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An Eventful Week
Well, we've had an eventful week. Tomorrow morning I leave for the CPTI Philadelphia seminar. I'm anticipating another great group of folks who really want to learn the subtle ins and outs of trading options. It's a great feeling to impart knowledge and to touch lives. It's going to be a great weekend. (I sure hope they have air conditioning in Philadelphia).

It looks like we're going to be back in the positive for the July option cycle. That's more like it. Was there ever any doubt? (Well, maybe a little).

We closed an RUT position, rolled our QQQQ ITM Strangle position, established two new August positions. Gosh, that was exhausting. Time to rest. And the market should be ready for a rest as well.

We're still exposed for Friday's opening settlement price. And, many of you will remember last month's fiasco with the seemingly unreasonable SPX settlement number. So, it ain't over till the fat lady sings out the number. Remember, the SPX settlement symbol is $SET or just SET. The RUT settlement number is $RLS or just RLS.

Our August SOX position is being threatened. With five weeks to go, I can't bring myself to close it out just yet. Now, those of you in the position need to have a maximum pain threshold. If you have a small account size or if you are losing sleep over the SOX position, it's time to close the position (notice I didn't say "GTFO" -- see below). We each have our own risk tolerance. The SOX is now in uncharted territory. So, the choice is yours. It's your money.

Our July OEX Iron Condor still has a day to go, but looks secure. The July SPX bull put spread is certainly safe (with a 100 point cushion). For those who didn't close out the RUT earlier, tomorrow's settlement number could get real interesting. We had sold the 670/680 bear call spread and RUT is at 663.02. Whether you believe in God, Buddha, or the Easter Bunny, you might want to say a little prayer or light a candle. In retrospect, it appears we would have been better off holding onto our RUT position. But, closing it was the prudent thing to do. And, we're all prudes here, right (NOT)? So we did it.

From The "Believe It Or Not" File
Speaking of prudes, you all will be amused to know that there is a segment (however small) of our readership who took offense to my use of the acronym "GTFO." These people's lives are so full that they actually had the time to write emails to the good people at Rightside complaining that they had been offended. Unfortunately, they did not have the courage to write to me directly. I was actually salivating at the thought that I might have an opportunity to respond to them individually. No such luck. Fortunately, the vast majority of us live in the real world and have a sense of humor. Ward and June Cleaver live on only on TV Land channel -- and it's a good thing they, and The Beaver, never had to trade options. They would have been lousy at it.

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JULY POSITIONS
CPTI JULY Position #1 - RUT Iron Condor - 663.02
On Thursday, June 2 with the RUT trading near 620, we sold 12 RUT July 580 puts and bought 12 RUT July 570 puts for a credit of $.80 ($960). Then we sold 12 RUT July 670 calls and bought 12 RUT July 680 calls for a credit of $.50 ($600). Our total credit and profit potential is $1.30 ($1,560). The maximum profit range is 580 to 670. Maintenance requirement: $12,000. Closed for $360 loss.

CPTI JULY Position #2 - OEX Iron Condor - 574.96
On June 8 with the OEX trading near 565, we sold 15 July OEX 535 puts and bought 15 July OEX 525 puts for a credit of $.45 ($675). Then we sold 15 July OEX 585 calls and bought 15 July OEX 595 calls for a credit of about $.75 ($1.125). Our total net credit and profit potential is $.95 ($1,420). Maximum profit range of 535 to 585. Maintenance is $15,000.

CPTI JULY Position #3 - SPX Bull Put Spread - 1226.50
On Thursday, June 9 with the SPX trading near 1193, we sold 15 July SPX 1125 puts and bought 15 July SPX 1110 puts for a credit of $.60 ($900). Our net credit and profit potential for this bull put spread is $900. Maintenance: $22,500. If we have an opportunity to put on a bear call spread, to complete our Iron Condor, at a safe and profitable level, we will. But, we're not going to force anything or compromise our safety.

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AUGUST POSITION
CPTI AUGUST Position #1 - SPX Iron Condor - 1226.50
On Thursday, June 23 with the SPX trading near 1200, we sold 12 Sell 12 SPX August 1140 puts and then bought 12 SPX August 1125 puts for a credit of $1.30 ($1,320). The market moved down in the morning and we were able to get filled at $1.30. Some CPTI traders who were late to the dance got even more.

Then, on June 28th, we sold 12 SPX August 1265 calls and bought 12 SPX August 1280 calls and actually got filled at $.70 ($840), although we placed the order for $.65. That is not an unusual occurrence when you have the right broker.

Our total net credit for the Iron Condor is $2,160. Our maximum profit range is 1140 to 1265. That's pretty comfortable, but we have to wait for another seven-plus weeks. Maintenance is $18,000.

CPTI AUGUST Position #2 - SOX Iron Condor - 463.93
On Friday, July 01, with the SOX trading near 420, we put on an Iron Condor.
We sold 12 SOX August 380 puts and bought 12 SOX August 370 puts for a credit of $.60 ($720). Then we sold 12 SOX August 465 calls and bought 12 SOX August 475 calls for a credit of about $.60 ($720). Our total net credit and profit potential of about $1.20 ($1,440). Our maximum profit range is 380 to 465. Our maintenance is $12,000 -- if you have the right broker.

CPTI AUGUST Position #3 - SPX Bull Put Spread - 1226.50
On July 8th, we sold 12 SPX August 1145 puts and bought 12 SPX August 1130 puts for a credit of $.90 ($1,080). We will watch for an opportunity to put on a bear call spread. But we won't compromise safety for premium. Maintenance is $12,000.

CPTI AUGUST Position #4 - RUT Bull Put Spread - 663.02
On July 14th, with the RUT trading near 667, we sold 12 RUT August 620 puts and bought 12 RUT August 610 puts for a credit of $.55 ($660). Again, we will watch for an opportunity to put on a bear call spread to complete an Iron Condor, but we won't compromise safety for premium. Maintenance is $12,000

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ONGOING STRATEGIES
ZERO-PLUS Strategy - July SPX Iron Condor - 1226.50
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 May, we placed an SPX Iron Condor with a total net credit was 2,000. It expired worthless. Our new cash position is: $29,500 + $2,000 (May Profit) = $31,500

July Zero Plus Position: SPX Iron Condor
We sold 15 July SPX 1125 puts and bought 15 July SPX 1110 puts for a credit of $.50 ($750). Then we sold 15 July SPX 1255 calls and bought 15 July SPX 1270 calls for a credit of about $.50 ($750). Our total net credit and profit potential is $1.00 ($1,500). Our maximum profit range is 1125 to 1255. Maintenance is $22,500. Remember to adjust the number of contracts to your account size.

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QQQ ITM Strangle - $38.77
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 of the July $37 calls and July $37 puts to the August $37 calls and August 37 puts. We took in a total of $.50 ($500). Our current short positions are the August $37 puts and August $37 calls. Our new total of generated premium is $4,900 ($4,400 + $500).

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COUNTDOWN TO PHILADELPHIA -- 2 DAYS

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

WATCH FOR NEW CPTI SEMINAR DATES TO BE POSTED SOON!!

WE'VE HAD 29 OUT OF 31 PROFITABLE MONTHS!

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

Spots are filling up fast. There are a few 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 date and location is: 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! The price is right and it will be an experience you'll never forget.

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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