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LOVIN' THAT GREEN STUFF

HAVING TROUBLE PRINTING?
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FEELIN' POSITIVE -

Kermit the Frog sang, "It isn't easy bein' green." Very profound, indeed. Generating profits using our premium selling strategies is getting increasingly difficult. With the low volatility, we were only able to put on three trades for the July cycle. Two positions, per our master plan, expired worthless. The third, we closed early for a small loss. The net profit was just shy of $2,000. A respectible month's work.

We've done better, and we've done worse. To generate a little bit of premium, we've had to establish positions much earlier. That means we're exposed to market fluctuations for a longer period of time. It's more dangerous, but not as dangerous as narrowing our profit ranges.

So, we're going to continue to watch for potential positions. We won't compromise safety for premium. If I see something that I believe is relatively safe and potentially profitable, I will post it. If there aren't good trades, I'm not going to manufacture them.

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PHILADELPHIA CPTI SEMINAR
What can I say? It was terrific. We had another great group of traders who were dedicated to learning new strategies, ways to improve old strategies and how to squeeze as much premium as possible from those option chains. It was filled with a lot of laughs and even more education.

At my CPTI seminars, we have a segment I call "Traders Anonymous." It's a confessional during which we all take turns getting up in front of the group and talk about our worst trades. There are some real horror stores.

One trader told a memorable story. "Remember the Bush/Gore election?" he said. "Well, I expected that there was going to be a major market move after the presidential election. So, I put on a straddle and spent $10,000 on November at the money puts and calls."

"Well, if you remember, that was the election with the 'hanging chads.' The election was finally decided in January. My $10,000 of November puts and calls expired worthless," he said. "Now what were the chances of that happening?"

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TRACKING THE PORTFOLIO
Below is a summary of the July CPTI positions. Through nine months in tracking year number three, we're now $14,524 to the positive. We took a big hit in June, but we bounced back in July and we're still nicely positive for the year. Onward and upward. We've now been profitable for 30 out of the last 32 months -- something we can be very proud of.

RECAP OF JULY POSITIONS
SPX Bull Put Spread - Profit: $900
OEX Iron Condor - Profit: 1,420
RUT Iron Condor - Loss: $360
TOTAL JULY PROFIT: $1,960

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SUMMARY OF JULY POSITION
CPTI JULY Position #1 - RUT Iron Condor - 658.56
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 - 571.01
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). Profit: $1,420

CPTI JULY Position #3 - SPX Bull Put Spread - 1221.13
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. Profit: $900

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AUGUST POSITIONS
CPTI AUGUST Position #1 - SPX Iron Condor - 1221.13
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 - 460.84
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 - 1221.13
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 - 1221.13
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 - $38.73
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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PHILADELPHIA SEMINAR -- A GREAT SUCCESS!!

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

WE'VE HAD 30 OUT OF 32 PROFITABLE MONTHS!

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

I'm looking at potential locations for the next series of CPTI seminar. Let me know if you would like a seminar near you. Cities currently under consideration are Detroit, Dallas and Denver. Contact me at mparnos@optioninvestor.com and let me know your thoughts.

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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