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THE NEW BATTLE OF NEW ORLEANS

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A NEW BATTLE OF NEW ORLEANS

The devastation in New Orleans is going to play havoc with all the economic numbers for months to come. It's going to make it difficult to calculate the true condition of our economy until the dust settles. We'll be dealing with even more approximations than we normally do. Victims of Katrina can't file jobless claims because there's no place to file them -- the buildings are gone. Everything is closed and/or under water. The economy down there has come to a screeching halt. It's a sad situation that will take a long long time to work itself out -- even with financial help from government agencies. There will be a substantial slowdown and the market should react accordingly.

In the meantime, we'll be diligent in trying to come up with our conservative trades. Hopefully, there won't be dramatic reactions and the market will continue to drift up and down.

We're coming into a three-day weekend. Monday is Labor Day and the markets will be closed. If you're going to be selling premium, tomorrow would be a good day to do it. There will likely be some volatility tomorrow. It seems that has been the pattern this week. Stay alert and be prepared to take advantage of opportunities as they present themselves.

All of us join in sending our thoughts, our prayers and best wishes to those unfortunate souls in New Orleans who have lost their homes and family members. I know many who are donating substantial sums to the cause. I've also received emails from some CPTI members who are heading to New Orleans as part of the Red Cross effort to help those in need. It's going to be a long healing process. CPTI has many good friends in the New Orleans area. That's where we had our first seminar last October.

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NEW POSITION ALERT
The market seems to be holding up pretty well. Let's put on the bull put spread to complete our October SPX Iron Condor. We already have the 1280/1290 bear call spread.

Sell 15 SPX October 1160 puts
Buy 15 SPX October 1150 puts
Credit of about $.60 ($900)

When we get filled, we will have then completed our Iron Condor. We'll have a trading range of 1160 to 1280. Our total potential profit will be $1,800. There should be no additional maintenance required above the $15,000 that's being held for our bear call spread (IF you have the right broker).

Don't be afraid to throw orders out there. It costs nothing to place orders and, if they're within reason, you'd be surprised how many get filled. Those who have attended my seminars know how to calculate how much premium to ask for -- and they very often get it.

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LIFE GOES ON
As badly as we feel for those suffering in New Orleans, we have to move forward with our lives. We still have to take care of our own. Spots at the Denver seminar (Oct. 15/16 -- see below) are beginning to fill up. Don't procrastinate. Let me know if you're interested and I'll personally call you to answer all your questions. Drop me a note at mparnos@optioninvestor.com. What you will learn at the seminar can help you generate many thousands of dollars of additional profit.

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SEPTEMBER POSITIONS
CPTI SEPTEMBER Position #1 -- SPX Iron Condor - 1221.59
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. We then sold 12 Sept. SPX 1265 calls and bought 12 Sept. SPX 1280 calls for a credit of $.85 ($1,020). Our total credit and profit potential is $1,980. Our maximum profit range is 1175 to 1265. The maintenance for the entire position is (if you have the right broker) $18,000.

CPTI SEPTEMBER Position #2 - RUT Iron Condor - 668.45
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.

Then, on Monday, we sold 12 Sept. RUT 690 calls and bought 12 Sept. RUT 700 calls for a credit of about $.85 ($1,020). Our total credit and profit potential is $2,040. Our maximum profit range is 630 to 690. The maintenance for the entire position (if you have the right broker) is $12,000.

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CPTI OCTOBER POSITIONS
CPTI October Position #1 - SPX Bear Call Spread - 1221.59
We sold 15 SPX October 1280 calls and bought 15 SPX October 1290 calls for a credit of about $.60 ($900). We have a 75-point cushion. The maintenance for this bear call spread is $15,000. We will look for the market makers to open up more strike prices on the lower end so we can possibly put on the bull put spread to complete our Iron Condor.

CPTI October Position #2 - OEX Iron Condor - 564.38
With the OEX at about 559, we sold 15 OEX October 590 calls and bought 15 OEX October 600 calls for a credit of about $.55 ($825). Then we sold 15 OEX October 525 puts and bought 15 OEX October 515 puts for a credit of about $.75 ($1,125). Our credit and potential profit is $1,950. Maximum profit range is 525 to 590. Maintenance is $15,000.

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ONGOING STRATEGIES
ZERO-PLUS Strategy - September SPX Iron Condor - 1221.59
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.

Our new cash position is: $31,500 + $1,500 (July Profit) = $33,000

Earlier this week we sold 20 SPX 1165 puts and bought 20 1150 puts for a credit of $.65 ($1,300). We also put on the bear call spread for our September Iron Condor. We sold 20 Sept. 1265 calls and bought 20 Sept. 1280 calls for a credit of $.85 ($1,700). No additional maintenance was required. Our maximum profit range is now 1165 to 1265.

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QQQ ITM Strangle - $38.92
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 belief 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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