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Kevlar Butterfly

Discussion in 'Options' started by Edward, May 6, 2015.

  1. Edward

    Edward Well-Known Member

    How is the webinar on the Kevlar Butterfly trade different then the other Butterfly variations trade such as John Locke's M3? The general principles seem the same.
     
  2. marat

    marat Well-Known Member

    The main difference is in the nature of the hedge for the upside risk. M3 does it through the long ITM call. "Kevlar" modifies call wing (in size and/or width) to accomplish this. M3 is net long calls, and Kevalr is "neutral" (same number of long and short position). On a practical side I often use "kevlar"-like setups (these are really broken wing flys, BWB as people usually call them) when I do not have enough capital for M3. Kevlar setups can also be used in other markets, while M3 is more RUT specific. If I have capital and want to trade RUT, I would probably use M3 over kevlar.
     
  3. marat

    marat Well-Known Member

    Example of kevlar/BWB trade on /ES in my small (~10K) IRA account upload_2015-5-6_7-56-52.png
     
  4. Venrcew

    Venrcew Well-Known Member

    How does kelvar trade adjust with market rally?
     
  5. Venrcew

    Venrcew Well-Known Member

    How does kelvar trade adjust with market rally?
     
  6. Boomer34

    Boomer34 Well-Known Member

    Can someone describe the derivations of the various Kevlars? I know Jim had an initial one, then him and Himanshu had a 2nd variation (shown in webinars in mid 2015)...and now I know Jim just did a recent webinar that seems to have different parameters (profit target, max loss)...

    I really liked the recent webinar...and would love to hear more feedback.
     
  7. Venrcew

    Venrcew Well-Known Member

    Agree
     
  8. AKJ

    AKJ Well-Known Member

    Have you guys seen the thread that has been sticky'd to the top of the "Options" forum. It's about the Kevlar. Jim provides some comments.
     
  9. jim

    jim Administrator Staff Member

    A lot of people have asked me about the difference between my Kevlar trade and an M3... I simply reply by explaining that I don't drive an M3... I drive a BMW 328i Convertible (and a Prius... I told you that I am boring and like my rocking chair).

    The simple fact is that I don't know the difference. I have never traded John's M3, and I don't know his rules... I don't even know if he has specific rules or just general guidelines. I review my Kevlar's objective, approach, setups, and general guidelines on the Round Table on Sept 21. If you are a CD member, you can find the Video on the "Library" tab of the member site. If you are not a CD member, why not? It is only $12.50 per month.;)

    On a final note, I will not be posting in this Forum, after this. If you have any questions for me about the Kevlar, please use the Forum entitled "Kevlar" in the options section. I will answer high-level general questions in the Kevlar forum. I will not answer specific questions, as that is reserved for the Kevlar Alert subscribers.
     
  10. Venrcew

    Venrcew Well-Known Member

    Jim you did a kelvar trade with himanshu. How do you adjust your trade say market rally strongly?
     
  11. jim

    jim Administrator Staff Member

    Venrcew,

    I guess you didn't see my last post where I said...
    I will not be posting in this Forum, after this. If you have any questions for me about the Kevlar, please use the Forum entitled "Kevlar" in the options section. I will answer high-level general questions in the Kevlar forum. I will not answer specific questions, as that is reserved for the Kevlar Alert subscribers.


    However, here is the answer to your question:

    I have never traded with Himanshu, but we have discussed his modifications of my original Kevlar rules (2010) to make his own version (around 2013) of my Kevlar. In 2014, I made some changes to my Kevlar... the bi-modal entry and risk management / adjustment methodology being the two significant changes.

    You have probably noticed that the Kevlar has a negative Beta compared the S&P. The Kevlars most challenging months have been when the S&P runs relentlessly higher and higher. The Kevlars most profitable month have been when the S&P has sold off.

    On Tuesday, I will be presenting a review of my OCT Kevlar Trade (closed with a +11.2% gain) and an analysis of my NOV Kevlar trade (Still open with approximately a +1% gain currently). The OCT trade review will be short and boring. I put the OCT Kevlar on, made one adjustment, and closed the trade, after 34 days-in-the-trade, for a nice gain. Profitable, but boring... This did not provide a great teaching opportunity. What will be much more interesting will be discussing how I manage the Kevlar in an up market. This Kevlar Webex, on Tuesday, October 11, is for Kevlar subscribers only.

    Regards,
    Jim
     

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