Option Investor
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WE'VE GOT GOOD NEWS AND . . .

HAVING TROUBLE PRINTING?
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The good news is that we added our second November CPTI position on Tuesday -- an Iron Condor on the Russell 200 Index (RUT). The market fluctuated first up, then down, and we had no problem getting filled at the posted prices. Some CPTI students who didn't put the trade on immediately were able to, later in the day, adjust their short strike prices down 10 points. Sometimes, it's an advantage coming late to the party.

The bad news is that the market then decided to take a southern vacation. It remains to be seen if the market is going to stop at Florida or go all the way to the equator.

With 10 trading days left in the October cycle, we still have 31 and 36-point cushions on our respective SPX bull put spreads along with a 26-point cushion on our OEX position. Are we worried? No, not yet, but this move now has our attention.

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THE TRADING ATTITUDE
I want to pass along to you a few thoughts I came across in an article by Dr. Phil Duke. He has an interesting take on trading and one's trading environment-- surprisingly similar to that of us couch potatoes.

"Logic is the hero of this story and emotion the villain. Fortunately, there are ways to strengthen the hero and weaken the villain, even though we can never entirely separate them.

The more important trading results are, the more you will freeze up emotionally. Then, the more your logical judgment will be adversely affected, with the result of poorer judgment, more losing trades, etc." The solution is simple: Loosen up.

"Make yourself comfortable, enjoy yourself. Drink your favorite (non-alcoholic) drink, eate your favorite food. Make sure your trading setup is comfortable. Play soothing music in the background. Relax and enjoy"

Duke goes on to say, "If you don't (enjoy yourself while trading), you are cheating yourself out of something precious. If, despite your best efforts, you are dissatisfied with your trading, there is a simple solution -- step away. Many traders who have stopped trading for awhile do better upon returning."

I don't know much about Dr. Phil Duke, other than that he's been trading since 1954, but I like this guy. He's got the right attitude. That's why I include different forms of humor in my column and my seminars. Trading is not life or death -- or shouldn't be. This material, and the process, is a lot more palatable if you can put it all into perspective, and a smile helps too.

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CPTI CURRENT OCTOBER POSITIONS
CPTI October Position #1 - SPX Iron Condor - 1191.49
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 have a complete Iron Condor with a trading range of 1160 to 1280. Our total potential profit is $1,800. Our maintenance requirement is $15,000.

CPTI October Position #2 - OEX Iron Condor - 551.26
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 - 1191.49
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.

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CPTI CURRENT NOVEMBER POSITIONS
CPTI November Position #1 - SPX Iron Condor -- 1191.49
With the SPX trading at about 1215, we sold 12 SPX November 1140 puts and bought 12 SPX November 1130 puts for a credit of about $.80 ($960). Then, we sold 12 SPX November 1280 calls and bought 12 SPX November 1290 calls for a credit of about $60 ($720). Our total credit and profit potential is $1.40 ($1,680). Maintenance is $12,000 (if you have the right broker). Maximum profit range is 1140 to 1280.

CPTI November Position #2 - RUT Iron Condor -- 639.45
With the RUT trading at about 665, we sold 12 November RUT 610 puts and bought 12 November 600 RUT puts for a credit of about $.60 ($720). Then, we sold 12 RUT November 720 calls and bought 12 RUT November 730 calls for a credit of $.65 ($780). Our total credit and profit potential is $1.25 ($1,500). Maintenance is $12,000 (IF you have the right broker). Maximum profit range is 610 to 720.

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ONGOING STRATEGIES
ZERO-PLUS Strategy - September SPX Iron Condor - 1191.49
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

For October 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).

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QQQ ITM Strangle - $38.25
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).

On September's expiration Friday we rolled out our short September positions. 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 $.05 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


Based on these figures, the new total of generated premium (through the October cycle) is $5,350 ($5,100 plus the $250).

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COUNTDOWN TO DENVER CPTI SEMINAR
A FEW SPOTS LEFT --

CPTI SEMINAR DATE -- DENVER, CO - OCT. 15/16
I have received an enthusiastic response from the good people in the Denver area. Our next CPTI seminar will be on Saturday & Sunday, October 15th & 16th in Denver, Colorado.

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 latest Philadelphia CPTI Seminar was a great success (actually, they all are). There are now 25 more 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?

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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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