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M3 or BWB...which do you prefer to trade ?

Discussion in 'Options' started by Rod M, Jun 10, 2015.

  1. Rod M

    Rod M Well-Known Member

    I have my own opinions, but I would like to solicit opinions of my fellow traders. Which do you prefer to trade: M3 or BWB (Tony Sizemore style) and why ?
    Thanks.
     
  2. Tps

    Tps Guest

    Although it wasn't an option, the weirdor. It has a very high win rate (I haven't lost in a long long time) and lower risk than the M3 in my view.
     
  3. Vijay

    Vijay Member

    I have been trading both M3 and Weirdor with good results. Any suggestions as to where/how to purchase the guidelines/video for the BWB trading?
     
  4. Venkat

    Venkat Guest

    I prefer trading M3 on RUT and BWB on SPX because of vol skews and how OTM puts hold up their premiums closer to expiration. Using BWB, you can even try to mimic the T+0 of an M3 but that holds good only for a limited market movement and for a limited days. Of course, it depends on the strikes and where the market is, but the gamma of BWB tend to increase faster compared to M3, especially closer to expiration.

    There are multiple variations of M3 and one of them is called M3U which is nothing but a BWB.
     
  5. marat

    marat Well-Known Member

    Any chance you can show your BWB setup on SPX, strike location, etc?
     
  6. Rod M

    Rod M Well-Known Member

    The one challenge I see with the Weirdor is the call credit spread. With vols so low,, if you move near the short strike of the call credit spread, you will not get much help from the long call and therefore you are faced with a downward sloping T+0 line and you will have to roll your call credit spread up.. Any comments here ?
     
  7. Venkat

    Venkat Guest

    Marat: I am currently travelling and don't have any BWB in SPX. Usually it's 80 credit wing, 20 between the short strikes and 60 debit wing. Example: 2000/2080/2100/2160. It will be easier if we could connect on Skype and perhaps exchange notes. My skype ID is "optionoz"
     
  8. Rod M

    Rod M Well-Known Member

    Venkat: I set up my SKYPE account and sent you an email with the ID.
     
  9. Gabor Maly

    Gabor Maly Well-Known Member

    Sure upside can be a problem with wierdors but even with vol so low they have been performing pretty good, small but steady gains(I don't roll out I close them). While I have been trading wierdors for more than a year now, I obviously have not been trading them long enough to go through periods like 2008 or 2011. M3s handle those periods much better at least in my backtests and there can come a point when I would stop putting on a new wierdors as vol goes to the roof.....of course it is just me and more experienced wierdor traders might argue otherwise. So I guess what I am trying to say is that the downside with the wierdor can also be a challenge given the right market conditions.
     
  10. Tps

    Tps Guest

    If you stick to rigid risk management, the weirdor performs well in 2008/2011 type environments. That would entail eventually buying in your shorts after you've bought 4 or more debit spreads.

    How does the M3 hold up during crashes?
     
  11. Vijay

    Vijay Member

    Let me know if anyone has purchased BWB series from SMB Options Tribe and/or Tony Sizemore and the trading results. I know there are many ways to trade BWB but I am hearing a lot about "Tony Sizemore" style BWB. SMB Options tribe also sell the BWB trading system developed by Greg Loehr.
     
  12. Gabor Maly

    Gabor Maly Well-Known Member

    In general I had less headache with the M3s during these backtests in very rough periods and it is amazing how much of a down move they can weather out... but I may have to tweak my adjustment guidelines for the wierdor as you point out. I love the wierdor, I just know that I have not been tested yet (nor with the M3s).
     
  13. Trader G

    Trader G Well-Known Member

    I used to trade a bwb and extra calls to create a profile similar to the M3 (original Kevlar). It works pretty well, but what I find with a traditional M3 structure is that it is really resilient to a sharp move down. The vega on the long call really seems to pick up and what you will find is that even if price drops on day 1 from outside the tent to below the mid strike you are still flat to up with the M3. Of course the trade may morph over time and what is a traditional fly can become a bwb as I move my longs and shorts around.
     

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