Option Investor
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WHO'S IN THE MOOD FOR A QUICKIE?

HAVING TROUBLE PRINTING?
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The market has been relatively calm lately and that can mean only one of two things. That, a) we're in a pretty narrow trading range (which would be good news); or b) it's the calm before the storm and it's going to go nuts in one direction or the other. Do you want to take a shot at a few extra bucks for a week?

For the more aggressive CPTI traders/students who have watched our monthly quickies work out on a pretty regular basis, we once again prepare for the most exciting week of the month. Remember, these trades aren't for everyone. They are especially not for traders who are not available to monitor the trades. There is a good reason why I don't include these in our CPTI portfolio result. Don't do these with your rent money, your pizza money, your gas money, or your extra-curricular activity money -- not necessarily in that order.

OK, you know the drill. Here goes . . .

April Quickie #1 - SPX Iron Condor - 1191.14
Sell 10 April SPX 1210 calls
Buy 10 April SPX 1220 calls

Sell 10 April SPX 1175 puts
Buy 10 April SPX 1165 puts

Total net credit and profit potential of about $1.50 ($1,500). Max profit range 1175 to 1210. Maintenance is $10,000.

April Quickie #2 - MSH Iron Condor - 458.34
Sell 10 April MSH 450 puts
Buy 10 April MSH 440 puts

Sell 10 April MSH 465 calls
Buy 10 April MSH 475 calls

Total net credit and profit potential of about $2.25 ($2,250). Max profit range of 450 to 465. Maintenance is $10,000.

April Quickie #3 -- SOX Iron Condor - 418.97
Sell 10 April SOX 405 puts
Buy 10 April SOX 395 puts

Sell 10 April SOX 430 calls
Buy 10 April SOX 440 calls

Total net credit and profit potential of about $1.70 ($1,700). Max profit range of 405 to 430. Maintenance is $10,000.

Remember, this is earnings season. I know these are all indexes, but weird stuff can happen. Even though the market has been moving up a bit, it's not doing it on big volume. I don't think it's ready to move out of our main trading range. Now it's just a matter of it can cool its jets for another week. This is another kind of extra-curricular activity. You can't catch anything, but, if you're not careful, you sure can lose something.

Good luck and trade smart!

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April Position Update
This week we've been proactive in locking in profits on two of our positions -- the OSX Calendar Spread and our SPX Sure Thing Credit Spread. We now have $2,770 in our pocket and our other open positions are looking very good with one week to go until expiration.

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NEW SUMMER SEMINAR DATE: JULY 16 & 17 -- PHILADELPHIA, PA

WE'VE HAD 27 OUT OF 28 PROFITABLE MONTHS -- WITH NO END IN SIGHT.

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

The CHICAGO Mike Parnos CPTI seminar is sold out. However, there are still spots left for the May IRVINE, CA seminar, and now, of course, the new PHILADELPHIA, PA seminar. Spots probably won't last 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.

The dates and locations are:
April 16/17 - Chicago, IL - SOLD OUT!!!
May 14/15 - Irvine, CA
July 16/17 - Philadelphia, PA

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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Clearing Up A Few Things . . .

From What I Hope Is An Atypical Reader
Here's an email question that I just had to share with you. Those of you who have been following this column for years already know the answers to the questions posed by this reader. For the many new CPTI students and subscribers, I thought I could kill a few birds with one stone. This is a response I received from a skeptical reader after I reminded him that, "My posted trades are there as guidance. Sometimes the prices are still available, and sometimes they are not. My column is basically an educational column. Traders can take the strategies I teach and apply them to posted trades and many different indexes. I'm constantly impressed and amazed at how creatively the students have applied my strategies to a variety of situations -- and been profitable. My posted trades are just a starting point. I do my best to stimulate readers to think -- not just follow my trades."

Mike,
I would much rather pay you for your specific stock trades, auto trading it is called on several brokerages, than to try to learn a strategy by attending a seminar and buy books and tapes. I know that by far, MOST people 80% or more that try to become traders for themselves, lose everything they had to start with. I don't know how many years it took you to become as market savvy as you now are, but it is one heck of a lot more than your students are. My question for people that sell seminars and other books and tapes, is "Why, if you are so successful trading, would you spend time running tiring seminars, traveling living out of suitcases and standing on your feet for 8 hours a day, why would you do that with your time if you could be trading and keeping your secrets to success to yourself?" Please don't tell me that you just want to help people, if you did, you wouldn't charge a penny for your time. Obviously, you are in business to Make Money, hence a fee for your seminars. If I could make an every increasing 10% per month on my portfolio, I would spend my free time on a beach somewhere rather than standing up in a seminar, eating hotel food, living out of a suitcase. Please explain it to me in a way I would understand? (name withheld)

"Dear ______,
I am retired. I was able to retire ten years ago (when I was 46). Trading had a lot to do with it. What money I receive from writing, trading and teaching seminars is over and above what I need to live. You may not believe this, but I love teaching and writing about options for those who want to learn. I'm not a philanthropist, but I do like to help people in my own way. What I charge for my two day advanced seminar is half of what other seminars cost. I would be stupid not to charge for my seminars. People only value things that they pay for. I also love meeting the folks at the seminars. You can ask any of the attendees if they honestly believe I'm there for any other reasons. I only schedule seminars about once a month. I don't spend my life in hotel rooms or living out of suitcases. It goes against my nature. By the way, I don't eat hotel food. I eat fast food. I'm a true couch potato through and through.

I post almost all of my trades in a timely fashion, but I have a life, too. If you don't want to learn, well, that's your choice. But what happens if I'm not around when it's time to get out of a trade. Are you going to be able to deal with it? For your sake, I hope so."

Nuff said.

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CPTI APRIL POSITIONS
April CPTI Position #1 -- MSH Iron Condor - 458.34
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. Maximum profit range is 420 to 510 and the maintenance is $15,000.

April CPTI Position #2 - OSX Calendar Spread -- Closed for $1,500 Profit.
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. On Tuesday we closed out this position for a profit of $1,500.

April CPTI Position #3 - CME Iron Condor - 187.89
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 - Closed for $1,270 Profit

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). On Wednesday we closed our position for a profit of $1,270.

April CPTI Position #5 - SPX Iron Condor - 1191.14

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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MAY CPTI NEW POSITIONS

May CPTI Position #1 - SPX Iron Condor - 1191.14
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 - 187.89
We sold 15 CME May 155 puts and bought 15 CME May 145 puts for a credit of $.65. Then we sold 15 CME May 230 calls and bought 15 CME May 240 calls for a credit of $.40. Our total net credit and profit potential is $1.05 ($1,575). Our maximum profit range is 155 to 230. The maintenance is $15,000.

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ONGOING STRATEGIES
ZERO-PLUS Strategy - March Iron Condor Position - SOX - 418.97
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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QQQ ITM Strangle - $36.94
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.

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 . . .

Just a reminder . . . we currently have GTC orders out there to buy back the short 36 puts and the short 37 calls for $.05 each. Be alert!

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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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