An Arbitrary Lagrangian-Eulerian formulation has been posed to solve the challenging problem of the three-dimensional Taylor bubble, within a Conservative Level Set (CLS) framework. By employing a domain optimization method (i.e. the moving mesh method), smaller domains can be used to simulate rising bubbles, thus saving computational resources. As the method requires the use of open boundaries, a careful treatment of both inflow and outflow boundary conditions has been carried out. The coupled CLS - moving mesh method has been verified by means of extensive numerical tests. The challenging problem of the full three-dimensional Taylor bubble has then been thoroughly addressed, providing a detailed description of its features. The study also includes a sensitivity analyses with respect to the initial shape of the bubble, the initial volume of the bubble, the flow regime and the inclination of the channel.