Paul Demers
New member
I can't quite recall the exact numbers but I believe the butterflies got down 6% and the calendar trades got down 12%.
M3 - The best strategy?
- Thread starter Neri
- Start date
J
Jerry3
Guest
Were you ever ready to pull the plug on them at that point ?
Hi, I have only been trading for only a year so please take my comments with a pinch of salt. I used to be a Kevlar trader and only recent adopted a modified RoadTrip as the basis for my trade system. I can't comment too much on M3 since I'm not a M3 trader. My experience tells me that the trading system is only a guideline for trading. I believe the crucial edge one can get is feeling the market sentiment and decide on the adjustments you wish to make to fight the market. I don't trade mechanically becos it doesn't work too well especially in today's market. I used to trade mechanically though.
Happy trading!
Regards
Murphy
Teddy
Member
I profited from the Feb6 drop. I was really pee'd at the low 9 iv level from the SPX and went to oil. I had found it so cheap to pay for theta that I was putting up side hedges from Nov. The market just kept going up and the hedge were making more money than the income trades and faster too. Every time it goes up, I would take profit or adjust or put a new one on. At some point I decided to hedge for the down side. The down side didn't come until Jan30 to Feb6. Well the downside hedges did really well.
Remember, IV was like 9 then.
One thing I keep looking at is the ATR over 14 days. It used to be 20 ATR. Now it is like 53 from what I saw yesterday.
I have started my version of the M3 and bearish fly. Now the current ATR is something I find important. The wing width needs to account for the current ATR.
I didnot like the RTT when the vol was in the 9s. At the bottom of the Feb6 market, I decided to slap on some RTTs and STT trades. I've shown many of these on Slack.
Remember, IV was like 9 then.
One thing I keep looking at is the ATR over 14 days. It used to be 20 ATR. Now it is like 53 from what I saw yesterday.
I have started my version of the M3 and bearish fly. Now the current ATR is something I find important. The wing width needs to account for the current ATR.
I didnot like the RTT when the vol was in the 9s. At the bottom of the Feb6 market, I decided to slap on some RTTs and STT trades. I've shown many of these on Slack.
Hi Teddy, what trade would you have open when the vol is in the 9s? I read that you don't like RTT in this situation. Like to hear your advice. Thanks!
Regards
Murphy
Teddy
Member
With the current IV in the 20s, they don't work. They are a form of backspreads. They were posted in slack. You should be able to google some generic models and play around with them in ONE or OV, or Thinkback. Having said this, they are not appropriate under the current environment with the a 53 ATR and 20s IV.
ethanscott
New member
I could not agree more
Been away for a while partly because I did not fare well with the feb drop. I had the adjustments lined up and they would have worked but I said let’s wait a day and boom ... too late and the pricing went haywire. Tried all tricks but could not save the trades in trouble.
Anyways to the original question : M3 is just a trade with a lot of guidelines. It is good to start with but never assume it is everything. Life/market will throw curve balls and you should be prepared to handle them with a variety of tools - some provided by M3 some you need to discover on your own / from other trades. The basic idea is concepts. Do you get them or not.
Markets change every year. Maybe last year M3 worked but this may be the year of bearish. Or maybe this year M3 works on RUT but not on SPX and next year they trade places. You can never say. What you can do is learn a) how to limit loss and b) sense when the market character is changing.
Anyways to the original question : M3 is just a trade with a lot of guidelines. It is good to start with but never assume it is everything. Life/market will throw curve balls and you should be prepared to handle them with a variety of tools - some provided by M3 some you need to discover on your own / from other trades. The basic idea is concepts. Do you get them or not.
Markets change every year. Maybe last year M3 worked but this may be the year of bearish. Or maybe this year M3 works on RUT but not on SPX and next year they trade places. You can never say. What you can do is learn a) how to limit loss and b) sense when the market character is changing.
Sorry to hear about your losses you are not alone. Turn them into paid lesson.
I think most of traders are or were in this stage. Look around CD and you find other examples.
Sometimes trying to neutralize greeks can ends with overtrading.
From what i've heard M3 is a one of good courses if taken right way. I mean if not taken as set of rules but as a way to became a trader. Little hard to explain, but I think, if you do it right way you likely won't be trading M3 anymore - you will be trading your own trade that may or may not reassemble org M3. In my opinion calling this new trade M3 is confusing in conversations (as RTT and others) because you are not sure if name refers to oryginal trade or modified, and you don't know how or how much modified it is - maybe in meantime it become closer High Prob Condor
and adopt
I think most of traders are or were in this stage. Look around CD and you find other examples.
Sometimes trying to neutralize greeks can ends with overtrading.
From what i've heard M3 is a one of good courses if taken right way. I mean if not taken as set of rules but as a way to became a trader. Little hard to explain, but I think, if you do it right way you likely won't be trading M3 anymore - you will be trading your own trade that may or may not reassemble org M3. In my opinion calling this new trade M3 is confusing in conversations (as RTT and others) because you are not sure if name refers to oryginal trade or modified, and you don't know how or how much modified it is - maybe in meantime it become closer High Prob Condor
and adopt
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Sorry to hear about your losses you are not alone. Turn them into paid lesson.
I think most of traders are or were in this stage. Look around CD and you find other examples.
Sometimes trying to neutralize greeks can ends with overtrading.
From what i've heard M3 is a one of good courses if taken right way. I mean if not taken as set of rules but as a way to became a trader. Little hard to explain, but I think, if you do it right way you likely won't be trading M3 anymore - you will be trading your own trade that may or may not reassemble org M3. In my opinion calling this new trade M3 is confusing in conversations (as RTT and others) because you are not sure if name refers to oryginal trade or modified, and you don't know how or how much modified it is - maybe in meantime it become closer High Prob Condor
and adopt
Typing on phone so can’t quote properly (fast enough) just going para by para
Well losses happen and lessons happen. It’s made me quite circumspect / fearful. My trade sizes are 10% of before so to recover losses of 10X trades, gotta work quite hard but then it reduces my risk too. A lot more room to play.
I have taken M3 and it is a bunch of good guidelines. Rather than going rigid on delta 50 this delta -50 that, if you can understand what works where, you can use those approaches in any trade.
... yes, and adopt.
I don't see any "ATM butterfly" can make money! Even M3 is difficulty to make money unless you are very good at Market Trend estimation, because in M3 both Butterfly and Call will cost your money to open and adjust lately will cause your losing more money. Only "Artfully Trader know how to adjust near expiring date and put the position into the tent. I think the "Covered Call" is the easiest way to make money!
Stock = Call - Put
Therefore Stock - Call = - Put. So a covered call is synthetically equivalent to a naked short Put.
Naked short Put works wonder during a up market but horribly in a down market.
Yes! Short Naked Put is wonderful strategy, Super Star Karen use this strategy to make tens millions dollars in her option trading. I do not recommend any person do not have enough money and a stronger heart. it is because you need rollover your pending position again and again until it is above the water when marker is going down!
The good news is that the US Market is always up, up, and up! Thanks, Keven Lee!
The good news is that the US Market is always up, up, and up! Thanks, Keven Lee!
I'm thinking Karen Bruton is not the best reference for how wonderful naked puts are as a trading strategy.
A short vertical put in SPX s even better
There is no reason to be naked put and have all that risk to the downside
You can do a similar trade with a short vertical and have the same margin with limited downside
I don't see any advantage that a naked put has over a short put vertical in SPX
Maybe in other indexes or stocks where the premium drops off rapidly the further you are OTM but in SPX there is still some premium left at 5 delta
There is no reason to be naked put and have all that risk to the downside
You can do a similar trade with a short vertical and have the same margin with limited downside
I don't see any advantage that a naked put has over a short put vertical in SPX
Maybe in other indexes or stocks where the premium drops off rapidly the further you are OTM but in SPX there is still some premium left at 5 delta
I do not trade naked short put in SPX. I do rollover the naked short put SPX positions when we got two "one thousand down in Market" in this Feb. I use rollover short positions in my trading position to keep the positive profit in my losing position at Feb and March of this year. I just got all these naked short position out of water and expired worthless and avoid almost " half million loss" and turn all the loss positions into win positions. It is the beauty of rollover and rollover!
Just remember the famous saying :" I never turn the hard earning money back to the market!" Super Karen said!
Just remember the famous saying :" I never turn the hard earning money back to the market!" Super Karen said!
You seem to contradict yourself here
Are you trying to say that you roll the put side of a vertical spread ? Than you should not call it naked
What do you mean by "rollover ? There is no such thing
Are you rolling up down or out in time ?