago. I could make more. money than I do but I'm just a lot more comfortable trading the way OTM strikes and making what I can make.

Keith.



----------------------------

#7399 Jun 5, 2016

Hi Tyler. I was wondering if you were going to provide your perspective on the write up by Radjamax. Especially on his lessons learned #3 concerning calls being much more dangerous than puts. After thinking about it some, I think it would be more appropriately stated that calls "can get you in to trouble if the market moves against you and you sell an over leveraged number of puts to compensate". Ultimately it is still the puts that can make your life miserable. If your put selling always has a cap on the number of contracts (never exceeded) and that cap is within your risk analysis, then I have a hard time grasping that calls are much more dangerous than puts.

��You make a point that there are large advantages to selling more near term contracts if you have suddenly found yourself close to the money (instead of Karen who was working at 95% OTM). My straddle trading this year has really validated the importance of the "time" factor. Being able to easily roll out and buy down leverage is key when trading ATM...which sounds like a situation she may have found herself in....unfortunately with the longer trades on.

I am curious on your statement that you are hovering "around 90%". Are you ��saying that you have 10% of your portfolio value remaining for options adjustments (but since you know you can never get a margin call on puts due to position sizing you can use more of your portfolio for calls?)��

I am running about 4 calls for every put, but I also ladder out long calls (besides the long put ladder). I am still playing with the long call approach as more of a way to keep me away from the 10% up stress test for PM while I am deleveraging during market melt ups. Two weeks ago I started with an unbalanced ATM straddle 40C/20P. I am testing a little different approach than deleveraging the stressed side. Since we have been trading at the upper end of the trading range I have been deleveraging the Put side over the past two weeks and rolling the call side. Presently I have a 40C/13P ��straddle at 2080, and the account shows I am using about 18% of my available capital. On some days the unrealized loss looks nasty, and on days when the market has slightly dipped the gains jump a lot. I tend to not pay attention to the net liq swings and focus on the "game" of how fast I can deleverage without giving back any collected premium". With markets never crashing up (except after big down moves) I feel pretty good with having 40 ITM calls on at 2080. Not so much if they were at 1900. If we never see 2080 again and the market always goes up from here then yes it will take me some time to deleverage the calls....but for me, puts by far are the scariest of the two just due to the speed and magnitude of the strong move when it happens.��

Dwayne

Sent from Yahoo Mail for iPhone

On Sunday, June 5, 2016, 5:58 AM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I am always hovering around 90 percent because I am selling five calls for every put. You can read about my strategy in the archives.

I am selling options just a couple dte. ��The rising markets with low iv do not impact me the same way Radjamax fears. ��The issues Karen runs into are due to being many dte where it becomes much more challenging to adjust.

I always start out at maximum leverage and then slowly reduce on each adjustment if an adjust is necessary.

My total puts are a fraction of what Karen sells and I also layer on a long put ladder that caps any potential losses from a crash scenario.

-Tyler



----------------------------

#7400 Jun 5, 2016

I do not believe that calls are more dangerous than puts. Leverage is more dangerous than non-leverage. The idea that a naked cal is more dangerous than a naked put isn't really the case. Just because there is a theory that the loss on calls is unlimited and puts are not, that is just an illusion.. So it's all about using leverage and then having a clear plan on how to adjust when your leveraged position goes against you.

I stay as close as I can to expiration because the adjustment options are so rich and I generally don't have to deal with implied volatility spikes / vega issues.. If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.. And that is the last thing you want to be dealing with if all of your puts have gone ITM as well.. There were a number of threads from last July where we walked through this implication.. But when I trade my calls 2-7 DTE and the market drops huge, the margin requirement on my calls goes to nothing.

I think of myself as using 100% of my margin 100% of my time.. I structure my call usage so that - if in theory - I get right ATM right at expiration (where margin use is highest) - I should be avoiding a margin call.. I was tested on this theory recently as two weeks ago when we had the huge up Tuesday, my calls were caught slightly ITM - they went from $.15 to $9.. And I got a margin call of about $2000 for every million invested.. So my calculations are a little bit off somehow.. Regardless, I did my typical adjustments, and started moving my calls from Wed to Fri, and reducing some leverage.. After a single roll, I was back to 95% margin usage and out of margin call. .

But when I am OTM, even though I have max calls opened, my total margin usage according to BP shows about 90%.. But it fluctuates a lot.. If the market moves up / down that will be all over the place.. But in generally it should be right at 100% if I get ATM.

For what it is worth, in 2014 - that was my nightmare year becasue the market just melted up.. I got my calls caught ITM twice.. And at the time I didn't hvae good aggressive put adjustments when my calls got there.. So I ended the year -9% return.. But in 2015 the market stabilized for me and I was better at making adjustments to my calls that were ITM.. So I had a 78% return last year.. Which sounds pretty impressive, but a lot of it was in the first 6 months where all of hte losses from 2014 were actually showing up as cash, and just finally materialized. . And this year, I am up 8% YTD, which I am pretty happy with because I was -12% in mid February. . Being right ATM for a portion of options, which I am a lot - and then having huge calls far OTM, you will have bigger swings, but I can manage anything and get my way through it.. I probably should be closer to 11% return for this year, but I got really aggressive with my naked calls being right ATM when the market was down big in Feb.. When it did a v-shaped rally, they were all caught ITM and it took a long time to dig them out.. I should have been more moderate and kept more OTM knowing that the market was over extended.. Oh well.

I'm still on track for a 25% return this year - which is around my average for 5 years now.







----------------------------

#7401 Jun 5, 2016

Rakesh,��

Mark to market is typically not good for commodities/futures/index options traders because

1) It's permanent. Once you elect it, if you want to go back to normal accounting you have to file a process with IRS and get their permission. Or you have to liquidate your fund and start a new one

2) the MTM election also converts gains and losses to ORDINARY income! That's bad since capital gains income is taxed much lower (and in fact options and futures are 60/40 long term vs short term which means you get a tax benefit trading those even if you don't hold them for 1+ year). Now it's true if you have losses (in excess of $3k) in a year, you would benefit from MTM because your losses would be ordinary losses and can be offset against other ordinary income. But obviously the goal is to have gains, and if you do MTM removes a significant advantage of the capital gains vs ordinary income tax treatment

Honestly I don't know any futures/index options traders that uses MTM because of those two reasons.��

Everything else you said I agree with absolutely she went off track and certainly appears to have civil liability, but it's likely she can successfully defend the SEC case and/or any criminal case.��



----------------------------

#7402 Jun 5, 2016

Somebody asked about what kind of returns are possible with Karen style but keeping margin in check.��A good example is Tony Caine with LJM funds. He's doing the exact same thing as Karen, has been since 1998. He has two strategies one that is not really hedged and the other where he buys even deeper OTM puts (like 1 delta). Both of those strategies interestingly have returned 20% annualized over their time frame (the unhedged one has retuirns of like 40-60% per year but then always has 50% drawdown for example in 2008 whereas the hedged one has a smoother equity curve).��

Honestly Karen just made this type of trading visible to retail. Big money has been doing it for a while (but the realistic limit is about 300mil for these strategies after which they become very difficult, which is why LTCM and Neiderhoffer blew up)



----------------------------

#7403 Jun 5, 2016

You can elect M2M and exempt 1256 vehicles like futures and index options. ��That is how I was advised to set it up.

Sent from XFINITY Connect Mobile App------ Original Message ------

From: radjamax@... [supertraderkarenstudy]To: supertraderkarenstudy@yahoogroups.comSent: June 5, 2016 at 3:44 PMSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble>��Rakesh,��

Mark to market is typically not good for commodities/futures/index options traders because

1) It's permanent. Once you elect it, if you want to go back to normal accounting you have to file a process with IRS and get their permission. Or you have to liquidate your fund and start a new one

2) the MTM election also converts gains and losses to ORDINARY income! That's bad since capital gains income is taxed much lower (and in fact options and futures are 60/40 long term vs short term which means you get a tax benefit trading those even if you don't hold them for 1+ year). Now it's true if you have losses (in excess of $3k) in a year, you would benefit from MTM because your losses would be ordinary losses and can be offset against other ordinary income. But obviously the goal is to have gains, and if you do MTM removes a significant advantage of the capital gains vs ordinary income tax treatment

Honestly I don't know any futures/index options traders that uses MTM because of those two reasons.��

Everything else you said I agree with absolutely she went off track and certainly appears to have civil liability, but it's likely she can successfully defend the SEC case and/or any criminal case.��



----------------------------

#7404 Jun 5, 2016

Tyler .. Can you please clarify ?

��If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.��



Lets say the market is at 2100 and I sell 2150 calls 45 DTE for $3.00 ... Now the market crashes the next day 10 % to 1900 and VIX goes up to 40 ... Are you saying my 2150 calls would be trading for ��more than the original $3.00 I sold them for with the market at 1900 ??? Are you sure about that ?��Victor��



From: "Tyler Jewell tylerjewell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Sunday, June 5, 2016 12:45 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��I do not believe that calls are more dangerous than puts. Leverage is more dangerous than non-leverage. The idea that a naked cal is more dangerous than a naked put isn't really the case. Just because there is a theory that the loss on calls is unlimited and puts are not, that is just an illusion.�� So it's all about using leverage and then having a clear plan on how to adjust when your leveraged position goes against you.

I stay as close as I can to expiration because the adjustment options are so rich and I generally don't have to deal with implied volatility spikes / vega issues.�� If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.�� And that is the last thing you want to be dealing with if all of your puts have gone ITM as well.�� There were a number of threads from last July where we walked through this implication.�� But when I trade my calls 2-7 DTE and the market drops huge, the margin requirement on my calls goes to nothing.

I think of myself as using 100% of my margin 100% of my time.�� I structure my call usage so that - if in theory - I get right ATM right at expiration (where margin use is highest) - I should be avoiding a margin call.�� I was tested on this theory recently as two weeks ago when we had the huge up Tuesday, my calls were caught slightly ITM - they went from $.15 to $9.�� And I got a margin call of about $2000 for every million invested.�� So my calculations are a little bit off somehow.�� Regardless, I did my typical adjustments, and started moving my calls from Wed to Fri, and reducing some leverage.�� After a single roll, I was back to 95% margin usage and out of margin call. ��

But when I am OTM, even though I have max calls opened, my total margin usage according to BP shows about 90%.�� But it fluctuates a lot.�� If the market moves up / down that will be all over the place.�� But in generally it should be right at 100% if I get ATM.

For what it is worth, in 2014 - that was my nightmare year becasue the market just melted up.�� I got my calls caught ITM twice.�� And at the time I didn't hvae good aggressive put adjustments when my calls got there.�� So I ended the year -9% return.�� But in 2015 the market stabilized for me and I was better at making adjustments to my calls that were ITM.�� So I had a 78% return last year.�� Which sounds pretty impressive, but a lot of it was in the first 6 months where all of hte losses from 2014 were actually showing up as cash, and just finally materialized. �� And this year, I am up 8% YTD, which I am pretty happy with because I was -12% in mid February. �� Being right ATM for a portion of options, which I am a lot - and then having huge calls far OTM, you will have bigger swings, but I can manage anything and get my way through it.�� I probably should be closer to 11% return for this year, but I got really aggressive with my naked calls being right ATM when the market was down big in Feb.�� When it did a v-shaped rally, they were all caught ITM and it took a long time to dig them out.�� I should have been more moderate and kept more OTM knowing that the market was over extended.�� Oh well.

I'm still on track for a 25% return this year - which is around my average for 5 years now.







----------------------------

#7405 Jun 5, 2016

Plus the stress test on the upside of 10 % would totally be inconsequential for the 2150 Calls with SPX at 1900 [ 1900 x 1.10 = 2090 ] ��so how would it require a huge amount of margin if markets drop huge ��????��



From: "Vic Ferrari vico213@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Sunday, June 5, 2016 6:01 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Tyler .. Can you please clarify ?

��If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.��



Lets say the market is at 2100 and I sell 2150 calls 45 DTE for $3.00 ... Now the market crashes the next day 10 % to 1900 and VIX goes up to 40 ... Are you saying my 2150 calls would be trading for ��more than the original $3.00 I sold them for with the market at 1900 ??? Are you sure about that ?��Victor��



From: "Tyler Jewell tylerjewell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Sunday, June 5, 2016 12:45 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble



��I do not believe that calls are more dangerous than puts. Leverage is more dangerous than non-leverage. The idea that a naked cal is more dangerous than a naked put isn't really the case. Just because there is a theory that the loss on calls is unlimited and puts are not, that is just an illusion.�� So it's all about using leverage and then having a clear plan on how to adjust when your leveraged position goes against you.

I stay as close as I can to expiration because the adjustment options are so rich and I generally don't have to deal with implied volatility spikes / vega issues.�� If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.�� And that is the last thing you want to be dealing with if all of your puts have gone ITM as well.�� There were a number of threads from last July where we walked through this implication.�� But when I trade my calls 2-7 DTE and the market drops huge, the margin requirement on my calls goes to nothing.

I think of myself as using 100% of my margin 100% of my time.�� I structure my call usage so that - if in theory - I get right ATM right at expiration (where margin use is highest) - I should be avoiding a margin call.�� I was tested on this theory recently as two weeks ago when we had the huge up Tuesday, my calls were caught slightly ITM - they went from $.15 to $9.�� And I got a margin call of about $2000 for every million invested.�� So my calculations are a little bit off somehow.�� Regardless, I did my typical adjustments, and started moving my calls from Wed to Fri, and reducing some leverage.�� After a single roll, I was back to 95% margin usage and out of margin call. ��

But when I am OTM, even though I have max calls opened, my total margin usage according to BP shows about 90%.�� But it fluctuates a lot.�� If the market moves up / down that will be all over the place.�� But in generally it should be right at 100% if I get ATM.

For what it is worth, in 2014 - that was my nightmare year becasue the market just melted up.�� I got my calls caught ITM twice.�� And at the time I didn't hvae good aggressive put adjustments when my calls got there.�� So I ended the year -9% return.�� But in 2015 the market stabilized for me and I was better at making adjustments to my calls that were ITM.�� So I had a 78% return last year.�� Which sounds pretty impressive, but a lot of it was in the first 6 months where all of hte losses from 2014 were actually showing up as cash, and just finally materialized. �� And this year, I am up 8% YTD, which I am pretty happy with because I was -12% in mid February. �� Being right ATM for a portion of options, which I am a lot - and then having huge calls far OTM, you will have bigger swings, but I can manage anything and get my way through it.�� I probably should be closer to 11% return for this year, but I got really aggressive with my naked calls being right ATM when the market was down big in Feb.�� When it did a v-shaped rally, they were all caught ITM and it took a long time to dig them out.�� I should have been more moderate and kept more OTM knowing that the market was over extended.�� Oh well.

I'm still on track for a 25% return this year - which is around my average for 5 years now.



----------------------------

#7406 Jun 5, 2016

Yes, correct.. The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.. Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.. If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.



----------------------------

#7408 Jun 5, 2016

Tyler's point is one of the reasons I ladder out some long calls as well as long puts for hedges. Although I don't typically have straddle trades on more than 14 days out (prefer 7 days), I have found that buying a bunch of cheap way OTM calls ��say 30-40 days out completely offsets the issue Tyler points out. ��I never make any money on the hedges...to me they are just a cost of doing business. Interestingly, even those puts I buy (probably from Keith) at 1575 have a significant offsetting impact on margin required if there is a massive increase in Vol. Again these hedges (so far) have always been losing trades for me (winning for Keith)...:-). My hedging strategy has evolved to be principally focused at keeping the +10%/-12% PM limits controlled to be well within my portfoilo size regardless of the Vol. Someone asked if I am mechanical with this approach as they wanted to do some back testing. I find it hard to say I am because I do stress daily, and if I believe I need to hedge some more based on hedges coming off in the current week due to expiration, I can't honestly say with a "process" what strikes, or dates I will use to replace them. I use somewhere around 20% of the premium I received for the hedges, and when I adjust to deleverage I make sure my target premium includes enough to accomplish the risk reduction I want both by deleveraging and also buying long laddered positions. The hedges I pick are entirely driven by what I see on the analyze tab to keep the +10/-12% stress test with Vol in check (also adjusted to the expiration date of my short positions)....so I always appear overhedged when I put them on. So far I am up 12% for the year with this approach and feel pretty comfortable with the available adjustments to stay out of trouble due to trading much shorter term than in say in my IRA accounts where I have been only selling 45 dte puts and typically don't sell calls.��

As I pointed out in another post the key for me will be when to sell the hedge during a crash as its positive impact is highest before Vol starts to revert to its mean, and your always wondering if it's really hit bottom. On paper, it prevents me from hitting a margin limit but at some point you have to make the roll adjustment to your losing short puts and at the same time figure out how to maximize the offsetting profits from the long hedges. If anyone has any experience/advice on this I would be interested in your input. I remember watching something on TastyTrade (the gals I think) during the August mini crash and they were struggling at the time with continuing to hold their hedges or to sell them on that infamous Monday morning.

Dwayne��

Sent from Yahoo Mail for iPhone

On Sunday, June 5, 2016, 4:39 PM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.







----------------------------

#7409 Jun 5, 2016

Tyler,

Good stuffs.

None of that CALL price action is an issue if you never sell CALLs to start with, at all.

There's no correct answer for sure and there will always be as many trading systems as there are traders. Nevermind that 99% of the so-called systems are flawed and will fail. Either system error or operator error...or both!

Basically, that boring preamble is to say more power to you for creating and executing a system that works for you.

However...

I'm working on a system that is selling only 5 delta PUTs at 56 DTE (that part should sound pretty familiar) ....but I only sell on VIX spikes, and I take off at ~50% profit. When I close the position, it's typically on a SPX up day. All very normal, but here's the big difference:.

I simply go FLAT and wait for the next VIX "signal."

Here are some of the theoretical benefits:

1) I don't layer in wave after wave of overlapping PUT positions, so I stay small..

2) Going flat and waiting for the next elevated VIX level means you no longer have 100% market exposure. So just maybe you will completely miss that next horrific event. Unlikely, but at least you have some odds of missing that now..

3) When you only enter at elevated VIX levels, you can get to 50% profit with relatively minor SPX bounces, much less a 2-3 day rise.

4) If the market goes to hell, you still sold a 5 delta and have a 95% chance of victory, as long as you can hold on, margin-wise. Or you can roll and all that crap..



Currently, I'm working on what level constitutes an "elevated VIX" but if you look at a VIX daily, it appears you get at least one shot at it per week, which is plenty.

For example, in this current VIX environment, "elevated" appears to be say 16.5 and if you look at a VIX daily, you can see all the recent opportunities..

So far so good but I'm only three trades into this thing. I was recently flat almost a week, waiting for the little 14.6 we got Friday. Was probably premature on that but like all of us here, being flat is a real test and I need practice.



Cheers

RM







.



----------------------------

#7410 Jun 5, 2016

Tyler, I have read all of your previous posts, but I am unclear when you say "I did not have aggressive put adjustments when the calls got there". In reading your previous posts it seems your normal response has been to immediately move your maximum allowable puts to ATM and delever the calls by about 10%. I think in another post you clarified that you may not put all of your available puts ATM, but enough to delever the scary side around 10%. So were you doing something different in 2013/2014 to deal with the calls that ultimately you modified to your current strategy? Thanks and I always appreciate the time you take to share your experiences with this group.

Dwayne

Sent from Yahoo Mail for iPhone

On Sunday, June 5, 2016, 10:46 AM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I do not believe that calls are more dangerous than puts. Leverage is more dangerous than non-leverage. The idea that a naked cal is more dangerous than a naked put isn't really the case. Just because there is a theory that the loss on calls is unlimited and puts are not, that is just an illusion.�� So it's all about using leverage and then having a clear plan on how to adjust when your leveraged position goes against you.

I stay as close as I can to expiration because the adjustment options are so rich and I generally don't have to deal with implied volatility spikes / vega issues.�� If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.�� And that is the last thing you want to be dealing with if all of your puts have gone ITM as well.�� There were a number of threads from last July where we walked through this implication.�� But when I trade my calls 2-7 DTE and the market drops huge, the margin requirement on my calls goes to nothing.

I think of myself as using 100% of my margin 100% of my time.�� I structure my call usage so that - if in theory - I get right ATM right at expiration (where margin use is highest) - I should be avoiding a margin call.�� I was tested on this theory recently as two weeks ago when we had the huge up Tuesday, my calls were caught slightly ITM - they went from $.15 to $9.�� And I got a margin call of about $2000 for every million invested.�� So my calculations are a little bit off somehow.�� Regardless, I did my typical adjustments, and started moving my calls from Wed to Fri, and reducing some leverage.�� After a single roll, I was back to 95% margin usage and out of margin call. ��

But when I am OTM, even though I have max calls opened, my total margin usage according to BP shows about 90%.�� But it fluctuates a lot.�� If the market moves up / down that will be all over the place.�� But in generally it should be right at 100% if I get ATM.

For what it is worth, in 2014 - that was my nightmare year becasue the market just melted up.�� I got my calls caught ITM twice.�� And at the time I didn't hvae good aggressive put adjustments when my calls got there.�� So I ended the year -9% return.�� But in 2015 the market stabilized for me and I was better at making adjustments to my calls that were ITM.�� So I had a 78% return last year.�� Which sounds pretty impressive, but a lot of it was in the first 6 months where all of hte losses from 2014 were actually showing up as cash, and just finally materialized. �� And this year, I am up 8% YTD, which I am pretty happy with because I was -12% in mid February. �� Being right ATM for a portion of options, which I am a lot - and then having huge calls far OTM, you will have bigger swings, but I can manage anything and get my way through it.�� I probably should be closer to 11% return for this year, but I got really aggressive with my naked calls being right ATM when the market was down big in Feb.�� When it did a v-shaped rally, they were all caught ITM and it took a long time to dig them out.�� I should have been more moderate and kept more OTM knowing that the market was over extended.�� Oh well.

I'm still on track for a 25% return this year - which is around my average for 5 years now.







----------------------------

#7411 Jun 5, 2016

In 2014 the first time I got caught in the money I was lagging my puts about 1-2 percent out of money. ��Missed out on a lot of premium that would have offset losses. ��I was too paranoid of a reversal. ��Now I realize that if my calls are breached or threatened a reversal is unlikely. ��So I get my puts higher immediately. �� But back then I didn't have anything atm and now I trade smaller overall but have more stuff atm with the exception of my large call position which is far otm.

So I have a bunch of calls and puts atm for max premium. ��And then the remaining calls far otm two dte. �� And then a few more puts 35 dte 4 percent otm which 80 percent of the premium is used to buy long puts at different Expirations. ��All of those long puts add up to about 125 percent of the contracts that I have short. ��If the market tanked tomorrow my max loss would be 6 percent. ��And I still collect about .5 to .6 percent cash each week.

-Tyler

---------------From: joe somebody joesomebody1959@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Sunday, June 5, 2016 4:49 PMSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

>��Tyler, I have read all of your previous posts, but I am unclear when you say "I did not have aggressive put adjustments when the calls got there". In reading your previous posts it seems your normal response has been to immediately move your maximum allowable puts to ATM and delever the calls by about 10%. I think in another post you clarified that you may not put all of your available puts ATM, but enough to delever the scary side around 10%. So were you doing something different in 2013/2014 to deal with the calls that ultimately you modified to your current strategy? Thanks and I always appreciate the time you take to share your experiences with this group.

Dwayne

Sent from Yahoo Mail for iPhone

On Sunday, June 5, 2016, 10:46 AM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I do not believe that calls are more dangerous than puts. Leverage is more dangerous than non-leverage. The idea that a naked cal is more dangerous than a naked put isn't really the case. Just because there is a theory that the loss on calls is unlimited and puts are not, that is just an illusion.�� So it's all about using leverage and then having a clear plan on how to adjust when your leveraged position goes against you.

I stay as close as I can to expiration because the adjustment options are so rich and I generally don't have to deal with implied volatility spikes / vega issues.�� If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.�� And that is the last thing you want to be dealing with if all of your puts have gone ITM as well.�� There were a number of threads from last July where we walked through this implication.�� But when I trade my calls 2-7 DTE and the market drops huge, the margin requirement on my calls goes to nothing.

I think of myself as using 100% of my margin 100% of my time.�� I structure my call usage so that - if in theory - I get right ATM right at expiration (where margin use is highest) - I should be avoiding a margin call.�� I was tested on this theory recently as two weeks ago when we had the huge up Tuesday, my calls were caught slightly ITM - they went from $.15 to $9.�� And I got a margin call of about $2000 for every million invested.�� So my calculations are a little bit off somehow.�� Regardless, I did my typical adjustments, and started moving my calls from Wed to Fri, and reducing some leverage.�� After a single roll, I was back to 95% margin usage and out of margin call. ��

But when I am OTM, even though I have max calls opened, my total margin usage according to BP shows about 90%.�� But it fluctuates a lot.�� If the market moves up / down that will be all over the place.�� But in generally it should be right at 100% if I get ATM.

For what it is worth, in 2014 - that was my nightmare year becasue the market just melted up.�� I got my calls caught ITM twice.�� And at the time I didn't hvae good aggressive put adjustments when my calls got there.�� So I ended the year -9% return.�� But in 2015 the market stabilized for me and I was better at making adjustments to my calls that were ITM.�� So I had a 78% return last year.�� Which sounds pretty impressive, but a lot of it was in the first 6 months where all of hte losses from 2014 were actually showing up as cash, and just finally materialized. �� And this year, I am up 8% YTD, which I am pretty happy with because I was -12% in mid February. �� Being right ATM for a portion of options, which I am a lot - and then having huge calls far OTM, you will have bigger swings, but I can manage anything and get my way through it.�� I probably should be closer to 11% return for this year, but I got really aggressive with my naked calls being right ATM when the market was down big in Feb.�� When it did a v-shaped rally, they were all caught ITM and it took a long time to dig them out.�� I should have been more moderate and kept more OTM knowing that the market was over extended.�� Oh well.

I'm still on track for a 25% return this year - which is around my average for 5 years now.



----------------------------

#7412 Jun 5, 2016

When I was designing my system I could not come up with any system where the returns were strong enough when using timing. ��You cannot predict when the circumstances will be right so I wanted a system that let me be 100 percent in the market all of the time.

I think of it this way - I am averaging 24 percent plus per year over five years and about 1/3 of those profits come from call selling. ��All this during a significant up market. ��What happens when the market reverses - the call gains will be a higher percentage.

My goal is to give my system a tweaking to be able to average 30 percent a year.

-Tyler

---------------From: Rob McCance rob.mccance@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Sunday, June 5, 2016 4:43 PMSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

>��Tyler,

Good stuffs.

None of that CALL price action is an issue if you never sell CALLs to start with, at all.

There's no correct answer for sure and there will always be as many trading systems as there are traders. Nevermind that 99% of the so-called systems are flawed and will fail. Either system error or operator error...or both!

Basically, that boring preamble is to say more power to you for creating and executing a system that works for you.

However...

I'm working on a system that is selling only 5 delta PUTs at 56 DTE (that part should sound pretty familiar) ....but I only sell on VIX spikes, and I take off at ~50% profit. When I close the position, it's typically on a SPX up day. All very normal, but here's the big difference:��

I simply go FLAT and wait for the next VIX "signal."

Here are some of the theoretical benefits:

1) I don't layer in wave after wave of overlapping PUT positions, so I stay small.��

2) Going flat and waiting for the next elevated VIX level means you no longer have 100% market exposure. So just maybe you will completely miss that next horrific event. Unlikely, but at least you have some odds of missing that now.��

3) When you only enter at elevated VIX levels, you can get to 50% profit with relatively minor SPX bounces, much less a 2-3 day rise.

4) If the market goes to hell, you still sold a 5 delta and have a 95% chance of victory, as long as you can hold on, margin-wise. Or you can roll and all that crap..



Currently, I'm working on what level constitutes an "elevated VIX" but if you look at a VIX daily, it appears you get at least one shot at it per week, which is plenty.

For example, in this current VIX environment, "elevated" appears to be say 16.5 and if you look at a VIX daily, you can see all the recent opportunities.��

So far so good but I'm only three trades into this thing. I was recently flat almost a week, waiting for the little 14.6 we got Friday. Was probably premature on that but like all of us here, being flat is a real test and I need practice.



Cheers

RM







��







----------------------------

#7413 Jun 5, 2016

Tyler,

Roger that and I completely agree with the timing aspect. If any system really depends on timing as a major aspect, forget it.

I don't feel I'm "timing" the market, I mean I may be but it does not feel like it. I'm simply entering only on an elevated VIX day, relative to recent VIX numbers.

There's no timing involved, just blindly entering with the VIX is say over 16 (in this current environment). Not really making any predictions about the next day, week or month.

It's pretty mechanical.

RM



----------------------------

#7414 Jun 5, 2016

Tyler, Thanks and that makes sense. I'm probably at the stage where you were a few years ago....with the current market close to all time highs I am loath to increase my existing put positions or move them to ATM, and would rather see if the market loses some steam and backs down a couple of points to take the pressure off my ITM calls. With the hedges I have on I'm not worried about a margin call (I can always delever pretty quick by moving some puts to ATM and going out another week), but I have had calls pretty deep ITM before and it is hard to roll them out just a week and get a decent premium with the VIX going down. I don't really do any far OTM short calls....I've found I really prefer to sell ATM if possible as it provides the most opportunities for managing market shifts due to the high premium collected and the fact that Vega is really negated with the short duration....much easier with Vol up, but still manageable with low Vol as long as you watch out for the vol expansion. Usually my dilema with calls is I like to move them up a strike along with deleveraging, and normally don't get enough premium to do both without pulling some puts to ATM. I also don't mind being inverted if the situation requires as I have been able to work out of it. Where you do 125% on the put hedges, ��I typically have twice (by count) the number of long contracts to short contracts looking at both puts and calls and they are spread out as far as 45 dte.����Thanks,

Dwayne

Sent from Yahoo Mail for iPhone

On Sunday, June 5, 2016, 5:59 PM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��In 2014 the first time I got caught in the money I was lagging my puts about 1-2 percent out of money. ��Missed out on a lot of premium that would have offset losses. ��I was too paranoid of a reversal. ��Now I realize that if my calls are breached or threatened a reversal is unlikely. ��So I get my puts higher immediately. �� But back then I didn't have anything atm and now I trade smaller overall but have more stuff atm with the exception of my large call position which is far otm.

So I have a bunch of calls and puts atm for max premium. ��And then the remaining calls far otm two dte. �� And then a few more puts 35 dte 4 percent otm which 80 percent of the premium is used to buy long puts at different Expirations. ��All of those long puts add up to about 125 percent of the contracts that I have short. ��If the market tanked tomorrow my max loss would be 6 percent. ��And I still collect about .5 to .6 percent cash each week.

-Tyler

---------------From: joe somebody joesomebody1959@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com>Sent: Sunday, June 5, 2016 4:49 PMSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in troubleTo: supertraderkarenstudy@yahoogroups.com>

��Tyler, I have read all of your previous posts, but I am unclear when you say "I did not have aggressive put adjustments when the calls got there". In reading your previous posts it seems your normal response has been to immediately move your maximum allowable puts to ATM and delever the calls by about 10%. I think in another post you clarified that you may not put all of your available puts ATM, but enough to delever the scary side around 10%. So were you doing something different in 2013/2014 to deal with the calls that ultimately you modified to your current strategy? Thanks and I always appreciate the time you take to share your experiences with this group.

Dwayne

Sent from Yahoo Mail for iPhone

On Sunday, June 5, 2016, 10:46 AM, Tyler Jewell tylerjewell@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��I do not believe that calls are more dangerous than puts. Leverage is more dangerous than non-leverage. The idea that a naked cal is more dangerous than a naked put isn't really the case. Just because there is a theory that the loss on calls is unlimited and puts are not, that is just an illusion.�� So it's all about using leverage and then having a clear plan on how to adjust when your leveraged position goes against you.

I stay as close as I can to expiration because the adjustment options are so rich and I generally don't have to deal with implied volatility spikes / vega issues.�� If you are trading 45 DTE and have a huge number of calls and the market drops huge, the IV will cause your calls to require a huge amount of margin.�� And that is the last thing you want to be dealing with if all of your puts have gone ITM as well.�� There were a number of threads from last July where we walked through this implication.�� But when I trade my calls 2-7 DTE and the market drops huge, the margin requirement on my calls goes to nothing.

I think of myself as using 100% of my margin 100% of my time.�� I structure my call usage so that - if in theory - I get right ATM right at expiration (where margin use is highest) - I should be avoiding a margin call.�� I was tested on this theory recently as two weeks ago when we had the huge up Tuesday, my calls were caught slightly ITM - they went from $.15 to $9.�� And I got a margin call of about $2000 for every million invested.�� So my calculations are a little bit off somehow.�� Regardless, I did my typical adjustments, and started moving my calls from Wed to Fri, and reducing some leverage.�� After a single roll, I was back to 95% margin usage and out of margin call. ��

But when I am OTM, even though I have max calls opened, my total margin usage according to BP shows about 90%.�� But it fluctuates a lot.�� If the market moves up / down that will be all over the place.�� But in generally it should be right at 100% if I get ATM.

For what it is worth, in 2014 - that was my nightmare year becasue the market just melted up.�� I got my calls caught ITM twice.�� And at the time I didn't hvae good aggressive put adjustments when my calls got there.�� So I ended the year -9% return.�� But in 2015 the market stabilized for me and I was better at making adjustments to my calls that were ITM.�� So I had a 78% return last year.�� Which sounds pretty impressive, but a lot of it was in the first 6 months where all of hte losses from 2014 were actually showing up as cash, and just finally materialized. �� And this year, I am up 8% YTD, which I am pretty happy with because I was -12% in mid February. �� Being right ATM for a portion of options, which I am a lot - and then having huge calls far OTM, you will have bigger swings, but I can manage anything and get my way through it.�� I probably should be closer to 11% return for this year, but I got really aggressive with my naked calls being right ATM when the market was down big in Feb.�� When it did a v-shaped rally, they were all caught ITM and it took a long time to dig them out.�� I should have been more moderate and kept more OTM knowing that the market was over extended.�� Oh well.

I'm still on track for a 25% return this year - which is around my average for 5 years now.







----------------------------

#7419 Jun 5, 2016

I am enjoying reading about Tony Caine and his fund. ��I had never heard of him.

Thanks for sharing!

Bobby

Sent from my iPhone

On Jun 5, 2016, at 3:46 PM, radjamax@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Somebody asked about what kind of returns are possible with Karen style but keeping margin in check.��A good example is Tony Caine with LJM funds. He's doing the exact same thing as Karen, has been since 1998. He has two strategies one that is not really hedged and the other where he buys even deeper OTM puts (like 1 delta). Both of those strategies interestingly have returned 20% annualized over their time frame (the unhedged one has retuirns of like 40-60% per year but then always has 50% drawdown for example in 2008 whereas the hedged one has a smoother equity curve).��

Honestly Karen just made this type of trading visible to retail. Big money has been doing it for a while (but the realistic limit is about 300mil for these strategies after which they become very difficult, which is why LTCM and Neiderhoffer blew up)



----------------------------

#7421 Jun 5, 2016

Are you sure this is correct ? On 8/20 ��the Market was at at 2100 ,I sell 40 , 2150 Calls ��45 DTE for $3 .00 �� [ No Puts to simplify ] ... By 8 /25 ��the market crashed to 1870 .... My Calls are worth more than $3.00 ? Much more ?? I don't remember that being the case .... Maybe Theoretically the Analyze Tab is correct but factually it doesnt happen that way ? �� �� �� Even if the Calls became $23 , I would only be down $ 80,000 on my Net Liq [ 23 - 3 = $20 x 40 x 100 = $80,000 loss ] �� If the Calls ��became $203 then I would be down $800,000 ��[ 203 - 3 = 200 x 40 x 100 = $800,000 loss ] ��Do you really think the 2150 calls 45 DTE would be $203 when the Market is at 1870 ??? No way ..... Any way to see this historically and see if the analyze tab is correct or I am ��? I think it can give us an edge if it wasnt the case ...Thanks��Victor��



From: "Tyler Jewell tylerjewell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Sunday, June 5, 2016 6:39 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.



----------------------------

#7422 Jun 5, 2016

P. S ��VIX ��went up to 50 on 8/24��



From: "Tyler Jewell tylerjewell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Sunday, June 5, 2016 6:39 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.



----------------------------

#7423 Jun 6, 2016

Vic,��

The Analyze tab is NOT correct. There's two reasons1. When you set the IV change in analyze, it applies that + to all expirys the same. That's wrong. Look at thinkback and see the change in IV for say 10 day, 30 day, 56day and LEAPS. You'l find that obviously the shorter time to expiry, the bigger jump in vol. But 56 day never jumps as much as near term. So if you're using vix as the measure, you will be OVERESTIMATING the vol jump for 30+ DTE positions. This is where if you want to be really accurate, you have to build your own model and actually model each set of your expirys individually. Of course using VIX as approximation is ok, but you may find yourself being too conservative (or not enough if a lot of your positions are sitting close to expiry)

2. The analyze tab uses a fixed vega. It assumes that as vol increases, vega does not change for that option. That is also not correct. Options have negative vomma (1st deriv of vega like gamma is to vega). That means as SPX falls, the same option will have higher vega (more sensitive to increased vol). This would mean the analyze tab would UNDERESTIMATE the p/l��

3. The volatility smile is not taken into account (as far as I can tell) in analyze. This is simply that IV is higher at OTM strikes and lower as you get closer to ATM. So For example even though the OVERALL IV went from 15 to 43 in the august spike, the IV of a particular option only went from 23 to 37. That's a huge difference if you look at the p/l of analyze tab, you'd be using 2x the actual volatility increase for that contract.��

So as you can see, historical vs analyze tab is not correct and the relationship between actual and theoretical changes depends on conditions. So you can either use analyze as an approximation which will get you in the ballpark, or build your own model and adjust the analyze info by the factors that your model dictates.��

Actually for this reason, we are bringing on a risk manager that will be refining our risk model and actuall stress testing EACH contract individually to build a p/l and margin stress test for the portfolio that should be much more accurate (btw this is what Tony Caine did : )��







----------------------------

#7424 Jun 6, 2016

Anyone uncovered details on how Tony Caine trades in his funds? I am sure he keeps his methods close to the vest. However, anyone came across any details on any past articles or interviews? In reading a handful of articles, the only things I have found so far is the use some proprietary software. A mentioned of selling strangles on S&P 500 (do not know if this is SPX or Futures or both) with DTE of 4 - 6 weeks out. As well as varying degrees of hedging in different funds. He stated in one interview that he does not trade on charts or predictions, but simply manages premium and risks. I would be interested in learning more about this guy, as it is someone else with a proven trade record in trading similar to our style.��

Tyson



----------------------------

#7426 Jun 6, 2016

Radjamax,

Good post.

RM



----------------------------

#7427 Jun 6, 2016

Ok good post on the vega and everything else the analyze tab does not take into account, thanks

At least from my experience with margin, when the market crashes or melt down or what ever you want to call it, the account or at least the way I trade will automatically turn into positive deltas, there for TOS takes into account the risk on the put side,and it takes my margin or buying power away based on that.

Lest say 24 of august, the market was around 1900 my 2150 calls where not taken into account from my margin as all was calculated based on my puts. Lets say TD grab 100k of margin based on the risk of my puts, if a go and close those calls, the new margintaken would probably be like 99.9k, so problem with a crash is definitely not the call side, thats the least of the problems.

Now if you only have calls on and the market crashes, no mater how expensive those calls may jump cause of volatility, you will not get a margin call for that.��

At least this is how it always has been for me, that is why some people say one side of the the strangle if running for free margin, cause they alway calculate based on the side Calls or Puts that is been tested at that moment.��

Cheers,

Antonio





From: supertraderkarenstudy@yahoogroups.com supertraderkarenstudy@yahoogroups.com> on behalf of Vic Ferrari vico213@... [supertraderkarenstudy]supertraderkarenstudy@yahoogroups.com>

Sent: Monday, June 6, 2016 1:01 AM

To: supertraderkarenstudy@yahoogroups.com

Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble��



----------------------------

#7428 Jun 6, 2016

Interactive brokers certainly will not treat it that way.. TOS may.

The point is that if you are trading naked calls, you are subject to huge vega risk and you need a trading plan.. My personal trading plan is to have my calls very close to DTE, to remove the vega risk. .BTW, the simple trading plan would be to just buy $.05 long calls converting short calls into a vertical spread.. That would remove any margin calls you may have.



----------------------------

#7436 Jun 6, 2016

Tasty trade just discussed Karen.. Sounds like they have her back. ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Monday, June 6, 2016 10:59 AMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble



----------------------------

#7440 Jun 6, 2016

What segment was that, Chris?

Thanks,Mark

---In supertraderkarenstudy@yahoogroups.com, ckalb@...> wrote :

Tasty trade just discussed Karen.�� Sounds like they have her back. ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Monday, June 6, 2016 10:59 AMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble



----------------------------

#7441 Jun 6, 2016

It was the talking with tom and tony where they take calls.. I know they now have two call ins.. The first is for trade ideas.. I believe it was the second. ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Monday, June 6, 2016 12:47 PMTo: supertraderkarenstudy@yahoogroups.comSubject: RE: [SuperTraderKarenStudy] Re: Is Karen in trouble



----------------------------

#7442 Jun 6, 2016

There.s the price of the 2150 call charted out before and during 8/24 - The short delta offsets the short vega.

Craig







On Jun 6, 2016, at 1:01 AM, Vic Ferrari vico213@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



Are you sure this is correct ? On 8/20 ��the Market was at at 2100 ,I sell 40 , 2150 Calls ��45 DTE for $3 .00 �� [ No Puts to simplify ] ... By 8 /25 ��the market crashed to 1870 .... My Calls are worth more than $3.00 ? Much more ?? I don't remember that being the case .... Maybe Theoretically the Analyze Tab is correct but factually it doesnt happen that way ? �� �� �� Even if the Calls became $23 , I would only be down $ 80,000 on my Net Liq [ 23 - 3 = $20 x 40 x 100 = $80,000 loss ] �� If the Calls ��became $203 then I would be down $800,000 ��[ 203 - 3 = 200 x 40 x 100 = $800,000 loss ] ��Do you really think the 2150 calls 45 DTE would be $203 when the Market is at 1870 ??? No way ..... Any way to see this historically and see if the analyze tab is correct or I am ��? I think it can give us an edge if it wasnt the case ...Thanks��Victor��



From:��"Tyler Jewell��tylerjewell@...��[supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To:��supertraderkarenstudy@yahoogroups.com��Sent:��Sunday, June 5, 2016 6:39 PMSubject:��Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.







----------------------------

#7444 Jun 6, 2016

Thank you , Craig !!! ��I knew the Calls ��decreased in Value ��.... So obviously the Analyze Tab was wrong in saying Net Liq would be negative with VIX so high ��, but instead according to this chart , with VIX at 50 , one would be quite profitable .... Conclusion - 45 DTE ��Short Calls are not the big bad wolf in a down move .... Am I missing something here ?��



From: "Craig Falwell mcfalwell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Monday, June 6, 2016 1:08 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble [1 Attachment]

��[Attachment(s) from Craig Falwell included below]There.s the price of the 2150 call charted out before and during 8/24 - The short delta offsets the short vega.

Craig







On Jun 6, 2016, at 1:01 AM, Vic Ferrari vico213@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



Are you sure this is correct ? On 8/20 ��the Market was at at 2100 ,I sell 40 , 2150 Calls ��45 DTE for $3 .00 �� [ No Puts to simplify ] ... By 8 /25 ��the market crashed to 1870 .... My Calls are worth more than $3.00 ? Much more ?? I don't remember that being the case .... Maybe Theoretically the Analyze Tab is correct but factually it doesnt happen that way ? �� �� �� Even if the Calls became $23 , I would only be down $ 80,000 on my Net Liq [ 23 - 3 = $20 x 40 x 100 = $80,000 loss ] �� If the Calls ��became $203 then I would be down $800,000 ��[ 203 - 3 = 200 x 40 x 100 = $800,000 loss ] ��Do you really think the 2150 calls 45 DTE would be $203 when the Market is at 1870 ??? No way ..... Any way to see this historically and see if the analyze tab is correct or I am ��? I think it can give us an edge if it wasnt the case ...Thanks��Victor��



From:��"Tyler Jewell��tylerjewell@...��[supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To:��supertraderkarenstudy@yahoogroups.com��Sent:��Sunday, June 5, 2016 6:39 PMSubject:��Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.



----------------------------

#7446 Jun 6, 2016

About 19 minutes into this is the convo about Karen ��www.tastytrade.com/tt/shows/talkin-with-tom-and-tony ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Monday, June 6, 2016 2:13 PMTo: supertraderkarenstudy@yahoogroups.comSubject: [SuperTraderKarenStudy] Re: Is Karen in trouble



----------------------------

#7451 Jun 6, 2016

Dwayne

Thanks again for buying those Puts, lol hopefully I can sell you some more if the market ever goes down.

Keith



----------------------------

#7455 Jun 6, 2016

Craig ... How come the Analyze Tab misinformed Tyler with a 10 % down move [ with the short 40 calls 45 DTE at 2150 ��] ��, with Vol rising to 44% that a 1,000,000 Net Liq would go negative when in fact your chart shows that the Net Liq would hardly have been affected at all ? ��Shouldnt the tab know the short Delta offsets the short Vega ? Were there other inputs that should have been implemented ?��Thanks��Victor��



From: "Craig Falwell mcfalwell@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Monday, June 6, 2016 1:08 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble [1 Attachment]

��[Attachment(s) from Craig Falwell included below]There.s the price of the 2150 call charted out before and during 8/24 - The short delta offsets the short vega.

Craig







On Jun 6, 2016, at 1:01 AM, Vic Ferrari vico213@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



Are you sure this is correct ? On 8/20 ��the Market was at at 2100 ,I sell 40 , 2150 Calls ��45 DTE for $3 .00 �� [ No Puts to simplify ] ... By 8 /25 ��the market crashed to 1870 .... My Calls are worth more than $3.00 ? Much more ?? I don't remember that being the case .... Maybe Theoretically the Analyze Tab is correct but factually it doesnt happen that way ? �� �� �� Even if the Calls became $23 , I would only be down $ 80,000 on my Net Liq [ 23 - 3 = $20 x 40 x 100 = $80,000 loss ] �� If the Calls ��became $203 then I would be down $800,000 ��[ 203 - 3 = 200 x 40 x 100 = $800,000 loss ] ��Do you really think the 2150 calls 45 DTE would be $203 when the Market is at 1870 ??? No way ..... Any way to see this historically and see if the analyze tab is correct or I am ��? I think it can give us an edge if it wasnt the case ...Thanks��Victor��



From:��"Tyler Jewell��tylerjewell@...��[supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To:��supertraderkarenstudy@yahoogroups.com��Sent:��Sunday, June 5, 2016 6:39 PMSubject:��Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.







----------------------------

#7457 Jun 7, 2016

Hi Victor, ��When the market drops big, the deeper your OTM call gets, the less vol sensitive it becomes.. In other words, the pop in VIX (which is calculated based on the weighted avg iv of the center strip (100+ put/calls) of the front 2 months of SPX) would not affect your far OTM call as much. .For e.g., the 2150c you sold for 3.00 on Aug 20 with 43 DTE had a -7 delta and iv of 11%.. On Aug 25 with 38 DTE, the EOD closing mark on that strike was .50 with a delta of 1.2 and an iv of 19% - only an 8 point % increase in iv (19 minus 11) despite VIX had gone up from 19 to 36.. When I simulate your strike using yesterday.s SPX closing price selecting the strike (2195c) using the same -7 delta and 38 dte, price adj (-8%) and vol adj (+8%) I get .60.. So, the Analyze tab is pretty close.. Like many others have pointed out the danger/vega risk is always on the put side as indicated by the reverse skew or the smirk! ��Hope this helps!.wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Monday, June 6, 2016 9:14 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble [1 Attachment]



----------------------------

#7458 Jun 7, 2016

Thanks Chris!

I did listen to it.�� Interesting take.�� Like you said, they're behind her.They don't think she's fraudulent to any degree.�� They think theprofits did go to charity, her heart is in the right place--all despitethe unconventional way losses were rolled forward and gains werebooked immediately.

One thing I didn't follow was Tom's statement that she underpaidherself?�� She collected incentive fees since 2014 when she shouldnot have been paid anything because the fund was in drawdown.Did you understand Tom's thought process on that?

Mark



----------------------------

#7460 Jun 7, 2016

That's what I figured he was saying as well. karen just flat out did not pay herself much. Most of the $$ that would normally go to her went to the charity in some way.

Rob



----------------------------

#7462 Jun 7, 2016

Don.t know - I don.t use the analyze tab that much anymore.

On Jun 6, 2016, at 11:14 PM, Vic Ferrari vico213@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

[Attachment(s)��from Vic Ferrari included below]

Craig ... How come the Analyze Tab misinformed Tyler with a 10 % down move [ with the short 40 calls 45 DTE at 2150 ��] ��, with Vol rising to 44% that a 1,000,000 Net Liq would go negative when in fact your chart shows that the Net Liq would hardly have been affected at all ? ��Shouldnt the tab know the short Delta offsets the short Vega ? Were there other inputs that should have been implemented ?��Thanks��Victor��



From:��"Craig Falwell��mcfalwell@...��[supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To:��supertraderkarenstudy@yahoogroups.com��Sent:��Monday, June 6, 2016 1:08 PMSubject:��Re: [SuperTraderKarenStudy] Re: Is Karen in trouble [1 Attachment]

��[Attachment(s)��from Craig Falwell included below]There.s the price of the 2150 call charted out before and during 8/24 - The short delta offsets the short vega.

Craig





On Jun 6, 2016, at 1:01 AM, Vic Ferrari��vico213@...��[supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



Are you sure this is correct ? On 8/20 ��the Market was at at 2100 ,I sell 40 , 2150 Calls ��45 DTE for $3 .00 �� [ No Puts to simplify ] ... By 8 /25 ��the market crashed to 1870 .... My Calls are worth more than $3.00 ? Much more ?? I don't remember that being the case .... Maybe Theoretically the Analyze Tab is correct but factually it doesnt happen that way ? �� �� �� Even if the Calls became $23 , I would only be down $ 80,000 on my Net Liq [ 23 - 3 = $20 x 40 x 100 = $80,000 loss ] �� If the Calls ��became $203 then I would be down $800,000 ��[ 203 - 3 = 200 x 40 x 100 = $800,000 loss ] ��Do you really think the 2150 calls 45 DTE would be $203 when the Market is at 1870 ??? No way ..... Any way to see this historically and see if the analyze tab is correct or I am ��? I think it can give us an edge if it wasnt the case ...Thanks��Victor��



From:��"Tyler Jewell��tylerjewell@...��[supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com>To:��supertraderkarenstudy@yahoogroups.com��Sent:��Sunday, June 5, 2016 6:39 PMSubject:��Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Yes, correct.�� The issue is the 45dte.

Just a do a simple test in TOS analyze tab.Let's say you do 30 calls to collect $3 premium, 45 dte.Then do a volatility spike from 14% to 44%.If there was a 10% drop over night - a flash crash, you'd be -70K on a NLV basis.�� Those calls rise in value, not decrease.

So - imagine how bad things would be if a 10% drop with $1M account.1. Your margin required for 30 calls would be about $800K to begin with.2. Then you are down another -70K3. Then you have to factor in whatever losses you are taking to your puts.

The issue is that you will be at a margin call at $130K in put losses.�� If you have 10 puts, that is 130 points, which is only a 6% drop.You'd have a margin call.

This issue doesn't exist if you are trading 2 dte.Both the cost of the calls is actually decreasing, and the margin requirement for those calls goes down.



----------------------------

#7463 Jun 7, 2016

Thanks Wende ...��



From: "quantabe@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Tuesday, June 7, 2016 4:57 AM Subject: RE: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Hi Victor, ��When the market drops big, the deeper your OTM call gets, the less vol sensitive it becomes.�� In other words, the pop in VIX (which is calculated based on the weighted avg iv of the center strip (100+ put/calls) of the front 2 months of SPX) would not affect your far OTM call as much. ��For e.g., the 2150c you sold for 3.00 on Aug 20 with 43 DTE had a -7 delta and iv of 11%.�� On Aug 25 with 38 DTE, the EOD closing mark on that strike was .50 with a delta of 1.2 and an iv of 19% - only an 8 point % increase in iv (19 minus 11) despite VIX had gone up from 19 to 36.�� When I simulate your strike using yesterday.s SPX closing price selecting the strike (2195c) using the same -7 delta and 38 dte, price adj (-8%) and vol adj (+8%) I get .60.�� So, the Analyze tab is pretty close.�� Like many others have pointed out the danger/vega risk is always on the put side as indicated by the reverse skew or the smirk! ��Hope this helps!.wende �� ��From: supertraderkarenstudy@yahoogroups.com [mailto:supertraderkarenstudy@yahoogroups.com] Sent: Monday, June 6, 2016 9:14 PMTo: supertraderkarenstudy@yahoogroups.comSubject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble [1 Attachment]







----------------------------

#7464 Jun 7, 2016

Hi Victor,

Just to add a little bit of extra thing. If you think about it, the reason the brokerage house ask you to put down more margin, is cause you position is at risk, and they will protect themselves from a loss, as it should be cause its the risk you where willingto take.��

So if Im short 1 contract of an SPX call at 2050 and market crash to 1800, my position is at less risk to been a loser than before.��

So..... ��





From: supertraderkarenstudy@yahoogroups.com supertraderkarenstudy@yahoogroups.com> on behalf of Vic Ferrari vico213@... [supertraderkarenstudy]supertraderkarenstudy@yahoogroups.com>

Sent: Tuesday, June 7, 2016 11:42 AM

To: supertraderkarenstudy@yahoogroups.com

Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble��



----------------------------

#7465 Jun 7, 2016

I understood all this ... Tyler and Rajamax were the ones ��saying the 45 DTE calls would explode in a 10% down move with higher VIX ��, and implied I would be in a margin call with the 2150 calls ... I thought maybe the Analyze Tab was problematic in this regard ... I just moved money to TOS , so I'm going to start , playing with it ... Exposure fees are killing me on IB ..



From: "antonio porres aporresm@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Tuesday, June 7, 2016 12:51 PM Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��Hi Victor,

Just to add a little bit of extra thing. If you think about it, the reason the brokerage house ask you to put down more margin, is cause you position is at risk, and they will protect themselves from a loss, as it should be cause its the risk you where willingto take.��

So if Im short 1 contract of an SPX call at 2050 and market crash to 1800, my position is at less risk to been a loser than before.��

So..... ��





From: supertraderkarenstudy@yahoogroups.com supertraderkarenstudy@yahoogroups.com> on behalf of Vic Ferrari vico213@... [supertraderkarenstudy]supertraderkarenstudy@yahoogroups.com>

Sent: Tuesday, June 7, 2016 11:42 AM

To: supertraderkarenstudy@yahoogroups.com

Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble��



----------------------------

#7524 Jun 10, 2016

So Rob, you and Rocky are suggesting Sosnoff claimed shewas underpaying herself because she charged only the 20% incentive fee and not the usual 2% management fee?��

But given that the fund was underwater since Oct 2014, shewas paying herself all along when she shouldn't have beenpaying herself at all.�� Sosnoff knew this is what the complaintsaid... how can he therefore say she was underpaying herself?

Mark

---In supertraderkarenstudy@yahoogroups.com, rob.mccance@...> wrote :

That's what I figured he was saying as well. karen just flat out did not pay herself much. Most of the $$ that would normally go to her went to the charity in some way.

Rob



----------------------------

#7525 Jun 10, 2016

Hey Mark,

I'm not claiming anything specific, that would be pure conjecture.

I'm guessing that if you looked at her NET personal income from the entire operation, she's not enriching herself like others in her profession would be.

It's a guess, not a claim. Like everyone else discussing Karen, including Soss and others.

My gut feel, and it's nothing more than that, is she's not evil.

RM



----------------------------

#7526 Jun 10, 2016

Hi Mark, I interpreted what the TT guys were saying as follows:1) Traditional fund management fees (or at least something viewed as the norm) would be a 2%/20% structure where the manager always gets a base fee as a % of holdings under management and then based on a high water mark (if that is specified in the operating agreement) they also collect 20% of any gains above the high water mark.2) Karen did not have in place the 2% base fee, just the 20% of profits structure.3) So in effect she was paid less than someone with the 2/20% structure.

They really didn't get into the details of the high water mark provision in one of the funds operating agreements, and if that language should have prevented fees being assessed (as part of the 20% of profit) based on the alleged monthly trade that was done to generate an end of month profit.

Dwayne��

Sent from Yahoo Mail for iPhone

On Friday, June 10, 2016, 8:06 AM, drklein01@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��So Rob, you and Rocky are suggesting Sosnoff claimed shewas underpaying herself because she charged only the 20% incentive fee and not the usual 2% management fee?��

But given that the fund was underwater since Oct 2014, shewas paying herself all along when she shouldn't have beenpaying herself at all.�� Sosnoff knew this is what the complaintsaid... how can he therefore say she was underpaying herself?

Mark



---In supertraderkarenstudy@yahoogroups.com, rob.mccance@...> wrote :

That's what I figured he was saying as well. karen just flat out did not pay herself much. Most of the $$ that would normally go to her went to the charity in some way.

Rob



----------------------------

#7528 Jun 10, 2016

Hi Bevan, I'm no expert on the best way to setup the accounting for a hedge fund, but Radjamax did a nice write up on his thoughts concerning how the accounting side of how she is set up may or may not have impacted the situation. It was posted 5 days ago in this subgroup, and is a good read.��

Dwayne��

Sent from Yahoo Mail for iPhone

On Friday, June 10, 2016, 8:34 AM, Bevan Ramsden bevanramsden@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��Assuming the sec claims are true: others in the profession wouldnt make trades at the client expense to enrich themselves. That is highly unethical, immoral and importantly for her, illeagal.I like the strategy, but to in simple english, cook the books to keep giving yourself performance fees is not ok.A non trading question: how could she justify not using mark to market accounting for a short term vol strat?

��Hey Mark,

I'm not claiming anything specific, that would be pure conjecture.

I'm guessing that if you looked at her NET personal income from the entire operation, she's not enriching herself like others in her profession would be.

It's a guess, not a claim. Like everyone else discussing Karen, including Soss and others.

My gut feel, and it's nothing more than that, is she's not evil.

RM







----------------------------

#7539 Jun 11, 2016

Sounds like you all interpret Sosnoff's statement the same way (being underpaid by not charging a management fee).�� Thanks.

I think the savings was more than lost by the continuous collection of the 20%, which is what the complaint is all about.

I don't know if she's truly a bad apple or not or if this was somehow an innocent mistake.�� She is an accountant and I don't think that helps her cause.�� It's hard for me not to see what Bevan sees in terms of "highly unethical, immoral and importantly for her, illegal."���� FWIW, Sosnoff doesn't see it that way.

Mark



----------------------------

#7541 Jun 12, 2016

Hi Mark,.

I read the SEC complaint. Ill quote the relevant paragraphs and try to reexplain. (Although I find the SEC's language easy to understand) I encourage you to read it..

Imagine you sell an option, then the cash gained from that trade you book immediately as profit. The option itself is accounted as a "long term investment" and is thus not subject to mark to market. (Previously someone said this is common, its not. A financial instrument expiring in 45 days is not long term, and the SEC found it strange too) Now what happens if the option value went up? Lets say, you sold at 20 and its now 30? No problem, sell EVEN more options to cover that 10 loss, the "paper loss" remains not reported to the client. If everything goes to plan, you get your premium and the client doesnt know. Hopefully the market even rebounds in your favour.

Its fraudalent because you are charging an incentive fee when there is no gain. (Her strategy lost the client money and she charges an incentive fee for it) The fiscal duty has been compromised, as these trades are for the benefit of Karen at the expense of the client. (In order to sell more premium, one would need to take on FAR more risk than was advertised. The client is now at a very real risk to lose everythig) The SEC found Karen's "spreadsheet" where she made these exact calculations, its the proverbial smoking gun. .

If you read further, Karen lost her client over 50mln dollars and has been underwater since October 2014. She did these trades to keep paying herself (fraudulently). As I said, if what the SEC says is true, it is very damning..

Bevan





From complaint.

The HI Fund and HDB employed a .high-water-mark. fee structurepursuant to which Hope was entitled to no fees unless the Funds made profits thatexceeded past losses. In other words, all prior losses needed to be made up beforeHope would be paid. Since at least November 2014, Hope and Bruton haveengaged in a continuous pattern of fraudulent trading to circumvent the impact ofthe high-water-mark fee structure. The fraudulent trading exploited the HI Fund.sobligation to calculate the incentive fee exclusively on the basis of monthly.realized. gains and losses..unrealized. gains and losses (i.e., those attributableto open trading positions at a month.s end) were not included in the fee

3. Each month, Hope caused the Funds to make certain .SchemeTrades. that had the purpose and effect of realizing a large gain in the currentmonth while effectively guaranteeing a large loss would be realized early thefollowing month. In essence, these trades continuously converted any realizedlosses into realized gains in the current month, and losses which would be realizedin subsequent months, except that they would be continually deferred by theDefendants engaging in additional Scheme Trades. The Defendants did notsimply delay realization of trading losses, however, they also intentionally sizedthe Scheme Trades such that the Funds realized a profit every month. Hopeemployees maintained a spread sheet that tracked, month to date, the realizedlosses of the Funds. As the end of each month approached, Bruton picked theamount of profit she wished the Funds to show (and de facto, the fees she wishedto generate), and her traders would size the Scheme Trades accordingly.4. Without the fraudulent Scheme Trades, Hope would have receivedalmost no incentive fees from at least October 2014 through the present..



----------------------------

#7544 Jun 12, 2016

I just reread Mark's email, he wasnt disagreeing. I guess the above is a rebuttal to a non-existent argument..

Apologies to Mark.Bevan



----------------------------

#7597 Jun 16, 2016

Yes, she is not going to attend.



From: "bethandbob203@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Friday, June 17, 2016 2:13 AM Subject: [SuperTraderKarenStudy] Re: Is Karen in trouble

��I just clicked on the link to the conference schedule for Dan Sheridan's conference going on today and tomorrow. ��Karen no longer appears on the lineup. ��

Can someone that is attending the conference confirm that she is not there? ��

I'm sure her attorneys advised her not to speak.

Bobby



----------------------------

#7599 Jun 16, 2016

did they say why at the conference?

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Fri, 17 Jun 2016 00:22:01 +0000Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

Yes, she is not going to attend.



From: "bethandbob203@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Friday, June 17, 2016 2:13 AM Subject: [SuperTraderKarenStudy] Re: Is Karen in trouble

��I just clicked on the link to the conference schedule for Dan Sheridan's conference going on today and tomorrow. ��Karen no longer appears on the lineup. ��

Can someone that is attending the conference confirm that she is not there? ��

I'm sure her attorneys advised her not to speak.

Bobby



----------------------------

#7602 Jun 16, 2016

It was assumed that it's due to attorney advise.



From: "Chris Fitz chrisfitz65@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: "supertraderkarenstudy@yahoogroups.com" supertraderkarenstudy@yahoogroups.com> Sent: Friday, June 17, 2016 4:20 AM Subject: RE: [SuperTraderKarenStudy] Re: Is Karen in trouble

��did they say why at the conference?

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Fri, 17 Jun 2016 00:22:01 +0000Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

Yes, she is not going to attend.



From: "bethandbob203@... [supertraderkarenstudy]" supertraderkarenstudy@yahoogroups.com> To: supertraderkarenstudy@yahoogroups.com Sent: Friday, June 17, 2016 2:13 AM Subject: [SuperTraderKarenStudy] Re: Is Karen in trouble



��I just clicked on the link to the conference schedule for Dan Sheridan's conference going on today and tomorrow. ��Karen no longer appears on the lineup. ��

Can someone that is attending the conference confirm that she is not there? ��

I'm sure her attorneys advised her not to speak.

Bobby







----------------------------

#8316 Sep 17, 2016

Thanks for sharing this. From a quick 3 minute read: we disclosed Systems unfair, well that's life.

Win or lose: the fund's done as legally she may or may not be right but ethically the concept of rolling losses and banking fees on profits - pretty sad :(

Sent from my iPhone

On Sep 17, 2016, at 10:45 PM, drzogje@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Karen & Co filed a motion to dismiss the case:MTD-BriefInSupport-09012016

MTD-BriefInSupport-09012016 Case 1:16-cv-01752-LMM Document 18-1 Filed 09/01/16 Page 1 of 38 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEO...



----------------------------

#8317 Sep 17, 2016

Harry, might want to send 15 minutes. ��If they disclosed as they state in the motion then I think it is a lawfully and ethical communication.

Chris

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Sat, 17 Sep 2016 23:06:43 -0700Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

Thanks for sharing this. From a quick 3 minute read: we disclosed Systems unfair, well that's life.

Win or lose: the fund's done as legally she may or may not be right but ethically the concept of rolling losses and banking fees on profits - pretty sad :(

Sent from my iPhone

On Sep 17, 2016, at 10:45 PM, drzogje@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Karen & Co filed a motion to dismiss the case:MTD-BriefInSupport-09012016

MTD-BriefInSupport-09012016 Case 1:16-cv-01752-LMM Document 18-1 Filed 09/01/16 Page 1 of 38 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEO...



----------------------------

#8318 Sep 18, 2016

You may be right but frankly it's not worth these 15 minutes for me because for me all her actions come with hindsight rather than a surprise and with the benefit of hindsight all this is just good gossip that prodded me to search and then learn something.

Sent from my iPhone

On Sep 17, 2016, at 11:55 PM, Chris Fitz chrisfitz65@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:



��Harry, might want to send 15 minutes. ��If they disclosed as they state in the motion then I think it is a lawfully and ethical communication.

Chris

To: supertraderkarenstudy@yahoogroups.comFrom: supertraderkarenstudy@yahoogroups.comDate: Sat, 17 Sep 2016 23:06:43 -0700Subject: Re: [SuperTraderKarenStudy] Re: Is Karen in trouble

��

Thanks for sharing this. From a quick 3 minute read: we disclosed Systems unfair, well that's life.

Win or lose: the fund's done as legally she may or may not be right but ethically the concept of rolling losses and banking fees on profits - pretty sad :(

Sent from my iPhone

On Sep 17, 2016, at 10:45 PM, drzogje@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��Karen & Co filed a motion to dismiss the case:MTD-BriefInSupport-09012016

MTD-BriefInSupport-09012016 Case 1:16-cv-01752-LMM Document 18-1 Filed 09/01/16 Page 1 of 38 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEO...



----------------------------

#8329 Sep 18, 2016

Read it all just now.

As I suspected from the very beginning, some Atlanta SEC lawyer (probably some kid out of college) does not understand the rolling of positions.

But on the other hand, I do get that it's confusing in this context of paying fees and performance calculations at any given specific time, like a random day someone exits the fund. But that's not something illegal.

Since a roll is fundamentally just closing a losing position and opening a new position to pay for it, it does cause a messy accounting situ. Certainly she's not the first fund to trade this way, there must be some president set before her about how the SEC views all this.

Karen should just kill this fund and go back to trading for herself. She could still give her profits to her own charity if that's her passion..





Rob



----------------------------

#8330 Sep 18, 2016

��Rob, I agree that her process for managing trades that have moved against her is pretty standard. I can even see why she does her fees the way she does. If those were disclosed and the investors went in with "open eyes" then I am not sure what the sec is getting tripped up on...unless of course there is something not in compliance with regulations, then even if everyone involved agreed to the process it could still result in a noncompliance. I am not a professsonal licensed trader so I have to claim ignorance in that area.

I think about your response yesterday that you would have trouble trading with a strategy that carried a large negative netliq, which is the genesis of the issues they have with her rolling the unrealized losses while collecting fees. Even Karen style trading at 5 delta has periodic market moves that create large unrealized losses...and she rolls them until they are worked off. Big moves may take awhile. Trading ATM creates those events much more frequently than trading at 5 delta, but the response is identical....roll the positions (reduce leverage, adjust strikes) until the market shifts and avoid the "realized" losses. Not inferring one strategy is better or worse than another, just pointing out that the responses to stressed positions are pretty similar.��

Dwayne

Sent from Yahoo Mail for iPhone

On Sunday, September 18, 2016, 8:44 AM, Rob McCance rob.mccance@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��Read it all just now.

As I suspected from the very beginning, some Atlanta SEC lawyer (probably some kid out of college) does not understand the rolling of positions.

But on the other hand, I do get that it's confusing in this context of paying fees and performance calculations at any given specific time, like a random day someone exits the fund. But that's not something illegal.

Since a roll is fundamentally just closing a losing position and opening a new position to pay for it, it does cause a messy accounting situ. Certainly she's not the first fund to trade this way, there must be some president set before her about how the SEC views all this.

Karen should just kill this fund and go back to trading for herself. She could still give her profits to her own charity if that's her passion..





Rob







----------------------------

#8334 Sep 18, 2016

Dwayne,

Nice post and I completely agree, with all of it in fact!

There are subtle, or maybe not so subtle, differences between KST and let's call it TST (Tyler Style Trading).

Both accomplish the same basic thing: collect premium.

I'm not even trying to shoot holes in TST, just trying to get it all out there: the good, bad and whatever there is. I think we all fully understand KST and the risks.

I think many people, myself included, are not fully there on TST, though some should be a LOT closer after this weekend, thanks to you and Tyler being so transparent..

I find it all very interesting and trust me, if I could fully see the light, I would switch over on Monday morning.

I'm ultimately here to make money!

Rob



----------------------------

#8554 Oct 7, 2016

Thanks for posting this. Interesting reading. To me the point that is not being addressed in all of the filings concerns if the investors have or have not seen an appreciation of their accounts when looking at NAV since fund inception. This is my completely non-legal educated viewpoint, but if I hired someone to make investments for me, and they successfully provide me an expected return year after year, would I think I was being defrauded for allowing them to collect management fees? On the contrary, if I was incurring significant losses while lining the pockets of the fund manager, you can bet my view would be different.

Based on the TT interviews, one would be led to believe that the fund annualized ROI after fees was well north of 20%. Anyone that rolls trades to let the statistics work out understands carrying forward ��unrealized losses. The issue at hand seems to be the view by the SEC that the investors have been duped into paying exorbinate fees on loss carried forward transactions, but there is no discussion concerning how individual accounts have faired from a NAV perspective. As an investor, if my investment is appreciating at a rate satisfactory to me from a NAV perspective, and included in that calculation is my pro rata share of any unrealized losses being carried on the books, then do I really care?

It seems that the initial disclosures and shareholder communications should have been much better, but I still don't see an intent to defraud. Just really highlights for me the risks in trading other people's money.��

Dwayne��

Sent from Yahoo Mail for iPhone

On Wednesday, October 5, 2016, 10:01 PM, drzogje@... [supertraderkarenstudy] supertraderkarenstudy@yahoogroups.com> wrote:

��SEC filed Opposition to Motion To Dismiss:��MTD-Opposition-10032016

MTD-Opposition-10032016 Case 1:16-cv-01752-LMM Document 19 Filed 10/03/16 Page 1 of 34 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DI...



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