Option Investor
Updates

IT'S QUICKIE TIME -- IF YOU DARE . . .

HAVING TROUBLE PRINTING?
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Last month's quickies were a fiasco. The market picked option expiration week to throw a directional tantrum and the quickies were the victims. Seasoned CPTI students, who played the quickies, got out with acceptable losses.

However, there are always going to be traders who sit paralyzed, puffing on that hopium pipe. They took hefty losses. Boy, did I hear from them. I told you they were dangerous. I told you they needed monitoring. I told you that I, personally, don't trade them.

On the other hand, last month was just one month. The controlled losses were small change compared to the substantial profits aggressive traders have made in the past. These traders have requested that I continue to toss out quickie ideas. So, with five trading days remaining to expiration (for European style options), here are some interesting ideas. Trade them at your own risk.

May Quickie #1 - SPX Iron Condor - 1159.36
Sell 10 SPX May 1140 puts
Buy 10 SPX May 1130 puts
Credit of about $1.30 ($1,300)

Sell 10 SPX May 1180 calls
Buy 10 SPX May 1190 calls
Credit of about $1.15 ($1,150)

Net credit and profit potential of about $2.45 ($2,450). Maximum profit range of 1140 to 1180. Maintenance: $10,000 or ($1,000 per contract).

May Quickie #2 - MID Siamese Condor - 639.80
Sell 10 MID May 640 puts
Sell 10 MID May 640 calls
Credit of about $11.50 ($11,500)

Buy 10 MID May 610 puts
Buy 10 MID May 670 calls
Debit of about $.90 ($900)

Net credit and profit potential of about $10.50 ($10,500). Profit range of 629.50 to 650.50. The closer MID finishes to 640, the more money you will make. Range parameters are also the exit points. Maintenance: $30,000 (or $3,000 per contract).

May Quickie #3 - RUT Iron Condor - 586.89
Sell 10 RUT May 570 puts
Buy 10 RUT May 560 puts
Credit of about $1.00 ($1,000)

Sell 10 RUT May 600 calls
Buy 10 RUT May 610 calls
Credit of about $1.00 ($1,000)

Net credit and profit potential of about $2.00 ($2,000). Maximum profit range of 570 to 600. Maintenance: $10,000 (or $1,000 per contract).

All prices are based on Thursday closing prices. The premiums include some negotiation between the bid and ask prices. You may or may not be able to get the posted premiums, but even close to the posted premiums is still acceptable.

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There Is No End To Ignorance and Gullibility
How desperate are people? Well, here's a good indication. If there's money involved, people will believe just about anything. That's why the general public is bilked out of billions of dollars every year. As soon as the authorities identify and act on one scheme, another one appears.

The "Wrong Number" Scam
Last week a Georgia telemarketing executive pleaded guilty in connection with a scheme in which he "allegedly" used voicemail messages made to sound as if they were accidentally left on answering machines to promote small company stocks.

On May 3, 2005, the Securities and Exchange Commission announced the filing of civil charges against two voicemail broadcasters and their associates for broadcasting hundreds of thousands of fraudulent "wrong number" stock tip messages. The messages, which were left on telephone voicemail recording machines throughout the country, were designed to make each recipient believe the caller had dialed the number by mistake. Many of the messages were left by a woman calling herself "Debbie," and sounded as if she had misdialed when calling a friend to pass along a hot stock tip.

Apparently, the scheme drove up the price of each of the touted stocks, temporarily inflating their combined market capitalization by approximately $179 million. This 'wrong number' scam is the first of its kind to hit the microcap market and it reportedly generated more complaints from the public than any other microcap fraud in recent memory.

They don't have a patch yet for "stupid." But they sure need one.

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MAY CPTI POSITIONS
May CPTI Position #1 - SPX Iron Condor - 1159.36
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 - 189.50
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.

May CPTI Position #3 - MID Iron Condor - Closed For $2,280 Loss
We sold 12 May MID 620 puts and bought 12 May MID 610 puts for a credit of $.65 ($780). Then we sold 12 May MID 700 calls and bought 12 May MID 710 calls for a credit of about $.45 ($540). Our total net credit and profit potential of $1.10 ($1,320). Closed for $2,280 loss.

May CPTI Position #4 - SPX Iron Condor - 1159.36
We sold 20 SPX May 1210 calls and bought 20 SPX May 1220 calls for a credit of about $.45 ($900). Then we sold 20 SPX May 1105 puts and bought 20 SPX May 1095 puts for a credit of about $.60 ($1,200). Our total net credit and profit potential is $1.05 ($2,100). Maximum profit range is 1105 to 1210. Maintenance: $20,000.

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ONGOING STRATEGIES
ZERO-PLUS Strategy - May Iron Condor Position - SPX - 1159.36
Profit: $2,000.
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.

In April, we placed a SOX 450/460 and 380/370 Iron with a total net credit was $.85 ($1,700). It expired worthless and our profit was the entire $1,700. Our new cash position is: $27,800 + $1,700 = $29,500.

New May Zero Plus Position: SPX Iron Condor - 1156.85Sold 20 SPX May 1210 calls and bought 20 SPX May 1220 calls for a credit of $.45 ($900). Then sold 20 SPX May 1090 puts and bought 20 SPX May 1080 puts for $.55 ($1,100). Our total net credit is $1.00 ($2,000).

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QQQ ITM Strangle - $35.85
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 April options to the May $36 puts and $37 calls and took in another $950. Add that to our previous cash total of $2,100 and we now have generated a total of $3,050.

We took advantage of the downdraft of the market to buy back our $37 calls for $.05. The order was there as a GTC (good till cancel) order since the original May rollout. The market spiked down and it got filled. Now, we will look for an opportunity, on a bounce, to sell another May option and take in an extra bit of premium.

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JUNE CPTI POSITIONS
CPTI June Position #2 - SPX Iron Condor - 1159.36
Our favorite index just keeps on giving. We'll keep on taking.
We sold 15 June SPX 1110 puts and bought 15 June SPX 1100 puts for a credit of $.70 ($1,050). Then we sold 15 June SPX 1225 calls and bought 15 June SPX 1235 calls for a credit of about $.70 ($1,050). Our net credit and profit potential is $140 ($2,100). Maximum profit range of 1110 to 1225. Maintenance is $15,000.

CPTI June Position #1 - CME Iron Condor - $189.50
CME has been good to us over the last few months. We'll give it another chance to be good to us again.

We sold 15 June CME $170 puts and bought 15 June CME $160 puts for a credit of $.60 ($900). Then we sold 15 June CME $230 calls and bought 15 June CME $240 calls for a credit of about $.50 ($750). Our net credit and profit potential is $1.10 ($1,650). Maximum profit range of $170 to $230. Maintenance is $15,000.

CPTI June Position - GOOG Iron Condor - $228.72 (Formerly May Position)
We sold 12 GOOG May 160 puts and bought 12 GOOG May 150 puts. We also sold 12 GOOG May 220 calls and bought 12 GOOG May 230 calls. Our total net credit and profit potential is $1.40 ($1,680). Our maximum profit range is $160 to $220. Maintenance is $12,000.

We bought back the May bear call spread and rolled out to the June $220/$230 bear call spread. We also bought back the May $160 put for a nickel. Our new credit and profit potential is now $2,260.

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

WE'VE HAD 28 OUT OF 29 PROFITABLE MONTHS -- WITH NO END IN SIGHT!

WANT TO ACHIEVE SUCCESS WITHOUT STRESS WITH CPTI WEALTH-BUILDING TECHNIQUES? OF COURSE YOU DO!!

Spots are still left for my July Philadelphia CPTI seminar. They 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:
May 14/15 - Irvine, CA -- SOLD OUT!!
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!

You should really try and make one of these seminars, if you can. With what you learn, you'll see a substantial increase in your trading results. If you've already signed up, I'll see you there. If you haven't signed up, what are you waiting for?

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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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