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DRAWING A LINE IN THE SAND

HAVING TROUBLE PRINTING?
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Today, the RUT had a rough day (down 11.54 points). But, it was a good day for some CPTI students who waited to enter a bull put spread position. I sent out a post about this earlier in the day and, wouldn't you know, some people actually paid attention. Instead of putting on yesterday's 630/620 bull put spread, they put on the 620/610. And, I know for a fact, that some traders were filled at $.95. That's nice premium for a 10-point credit spread -- especially in our current market environment. Perhaps they couldn't get filled yesterday. Maybe it was fate.

I even know some CPTI students who were filled on the 610/600 bull-put spread for a $.65 credit. Now, THAT's thinking out of the box and taking advantage of opportunities. I applaud them.

We will be keeping an eye on the market and looking to put on the bear call spread to complete our RUT Iron Condors -- if the opportunities present themselves.

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THE PRICE OF HAVING PRINCIPLES
Had an interesting experience this last week. There is a relatively new trading magazine out there called Options Trader Magazine. That's all well and good. I was flattered when they called. They had seen my work in other publications and wanted me to write an article for them. We negotiated my compensation. Things were just fine up to that point.

I wrote what I considered to be one of my better articles -- discussing the Siamese Condor. It was a typical Mike Parnos creation -- with me holding back nothing and expressing myself and making points using humor and telling things like they are. In one paragraph I said that "directional traders were crazy." And I explained why.

I submitted the article and, a few weeks later, they sent me an "edited" version of the article. I hardly recognized it. They took every ounce of humor and personality out of the article. What was left? -- the same boring drivel you can read in any other trading magazine. So, I ask myself, "do I want to put my name on something that doesn't accurately represent me or who I am?" I don't think so.

There are many editors -- from magazines to newspapers to any other media -- who believe they have to edit something to justify their own existence. They won't come out and admit it, but it's obvious. It's a power thing -- and damned are those who dare to question it.

After going round and round with them for three days, I presented them with an ultimatum -- either replace the edited material or include a disclaimer saying that Option Trader magazine has edited out any evidence that the writer had a voice or any personality.

Two days later, I received an email saying they decided not to publish the article. I wasn't surprised. Small minds do not suddenly get larger. Lights don't suddenly go on when there's no electricity. These guys would make lousy traders. They can't think out of their little box. They were worried that my frank and straight forward approach might offend someone (perhaps a directional trader). It must be awful to live in fear and have that kind of cloud hovering over your professional life.

What did I lose? I missed out on an opportunity for exposure to many options traders. Also, I will not receive compensation for the work I put into the article. However, sometimes, you have to draw a line in the sand. It takes self-discipline -- just like trading.

Will anything change? Of course not. Option Trader Magazine will continue to publish articles that all sound and look alike -- boring. They will all reflect the personalities (or lack of same) of the editors, not necessarily the writers.

What did I gain? Self respect. You can't buy it, not even with MasterCard. It's priceless, but a price was paid for it.

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TRIPPIN' TO THE PHILIPPINES
Just a word to CPTI students. I will be leaving on August 10th on a two-week adventure to the Philippines. I will be moving around from city to city and I will be taking my trusty laptop. I tell you this because I don't know what the Internet capabilities will be like there. I will do my best to post regular articles, etc. But, the days may be different. Plus, I won't be able to answer email questions as quickly as usual.

Make sure that you have your exit points in mind in case the market or a trade gets away from us. I won't necessarily be able to see the daily action or to send out timely alerts. You will, to a large degree, be on your own when it comes to exiting trades. If you're not up to that, don't put on any new trades that you won't be able to handle.

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AUGUST POSITIONS
CPTI AUGUST Position #1 - SPX Iron Condor - 1235.86
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 - 472.54
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 - 1235.86
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 - 671.84
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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SEPTEMBER POSITIONS
CPTI SEPTEMBER Position #1 -- SPX Bull Put Spread - 1235.86
On July 29 with the SPX trading at about 1240, we sold 12 SPX September 1175 puts and bought 12 SPX September 1160 puts for a credit of about $.80 ($960). We had about a 65 point cushion -- and various support levels above. Maintenance is $18,000.

CPTI SEPTEMBER Position #2 - RUT Bull Put Spread - 671.84
On August 3 with the RUT trading at about 685 we sold 12 RUT September 630 puts and bought 12 SPX September 620 puts for a credit of $.85 ($1,020). The cushion is about 55 points with support levels above the short strike price.

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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.

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

This week we sold 20 SPX 1165 puts and bought 20 1150 puts for a credit of $.65 ($1,300). If the market levels off, we'll try to put on the bear call spread to complete our Iron Condor.

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QQQ ITM Strangle - $39.57
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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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 in Denver. Then, the next will be in Detroit on November 5th & 6th.

Our CPTI seminars are limited to ONLY 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 -- $995.00 -- less than one profitable Iron Condor trade -- and you'll have a two-day experience that you'll remember, and profit from, for a lifetime.

Our recent Philadelphia CPTI Seminar was a great success (they all are). There are now 25 newly 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 WITHOUT STRESS? OF COURSE YOU DO!! USE OUR CPTI WEALTH-BUILDING TECHNIQUES!

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. Contact me at mparnos@optioninvestor.com. 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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