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CHUGGING ALONG - ENOUGH IS ENOUGH

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CHUGGING HIGHER -- ENOUGH IS ENOUGH

The market keeps on chugging along. In the past, when Intel, Microsoft, Citibank and Yahoo all disappointed with earnings, the market would have headed straight down -- not passing "Go" and not collecting "$200." But not this time around. The market seems to be shaking off bad news.

Apparently there is new money coming into the market, along with some short covering. Will it stop soon? Hard to tell. But I don't recommend topping off our bull put spreads by putting any bear call spreads on for awhile. For the little premium that we'd get, it's not worth the risk. The next resistance level is at our short SPX call strike at about 1265 - from back in January and February of 1999 and bottoms from December of 2000.

Are those levels meaningful? Hell, I don't know. I just read them somewhere. But let's hope so. My only regret is not putting on a "Sure Thing Credit Spread" a few weeks ago when it was a bit earlier in the trend.

The other day I put on a trade that I was reluctant to post. I went all the way out to September and put on an 1140/1125 bull put spread. With the SPX trading near 1230, I felt that the market was strong enough to put on the spread with a 90-point cushion. I didn't take in a lot -- only $.55. It's not a huge return on the risk, but I really like the chances of success. If the market pulls back again, the opportunity may be there again if you're interested.

This bull put spread is not an official CPTI position, but it strikes me as being very conservative and quite safe. Patience is required. Plus, there is always the possibility of putting the bear call spread on top in the future if the market levels out.

The CPTI Seminar profit train has added a second date for the fall -- Detroit. (see below) I hope to see many of you there.

A Little Traveling Music Please . . .
Thought I'd let you know that I'm going away for two weeks to the Philippines. It's a combination of business and pleasure. I'll be leaving on August 10th. That should not dramatically affect my postings. There's a rumor that they have computers and the Internet in the Philippines. I also hear that most of them speak English (I hope). I wonder how my acronyms will go over in Manila.

I'm looking forward to being there, but not the flight. It's an incredibly long flight -- well over 20 hours. I've never traveled that long. Do any of you have suggestions as to how to deal with that long of a flight? -- Besides drugs?

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A Little Surgery
Five surgeons are discussing who makes the best patients on the operating table.

The first surgeon says, "I like to see accountants on my operating table, because when you open them up, everything inside is numbered."

The second responds, "Yeah, but you should try electricians! Everything inside them is color coded."

The third surgeon says, "No, I really think librarians are the best; everything inside them is in alphabetical order."

The fourth surgeon chimes in: "You know, I like construction workers...those guys always understand when you have a few parts left over at the end, and when the job takes longer than you said it would."

But the fifth surgeon shut them all up when he observed: "You're all wrong. Politicians are the easiest to operate on. There are no guts, no heart, and no spine, and the head and butt are interchangeable.

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TWO NEW CPTI SEMINAR DATES!!

NEW CPTI SEMINAR DATE #1 -- DENVER, CO - OCT. 15/16
NEW CPTI SEMINAR DATE #2 -- DETROIT, MI - NOV. 5/6

We have liftoff, folks. I received an enthusiastic response from the good people in the Denver area. I'm pleased to announce the next CPTI seminar will take place on Saturday & Sunday, October 15th & 16th.

Now, remember, our seminars are limited to 25 attendees. If you're a serious options trader and you want to learn the nuances of our advanced non-directional trading strategies and hone your trading skills, contact me ASAP at mparnos@optioninvestor.com. I'll send you all the pertinent information. The price is right -- less than one Iron Condor trade -- and you'll have a two-day experience that you'll remember, and profit from, for a lifetime.

My recent Philadelphia CPTI Seminar was a great success (they all are). There are now 25 new enlightened minds, with smiles attached, ready to generate a healthy annual return using our CPTI strategies. Remember, if you attend one of my CPTI seminars, you are entitled to retake the seminar a second time at NO CHARGE!

WE'VE HAD 30 OUT OF 32 PROFITABLE MONTHS!

WANT TO ACHIEVE SUCCESS WITH A MINIMUM OF STRESS? OF COURSE YOU DO!! USE OUR CPTI WEALTH-BUILDING TECHNIQUES!

I'm looking at additional 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, Atlanta, and Dallas. 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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AUGUST POSITIONS
CPTI AUGUST Position #1 - SPX Iron Condor - 1233.68
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 - 475.19
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.
On 7/19 we closed the SOX Iron Condor for $500/contract = $6,000. Our loss is $6,000 - $1,440 (premium received) = $4,860.

CPTI AUGUST Position #3 - SPX Bull Put Spread - 1233.68
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 - 677.78
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 - 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 July, we placed an SPX Iron Condor with a total net credit was 1,500. It expired worthless. Our new cash position is: $31,500 + $1,500 (July Profit) = $33,000

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QQQ ITM Strangle - $39.42
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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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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