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ALIVE & WELL & PROFITABLE

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ALIVE & WELL & PROFITABLEThis is my first internet access in a week. First, I want to dispell the rumors that I have been kidnapped and held for a ransom of three dishes of sushi, four chili dogs with eveything and two clean pair of Fruit of the Looms.

As you know, I'm still on vacation in the Philippines and will share many stories about the trip in the future. I will, however, tell you one thing that I've discovered about Filipinas. They are probably one of the most resourceful nationalities in the world. They're a relatively poor nation with all kinds of political BS going on, but I'm continually impressed with how they make the absolute most out of everything they have. Americans are spoiled (including myself). Most of us have never been faced with problems of survival. We don't really appreciate what we have. It has, indeed, been an education.

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THE BUSINESS OF MAKING MONEY

We were right on three out of four of our positions. We exited our SOX Iron Condor early and took a loss of $4,860 when it appeared the SOX was moving up faster than one of those useless space shuttles we pay for with our hard earned tax dollars. In retrospect, if we had held the position, all would have been just fine. But, we did the prudent thing. If the SOX hadn't come back down, we could have experienced a loss that was easily double of what it cost us. It's just a cost of doing business.

I have received emails from daring CPTI students who held onto their SOX positions. They're smiling the smile of a kid who managed to steal 1,440 cookies out of the cookie jar without getting caught. I'm happy for them, but one day, not only will they lose their cookies, a few fingers and some family jewels to top it all off.

Our other three positions ended up very nicely, with a total profit of $3,900. Unfortunately, it wasn't enough to offset the loss on the SOX, so we're faced with out third month, out of the last 33, that was not profitable. Our accumulative loss was only $980. And, if I had it to do all over again, I would have done exactly the same thing.

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TRACKING THE PORTFOLIO
Below is a summary of the August CPTI positions. Through ten months in tracking year number three, we're now $13,545 to the positive. We took a small hit in August, but we're still nicely positive for the year. Onward and upward. We've now been profitable for 30 out of the last 33 months -- something we can be very proud of.

RECAP OF AUGUST POSITIONS
SPX Bull Put Spread - Profit: $1,080
SPX Iron Condor - Profit: $2,160
RUT Iron Bull Put Spread - Profit: $660
SOX Iron Condor - Loss: $4,860
TOTAL AUGUST LOSS: $980

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TOPPING THEM OFF
We currently have a September bull put spreads on the SPX & RUT indexes. I think the market has demonstrated that has calmed down sufficiently that we can chance completing our SPX & RUT Iron Condors with bear call spreads for September.

CPTI September Position #1 - Bear Call Spread on SPX - 1219.71
Sell 12 Sept. SPX 1265 calls
Buy 12 Sept. SPX 1280 calls
Credit of about $.85 ($1,020)

CPTI September Position $2 - Bear Call Spread on RUT - 652.51
Sell 12 Sept. RUT 690 calls
Buy 12 Selpt. RUT 700 calls
Credit of about $.85 ($1,020)

These prices are based on Friday's closing numbers. The numbers on Monday may very well be somewhat less. Adjust the number of contracts to your account size and always use limit orders when you place these spread orders. If you're using the right broker, there won't be any additional maintenance requirements to put on these positions to complete your Iron Condors. If you're using a broker that holds maintenance on both credit spreads in an Iron Condor, you should be ashamed of yourself! You're not making the most efficient use of your trading capital. Your punishment will be to stand in front of your broker's office holding a sign that says, "My elevator doesn't go all the way to the top floor."

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AUGUST POSITION SUMMARY
AUGUST Position #1 - SPX Iron Condor - 1219.71
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). Then, on June 28th, we sold 12 SPX August 1265 calls and bought 12 SPX August 1280 calls at $.70 ($840). Total net credit for the Iron Condor is $2,160. Maintenance is $18,000. Profit: $2,160.

CPTI AUGUST Position #2 - SOX Iron Condor - 471.19
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 - 1219.71. On July 8th, we sold 12 SPX August 1145 puts and bought 12 SPX August 1130 puts for a credit of $.90 ($1,080). Maintenance is $12,000. Profit was $1,080.

CPTI AUGUST Position #4 - RUT Bull Put Spread - 652.51
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). Maintenance is $12,000. Profit: $660.00

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SEPTEMBER POSITIONS
CPTI SEPTEMBER Position #1 -- SPX Bull Put Spread - 1219.71
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 - 662.79
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 - September SPX Bull Put Spread - 1226.42
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).

We will also put on the bear call spread for our September Iron Condor. We will sell 20 Sept. 1265 calls and buy 20 Sept. 1280 calls for a credit of about $.85 ($1,700). No additional maintenance will be required.

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QQQ ITM Strangle - $38.82
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).

Normally, if I had been able to access the internet, our rollout might have been a little different, but probably not much. But, looking at the closing quotes of Friday, you should have bought back the August $37 calls for about $1.90 and rolled them to the September $37 calls for about $2.00 (a credit of $.10 or $100). The August $37 puts would have expired worthless and you can simply sell the $37 September puts for another $.10 or $100).

So, for the September expiration cycle, we're only going to take in about $200 while we patiently wait for the QQQQs to come back down. Remember, this strategy requires a believe that the QQQQs will regress to the "mean" area of about $36 to $38. The success of this strategy is an average of premium taken in over an long period of time.

Based on these figures, the new total of generated premium is about $5,100 ($4,900 plus the $200).

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TWO 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!

30 OUT OF 33 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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