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THE END IS NEAR - AND SO ARE THE PROFITS!

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THE END IS NEAR -- AND SO ARE THE PROFITS!

Only one day left until expiration. Well, actually only one of our positions will be exposed to tomorrow's trading action -- CME. We have a nice cushion on our May CME Iron Condor, so no sleep will be lost on CME.

As usual, we are heavily vested in the SPX (S&P 500 Index) options. They are European style cash settled options. That means that trading on the May SPX options ceased today when the market closed. However, our fate still rests with the option gods because the settlement price is based on the accumulative opening prices of the 500 S&P stocks on Friday morning. The number is usual available late morning on Friday. The symbol for the S&P settlement figure is $SET.

The first print of the day from your data service provider IS NOT the settlement price. Why? Because all 500 stocks do not open at the same time.

We have a nice cushion in our two SPX Iron Condor positions. So, there is a high likelihood that three out of our four positions will have been profitable this month. That is enough to make us net profitable for our 29th out of 30 months.

QQQQ Rollout
Earlier this week we rolled out the short options in our QQQQ ITM Strangle for a net credit of $.80. Our new June position is short the June $37 calls and the June $36 puts. Don't forget to put on good till cancel orders to buy both of these options back at $.05.

For the May option cycle, we were able to buy back the $37 calls early for a nickel, but we didn't have an opportunity to take advantage of it. It didn't cost us anything, but we were in a position to profit -- a good place to be.

If we would have waited another few days, we might have picked up another $.10-$.20, but hindsight is always 20-20. That's why there are no set rules for the rollouts. They are difficult and should not be attempted without adult supervision.

QUICKIE UPDATE
"Gutsy" is your middle name if you played this month's quickies. "Poorer" is your other middle name if you played this month's quickies. Like last month, the market waited for expiration week to make a directional run. It appears that all quickies were stopped out for losses.

As before, skilled traders got out with acceptable losses, but I'm sure others did not. Dancing on minefields is not for the meek.

I'm Human (Sort Of)
We rolled out our Google position to June. The damn thing just keeps going up and we may have to take a hefty hit at some time in the future. At last week's CPTI Seminar in Irvine, I took a lot of kidding about the Google position -- and I deserved every bit of it. The kidding was good-natured -- and it was also right on the mark.

When I put this position on, I violated a cardinal rule about trading stocks that are sensitive to market movements and opening a position with earnings coming out. Then, I violated another rule by not closing the position when it was obviously out of control. Those are two strikes against me and I'm going to pay the price.

Every once in awhile, we have to relearn lessons. This one is going to be expensive, but I will remember it for a long long time. I may be able to keep rolling Google out until it eventually comes back down, or maybe not. The bottom line is that I've learned my lesson again. I will probably have to pay a steep financial (and emotional) price for my indiscretions. I may, somehow, ultimately, escape, but that won't stop me from feeling STUPID! See -- I'm just as hard on myself as I am on everyone else.

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MAY CPTI POSITIONS
May CPTI Position #1 - SPX Iron Condor - 1191.08
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 - 204.90
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 - 1191.08
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 - 1191.08
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 - $37.51
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 May options to June (see details above) and took in a net of $800. Our new total of income generated is $3,850 ($3,050 + $800). We are short the June $37 calls and $36 puts.

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JUNE CPTI POSITIONS
CPTI June Position #2 - SPX Iron Condor - 1191.08
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 - $204.90
CME has been good to us over the last few months. We're giving 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 - $239.18 (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:
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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