Karen the Super Trader
By Larry Jacobs - Editor of Traders World
Karen by her videos below has made an outstanding
return in the markets using options. She does it with apparently just a very simple trading strategy. She has been
on TastyTrade.com three times now and a lot of our subscribers have asked
about her method of trading.
See the three videos
Tom Sosnoff interviewed her in all three of the videos. An
interview with Tom by myself will be in the new issue of Trader World
From listening to
the videos she started with just a small amount of capital and turned it into hundreds of millions of
dollars. Her method is to collect income directly from writing mostly naked options. From what I understand is
that she writes naked puts near the bottom of swings and sells naked calls near the tops of swings. She used
Bollinger Bands and Fib numbers for timing.
now just trades the S&P 500 index (SPX) calls and puts.
She runs two
funds. One is for her clients and the other is for charity. Part of the profits of the first fund goes into the
She uses the
Think or Swim platform and trades the 12% out of the money puts and 10%
out of the money calls. She shorts the naked options when they have a lot of implied volatility.
These options are put on at the sweet spot that's when they will have a rapid decline in premium. This time
decay of premium is basically know as theta.
I understand how she uses the Bollinger bands. The strike prices that she puts on are at the edge or
slightly out of the Bollinger Bands. See the chart below. If the position moves against her then she will
put on even more, which is a double down strategy. The Bollinger Bands are set at 2-diviations on a 20-day
Here is a chart
of the SPY and this might be where she places her option trades. Selling naked puts at the bottoms and sell
naked calls at the tops of the Bollinger bands. This is my estimation of what she does, but can't be
She says in her
videos that she places the trades on at 56 days to the expiration of the options. This is known as the sweet
Karen keeps her eyes on implied volatility and writes the options when
volatility is rich and takes them off when it is cheap. She uses a technique to mitigate risk and to avoid her
Lick (Net Liquidating Value). Lick is applied to upfront option premium-paid cleared by the
become a trader she was an accountant and seems she knows really knows numbers. She may be a
mathematical genius. She seems to really know her business and her apparent profits seem to prove that she
knows her stuff. She seems to be very confident. Her technique might be considered by many to be very
risky. It also seems to me that she might use a lot of sixth sense. Karen is very matter of fact about her business. She sees
the returns as numbers but does not take trading personally. She has a strong trader mindset and seems
confident in her style.
Karen on her success and wish that she continues on the same path.
I have a message
relayed to her that I would like to interview her. I have not heard anything back yet. I am like
everyone else, I enjoy hearing success stories that this one.
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