Option Investor
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THE RETURN OF THE QUICKIE

HAVING TROUBLE PRINTING?
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Do you think the upward move is over? The market has shown remarkable strength in the midst of skyrocketing oil prices and the chaos of hurricane Katrina. Maybe the market will settle down and the bulls and the bears will duke it out for the next week. If that's what you believe, you may be interested in one of this month's "quickie" trades.

For new CPTI students, "quickie" trades are speculative trades put on for the last 5 trading days of an option cycle. These are NOT CPTI portfolio trades. They can be very risky and require close monitoring. Your risk is defined, but many traders have been known to freeze up and not take losses -- thereby suffering a close to, if not, maximum loss. I personally do not trade nor do I monitor the quickies, but over the past three years, many have made a nice chunk of change.

So, below are a few ideas. Obviously, adjust the number of contracts to your account size and watch them closely.

Quickie #1 - SPX Iron Condor - 1231.67
Sell 10 SPX September 1210 puts
Buy 10 SPX September 1200 puts
Credit of about $.60 ($600)

Sell 10 SPX September 1250 calls
Buy 10 SPX September 1260 calls
Credit of about $.60 ($600)

Total net credit and potential profit is $1.20 ($1,200). Max profit range is 1210 to 1250. Maintenance is $10,000.

Quickie #2 - RUT Iron Condor - 673.47
Sell 10 RUT September 650 puts
Buy 10 RUT September 640 puts
Credit of about $.45 ($450)

Sell 10 RUT September 690 calls
Buy 10 RUT September 700 calls
Credit of about $.60 ($600)

Total net credit and profit potential is $1.05 ($1,050). Max profit range is 640 to 690. Maintenance is $10,000.

Quickie #3 - SOX Iron Condor - 478.81
Sell 10 SOX September 495 calls
Buy 10 SOX September 505 calls
Credit of about $.60 ($600)

Sell 10 SOX September 460 puts
Buy 10 SOX September 450 puts
Credit of about $.50 ($500)

Total net credit and profit potential is $1.10 ($1,100). Max profit range is 460 to 505. Maintenance is $10,000.

Keep in mind that there are five trading days remaining. All three indexes are European style options, so they stop trading at the end of Thursday's session. But, all three are exposed to the Friday morning opening settlement price -- which we know can be a real adventure at times. The above prices are based on Thursday's closing prices. Tomorrow morning, at the open, the prices will likely be different. If there is a big gap up or down, use some sense. Don't jump into the trade. That kind of movement can change the dynamics of the trade. Consider altering the strike prices if the market holds the gap, in either direction.

Good luck, my friends. Trade these at your own risk. Trade smart!

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A Word To The Wise
Not all lessons are learned in the market. I sent my laptop, which was still under warranty, to California for repair. It came back, about three weeks later, repaired. However, much to my surprise and dismay, they also wiped clean the hard drive - no warning, no request. I spent the better part of two days locating, downloading and reloading software. Fortunately, my data was backed up, but it was still a giant PIA.

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SEPTEMBER POSITIONS
CPTI SEPTEMBER Position #1 -- SPX Iron Condor - 1218.02
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 - 663.33
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 Iron Condor - 1218.02
We sold 15 SPX October 1280 calls and bought 15 SPX October 1290 calls for a credit of about $.60 ($900). On Friday we sold 15 SPX October 1160 puts and bought 15 SPX October 1150 puts for a credit of about $.60 ($900). We now have a complete Iron Condor with a trading range of 1160 to 1280. Our total potential profit is $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).

CPTI October Position #2 - OEX Iron Condor - 563.17
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 - 1218.02
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 - $38.77
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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CPTI SEMINAR DATE!!

CPTI SEMINAR DATE -- DENVER, CO - OCT. 15/16
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.

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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