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WHAT THE MARKET AND MY EX-WIVES HAVE IN COMMON

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The market has been more fickle than my two ex-wives put together (now that would be a Kodak moment). The good part is that it's been down fickle and then up fickle -- which translates into a trading range kind of fickle. And, I can live with that. Somehow, in trading it's a lot easier to live with than the ex-wives. In the market, it creates a trading range. In marriage, it's just chaos.

Basically, our positions are in quite good shape with about two weeks left to expiration. Even our ongoing OSX position may now be heading back in the right direction. I still think the market has a slightly downward bias, but what do I know? We'll wait and see if it can hold a large part of Wednesday's gains. Tomorrow morning is the jobs report and the market always seems to get hot and bothered about it. And we know, the market, again like my ex-wives, over-reacts to everything. The one thing we can depend on is at least some momentary volatility.

The $MID
Danny, one of my most successful seminar students, came up with an index that I hadn't considered before -- the S&P Midcap 400 Index (sounds like a NASCAR race) - $MID. I'm going to take a long hard look at using the $MID in our portfolio for a few reasons. There seems to be some (but not a lot) premium there and the fact that it is based on mid-cap stocks would provide us with a little more diversification. Have any of you CPTI readers had any experience with the $MID? Let me know. I'm wondering how negotiation-friendly the market makers are at the $MID.

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May CPTI Position #2 - CME - 194.03
Through the various ups and downs of the market in recent weeks, the CME has held up particularly well. This is the Chicago Mercantile Exchange. I suppose the reason that it has held up is that, whether people are buying or selling, they are trading -- and that's how the CME makes its money. So, let's try and put it on again for May.

Sell 15 CME May 160 puts
Buy 15 CME May 150 puts
Appx. credit of $.45

Sell 15 CME May 230 calls
Buy 15 CME May 240 calls
Appx. credit of $.60

Total net credit and profit potential of about $1.05 ($1,575). Our maximum profit range is 160 to 230. The maintenance is $15,000.

For the more aggressive traders out there, you might look at putting the spreads on separately. If there is a dramatic reaction to the jobs report to the upside, you could put on the bear call spread first and perhaps take in some extra premium. Then, you could wait for the market to come back down to put on the bull put spread and snatch out some extra premium. This is a way to take advantage of anticipated volatility, but you'll need to be pretty attentive to the market to make this happen. Your risk? If the market continues in one direction and you lose the opportunity to put on the opposite spread at the right strike price.

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"About Choices"
In Ohio, there's a six month waiting period for filing for divorce.
However, there's only a 15-day waiting period to buy a handgun.
It's nice to know the government is giving us advice on how to work out our problems.

Idle Thoughts:
- First you forget names, then you forget faces. Then you forget to pull up your zipper. It's worse when you forget to pull it down.

- Long ago when men cursed and beat the ground with sticks, it was called witchcraft . . . Today, it's called golf.

- An older gentleman was on the operating table awaiting surgery and he insisted that his son, a renowned surgeon, perform the operation. As he was about to get the anesthesia he asked to speak to his son. "Yes Dad, what is it?" "Don't be nervous, son; do your best! and just remember, if it doesn't go well, if something happens to me . . . your mother is going to come and live with you and your wife."

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CPTI APRIL POSITIONS
April CPTI Position #1 -- MSH Iron Condor - 455.43
With MSH trading at about 471, we sold 15 MSH 510 April calls and bought 15 MSH 520 April calls for a credit of $.75. Then we sold 15 MSH 420 April puts and bought 15 MSH 410 April puts for a credit of $.45. Our total net credit is $1.20 with a potential profit of $1,800.

I took advantage of the time factor (and a little extra premium) to lower the bull put spread to 420/410 rather than the 430/420 that we have on as a March position. Does that balance out the additional time exposure? Not entirely, but it is a little safer. Maximum profit range is 420 to 510 and the maintenance is $15,000.

April CPTI Position #2 - OSX Calendar Spread - $139.31
We bought 10 OSX September $150 calls @ $8.30 and sold 10 OSX April $150 calls @ $2.35. Our out of pocket cost is about $5.95 ($5,950).

Our price target for the next six weeks is about $150. If we're right, we should make a nice chunk of change. Even if OSX goes nowhere, we will not have risked a great deal. The $2.25 we took in from the short April call will erode away and will help to offset any premium erosion from our long Sept. $150 calls.

We may hold this position only until April expiration, or we may roll it out further. It depends on how it all unfolds. It may evolve into an ongoing position. Why did I select the Sept. $150 calls? Because September is the furthest month out that OSX options are available.

April CPTI Position #3 - CME Iron Condor - 194.03
It's the Chicago Mercantile Exchange-you know, the exchange where people trade futures on grains, gasoline and pork bellies.

We sold 10 CME April 230 calls and bought 10 CME April 240 calls for a credit of about $.60 ($600). Then we sold 10 CME April 165 puts and bought 10 CME April 155 puts for a credit of about $.60 ($600). Our total net credit and profit potential is about $1.20 ($1,200). Our maximum profit range is 165 to 230. Maintenance is $10,000.

April CPTI Position #4 - SPX "Sure Thing" Credit Spread - 1180.58
The "sure thing" credit spread is used primarily with a trending market. The market appears to have changed direction and has no real reason to go up. With rising oil prices and other economic problems, it looks like the market may take a rest and may drift lower for awhile.

We sold 2 SPX April 1215 Calls and bought 2 SPX April 1240 Calls for a credit of about $7.00 ($1,400). This strategy is only for traders who have a very large account and have excess maintenance dollars handy. Our initial maintenance is only $5,000 (25 points x 2 contracts).

April CPTI Position #5 - SPX Iron Condor - 1180.58
We sold 15 SPX April 1125 puts and bought 15 SPX April 1115 puts for a credit of about $.50 ($750). Then we sold 15 SPX April 1250 calls and bought 15 SPX April 1260 calls for a credit of about $.50 ($750). Our total net credit is $1.00 ($1,500). Max profit range: 1125 to 1250. Maintenance: $15,000.

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ONGOING STRATEGIES
ZERO-PLUS Strategy - February Iron Condor Position - SPX - 1180.58
Profit: $1,800.


In my Feb. 8, 2004 column, I outlined a strategy based on an initial investment of $100,000. $74,000 was spent on zero coupon bonds maturing in about seven years at a value of $100,000. The principal $100,000 investment is guaranteed. We're trading the remaining $26,000 to generate a "risk free" return on the original investment.

This year, we're going to use the entire $26,000 of extra cash as maintenance for some Iron Condors. That should enable us to generate substantially more profit on this "no risk" strategy.

March Zero Plus Position: March SPX Iron Condor - Expired worthless-Profit: $1,800.

New Cash Position: $26,000 + $1,800 = $27,800.

New April Zero Plus Position: We sold 20 of the SOX April 450 calls and bought 20 of the SOX April 460 calls for a credit of $.55 ($1,100). Then we sold 20 SOX April 380 puts and bought 20 of the SOX April 370 puts for $.30 ($600). Our total net credit was $.85 ($1,700). It's a nice wide range with support on the bottom and resistance on the top.

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MAY CPTI NEW POSITIONS

May CPTI Position #1 - SPX Iron Condor - 1180.58
We sold 15 SPX May 1100 puts and bought 15 SPX May 1090 puts for a credit of $.60. Then we sold 15 SPX May 1235 calls and bought 15 SPX May 1245 calls for a credit of $.75. Our total net credit is $1.35 ($2,025). We have a maximum profit range of 1100 to 1235. The bigger the better!! Maintenance is $15,000.

May CPTI Position #2 - CME Iron Condor - (see above)

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QQQ ITM Strangle - $36.57
We own 10 January 2007 $42 puts and 10 January 2007 $32 calls at a total cost of $14,600. Only $4,600 is at risk as the other $10,000 of intrinsic value will always be there. We then sold the March $36 puts and $38 calls, taking in a total of $1.10 ($1,100). If all goes well, the QQQQs will close somewhere between $36 and $38. We will then sell the April near term options, etc. etc. The objective is to sell premium every month for the next 22 months. When all is said and done, we should be able to show a very nice profit.

On Wednesday we closed the March $36 put for $.10. and on Thursday (today) we sold the March $36.625 put for $.35 -- taking in an additional $250 on our 10 contract position.

We put another $250 in our pockets in our QQQ ITM Strangle trade. We sold 10 of the March $37 puts. Earlier this week, we bought back the 10 March $36.625 puts for a dime and, on Thursday, sold the March $37 puts for $.35 ($350). Going into expiration week, our short positions are now the $37 puts and $38 calls. We now have accumulated a cash total of $1,600 ($1,100 + $250 + $250). A good start.

We rolled out our short positions to April. We bought back the March $37 puts and sold the April $36 puts for no credit or debit. It was an even exchange. Then we sold the April $37 calls for $.60 ($600). We had purchased back the March $38 puts last week for $.05. Our net credit for April (at least to begin with) is $550. Add that to our previous cash total of $1,600 and we now have generated a total of $2,100. Now, if the market cooperates . . .

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NEW SUMMER SEMINAR DATE TO BE ANNOUNCED SOON!

27 OUT OF 28 PROFITABLE MONTHS -- WITH NO END IN SIGHT.

The CHICAGO Mike Parnos CPTI seminar is sold out. However, there are still spots left for the May Irvine, CA seminar. They probably won't last too long, so be proactive! That means GOYA. Contact me at mparnos@optioninvestor.com and I'll reserve a spot for you. He who hesitates may be SOL.

LEARN TO ACHIEVE SUCCESS WITHOUT STRESS WITH CPTI WEALTH-BUILDING TECHNIQUES

Do you have a job and can't monitor your trades all day long? These "hands-off" trading strategies are for you.

Do you want to learn how to consistently pocket profits that are out there for the taking?
Do you want to define and minimize your risks?
Do you know how to negotiate with market makers?
Do you know how to read between the lines of an option chain?
Do you know how to capture premium where there seems to be none?

We've been profitable 27 out of the last 28 months and I can help you learn the secrets. Actually, they're really not secrets. But, until you learn what to look for, not knowing the methods is likely costing you money.

Those are just a few of the valuable skills I teach and can help you develop when you attend my seminar. If you're a serious trader, why limit yourself?

Learn how to position yourself to take advantage of those silly directional traders who lose their money betting on whims or the recommendations of others? It's relatively easy pickins-if you have what it takes to harvest the crop. It's not brain surgery-IF you know what to do.

Options are marvelous tools-but you have to know how to use them. There's more to consistently making money than a coin flip and a mouse click. For less than the profit on one Iron Condor trade, you can learn how to put the percentages in your favor. It's knowledge that will last you a lifetime. Join me at one of my CPTI seminars.

The dates and locations are:
April 16/17 - Chicago, IL - SOLD OUT!!!
May 14/15 - Irvine, CA
Summer 2005 - To Be Announced

Send me an email at mparnos@optioninvestor.com and I'll forward you all the details. Don't be left out! The spots are filling up fast. It'll be a weekend you'll never forget! Serious option traders only! Directional trader converts welcome!

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HAPPY TRADING!
Remember the CPTI credo: May our remote batteries and self-discipline last forever, but mierde happens. Be prepared! In trading, as in life, it's not the cards we're dealt. It's how we play them.

Mike Parnos, Your Options Therapist and CPTI Master Strategist

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Couch Potato Trading Institute Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what? It isn't the fault of the strategies.

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