Option Investor
Updates

SEPTEMBER YIELDS SOLID PROFITS FOR THE GOOD GUYS! (THAT'S US)

HAVING TROUBLE PRINTING?
Printer friendly version

SEPTEMBER YIELDS SOLID PROFITS FOR THE GOOD GUYS! (THAT'S US)

After a minor disappointment August, we're back on the right track as ALL of our positions were 100% profitable. Because the market appeared to be trending and the miniscule premium that was available, we only had two positions on for the September cycle -- but they proved to be good ones. Our risk was less and we ended up with a nice percentage return on our risk.

The actual risk is calculated by taking the maintenance ($18,000 + $12,000 = $30,000) and subtracting the amount of premium taken in when initiating the trade ($1,980 + $2,040 = $4,020). Our actual risk for the September cycle was $25,980. To calculate the return on risk, we simply divide our profit ($4,020) by our risk ($25,980). We had a return on risk of 15.74% in the September cycle -- not to shabby!!

I know a number of CPTI Seminar graduates who had even better months. They were able to sift through the option chains, do the detective work necessary to find positions on a variety of indexes, negotiate extra premium from the market makers and take away some impressive profits. You can learn to do the same. There are still spots at the advanced Denver CPTI 2-day seminar (October 15/16). Contact me and I'll send you all the info (see below). Can you afford to go? More importantly, can you afford not to go?

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

TRACKING THE CPTI PORTFOLIO
Below is a summary of our September CPTI positions. Through 11 months in tracking year number three, we're now $17.565 to the positive. We made $4,020 in September. Although we had a few rough months earlier, we're still nicely positive for the year. Onward and upward. We've now been profitable for 31 OUT OF THE LAST 34 months -- something we can be very proud of.

RECAP OF SEPTEMBER POSITIONS
SPX Iron Condor - Profit: $1,980
RUT Iron Condor - Profit: $$2,040
TOTAL SEPTEMBER PROFIT: $4,020

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

QQQQ ITM STRANGLE ROLLOUT
On Friday we rolled out our short September positions. It looks like October is going to be another low premium month, while we wait for the QQQQs to come back down to earth. We sold the October $37 puts for $.15. Earlier in the month we had purchased back our September $37 put for $.05. We ended with a credit of only $.10 for the put side

Near Friday's close, we bought back the September $37 calls for $2.40 and sold the October $37 calls for $2.60 -- giving us a $.20 credit. Our total net credit for the October rollout is $.25 or $250.

ZERO PLUS STRATEGY UPDATE
The September Iron Condor expired worthless -- as planned. In anticipation of this, on Tues. we duplicated our CPTI portfolio SPX Iron Condor position (1155/1140 bull put spread and 1285/1300 bear call spread). The only difference is that we were a bit more aggressive, putting on 20 contract spreads (see below).

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

SUMMARY OF SEPTEMBER POSITIONS
CPTI SEPTEMBER Position #1 -- SPX Iron Condor - 1237.91
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. Profit: $1,980


CPTI SEPTEMBER Position #2 - RUT Iron Condor - 671.98
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, 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. Profit: $2,040

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CPTI OCTOBER POSITIONS
CPTI October Position #1 - SPX Iron Condor - 1237.91
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 - 573.37
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.

CPTI October Position #3 - SPX Iron Condor - 1237.91
With the SPX at about 1230, we sold 12 October SPX 1285 calls and bought 12 October SPX 1300 calls and received a credit of $.80 ($960). We had asked for $.75, but, our broker came back with an $.80 fill (bless his heart). Then, we sold 12 October SPX 1155 puts and bought 12 October SPX 1140 puts for a credit of $.65 ($780). Our total profit potential is $1,740. We have a maximum profit range of 1155 to 1285. Maintenance is $18,000.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

ONGOING STRATEGIES
ZERO-PLUS Strategy - September SPX Iron Condor - 1227.73
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: $33,000 + $1,700 (September Profit) = $34,700

Last week we duplicated the CPTI portfolio position by selling 20 October SPX 1155 puts and bought 20 1140 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. 1285 calls and bought 20 Sept. 1300 calls for a credit of $.80 ($1,600). Our total potential profit is $2,900. Our maximum profit range is now 1155 to 1285. Our maintenance is $30,000 (15-point spread X 20 contracts).

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

QQQ ITM Strangle - $39.40
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).

For the October expiration cycle, we're going to have another low premium month while we 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).

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

31 OUT OF 34 PROFITABLE MONTHS!!

CPTI SEMINAR DATE -- DENVER, CO - OCT. 15/16
We have liftoff, folks. I have received an enthusiastic response from the good people in the Denver area. 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 -- about half of 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!

31 OUT OF 34 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?

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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.

Couch Potato Trader Updates Archives