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M3 trading system

Discussion in 'Options' started by Troy Cassel, Jul 9, 2016.

  1. Troy Cassel

    Troy Cassel New Member

    Hi, I am some what new to options trading, I bought a subscription to options tribe and capital discussions and I have learned a lot from the videos at both sites. My question is has anyone bought the M3 trading system from John Locke? If so did you find it worth the money spent and did it help you become a profitable trader?
    Thank you for any input!
  2. Marcas

    Marcas Well-Known Member

    Hi Troy,
    to get you some thoughts from someone who did not buy M3 Class yet.
    From what I learned you will get good teaching from Mr Locke. The question is if you be able to understand/use it - you shouldn't take it, imo, as a introduction to options and you need enough capital to put M3 into practice.
    I think you can figure out a lot without paying for M3 Trading System, it is a matter if you want to commit enough effort and time yourself (and put more risk to your money).
    As I said, I'm planing to buy this class, mostly to learn about Mr Locke's approach to managing trades, but not just now. I will try some services from CapDisfirst.
    And remember that this comes from somebody who did not buy M3 Trading System.
  3. Gabor Maly

    Gabor Maly Well-Known Member

    A large number of traders (including me) on this forum trade M3 or other John Locke strategies for a living. it is worth every penny if you do want to do this professionally later down the road. Having said that this forum is full of similar and excellent strategies like Kevlar, Rhino, RTT etc....worth to explore all of them and then find the one that fits your personality.
  4. Brad U

    Brad U New Member

    Hey all. First Post in Capital Discussions. Good to be in the community. Background. 7 years trading options. Sheridan Mentoring Lifetime back in 08 or 09. Lots of other books etc. Studied all the John Locke stuff. Now my M3 question. I am struggling post Orlando with why we always want these positions to be Negative Vega. All the M3 positions I had on when Orlando hit got VERY underwater because fo the spike in Volatility, followed by the spike from the Brexit. Can anyone explain why we don't need to "fear" too much negative Vega on an M3? Has me a bit nervous since we are now back at extreme lows on the VIX. Thanks for any thoughts. Brad
  5. Gabor Maly

    Gabor Maly Well-Known Member

    Hi Brad and welcome. The answer to your question why the M3 being a negative vega trade holds up very well in a down move or down market versus a positive vega trade such as a calendar can be found in the following great presentation from Ron, , worth to watch if you have not already done so.
    When people say you do not need to "fear" negative vega they are basically referring to the behavior covered in the presentation. It does not mean your M3 will not be hit with RVX or VIX rocketing up 5-10 points overnight. If you want to avoid that you need to hedge your trade especially before events like Brexit or get out. If you are nervous about the market you are seeing currently besides hedging you can also go out further in DTE those expirations will typically be less impacted by vol spikes.

    Hope that helps
    GreenZone likes this.
  6. Brad U

    Brad U New Member

    This really really helps. Great explanation on Volatility in general. Thanks for posting.
    GreenZone likes this.
  7. maxtodorov

    maxtodorov Well-Known Member

    I am also a bit on the fence. I understand how M3 works, based on various videos that are posted about it. The big question is what more do you get out of the training. I know the strategy is liked, but if you apply general methodology of keeping your T+0 line flat, and adjusting the greeks to your liking, I question what more can one get from the training. But I have not heard anything negative about it.... so don't think it will be a waste....
  8. N N

    N N Well-Known Member

    I thought I would add to this thread instead of starting a new one, wanted to check with M3 Traders regarding fly width in the current low IV environment. It seems that FLY pricing is very high for a standard 75 width fly (on SPX) Are people waiting for IV to rise or perhaps adjusting widths, just trying to see what people are considering. Thanks!

    EDIT: Seeing similar problems in RoadTrip where standard RT are 1.65+ but even rolling ITM fly in is creating very uneven T+0 lines.
    Last edited: Aug 1, 2016
  9. Marcas

    Marcas Well-Known Member

    Hi, NN
    I don't know about M3, but in RTT you can modify ratio between call and put sides and width of each leg to get what you want. You can also wait a little (hopefully 'a little') to get better prices.
  10. vega4mike

    vega4mike Well-Known Member

    For the SPX M3 75 wide I thought the same last week, but they are now even more expensive, so basically they were relatively cheap last week, if you don't like the SEPT pricing, maybe try Oct, pricing still seems relatively reasonable...my 2 cents.
  11. Kevin Lee

    Kevin Lee Well-Known Member

    Just my two cents ....

    The value of any options trading course should not be just the trade plan. There are plenty of free trade plans in this forum as well as other places on the web. The true value of a course is learning to make logical trading decisions, learning the techniques to manage risk, as well as developing the necessary discipline to succeed.

    Following a trade plan is easy, ie when you see x delta do this and when your vega hits this, do that. You can be profitable by just doing that if the trade plan is well design. However, no trade plans can be profitable in all environment. Therefore, when the environment changes (and guaranteed to change in the future), the trade plan might stop working. What do we do then? Buy another course? Hence, I think it is critically important that we understand the principles behind any trade plan, understand the "why" and then eventually develop own trade plan in the future. Only by doing that, we can navigate and adapt to future market changes.

    Back to M3 - I think M3 is much more than just a trading strategy with a flat T+0 line. We can achieve that in many other ways. What I find enormously useful, at least for me, is the flexibility and the techniques involved in managing the position in so many different environment.
    Bruno likes this.
  12. Harry

    Harry Well-Known Member

    Kevin my man !! I am new to options, options strategies, capital discussions and you ... but ever since reading up on these and in the context of M3, I have been hearing your name. While it is partly because you were a recent highlight (trader of month) by John Locke, but I am sure it is also because of the good work you are doing by sharing your thoughts. I fully agree with your comment above - we need to think more about the concepts rather than the flat T+0. Beyond that - I am not qualified to say yet, but hopefully we will connect much more later. A big salute for the time being !!
  13. N N

    N N Well-Known Member

    When volatility is this low (and hence skew is high) does it make sense to adjust the legs inward (ie 30-40 width vs traditional 40-50 width?) It would seem the smaller the width, the less susceptible the fly would be to flattening of the skew? And the tradeoff would be less theta? Curious what the experts think?
  14. ACS

    ACS Well-Known Member

    The problem is not that volatility is very low now. You can create configurations that will make money under these conditions. The problem is that volatility this low usually does not last. The transition to a higher volatility regime will often blow out trades designed for lower volatility and the converse is true as well. This year has been so challenging because we've seen several sharp swings between low and high volatility. Other than being as aware and nimble as possible, I don't think there is a magic formula to over come the problem.
  15. N N

    N N Well-Known Member

    Just looked at some quick numbers during Brexit. Looked at the 2000/2050/2100 and 2025/2050/2075 PUT fly on 6/23 and 6/24. Indeed, the thinner (25 wide) strikes had less vol movement than the wider (50 wide)

    Interestingly enough the OTM put and the Body Put had little vol change while the ITM Put actually had vol decreasing. Considering VIX went from ~19 to 24 or so I thought it was very interesting. Now if you look at the ATM (first ~2100 to ~2050, imagine fly centered at 2100 and then magically recentered at 2050) those increased by about 2.5 vol points across all strikes. But obviously you have static strikes and there vol only DECREASED on the ITM side. FWIW

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