Option Investor
Updates

PERSPECTIVES ON SANTA

HAVING TROUBLE PRINTING?
Printer friendly version

I know that most people's minds are on the upcoming holidays. It's a great time of year. Peace on earth and good will toward man. Once again, I am visiting the Philippines and will experience the holidays here for the first time.

It's very festive here. As a matter of fact, they begin playing Christmas music here in early October! Why wait for the last minute? The malls are full of smiling faces and are packed. It looks like an ant farm with people everywhere, milling around.

If you're a movie lover, they have something very interesting here I haven't found in the states. They have VCDs - video cassette discs. Essentially, they are the same as the DVDs we buy at Best Buy etc. for $10 to $15 or more, but the prices are less than the equivalent of $3, with some being less than $2 -- and you own them. They play well on computers and other devices with Media Player. No, they're not pirated. That's cheaper than a rental. If they sold them in the states, people would never go to movie theaters again. I'm stocking up on some of my favorites.

It's about 80 degrees here, though it does rain a little most nights. They still don't have traffic lights, but I haven't seen one accident -- yet. Truly amazing!! In the states, it would be like bumper cars and they would be scraping people off the pavement on a daily basis. It would be a mortician's and collision shop's dream come true.

My hope to you is that all of my CPTI students will be able to share this holiday season with loved ones as I am. The gift of your presence and those special moments are more valuable than anything you can put wrapping paper around. They're priceless and should be captured and preserved for a lifetime.

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

THE MARKET IS CHURNING

While the world is eagerly anticipating Christmas, I'm looking forward to January options expiration. I like our positions this month. We still have four full weeks till expiration because January is a five week option cycle. The upside move seems to have stalled. There's no reason for a big sell-off. So, we're pretty much right in the middle with nice cushions for every spread. But, as we know, that can change in a hurry.

A nice thing about the January cycle is that there are two days on which the market is closed -- Christmas day (this year celebrated on Monday, December 26th) and New Years Day (this year celebrated on January 2nd). Those are two fewer days that we will be exposed to market activity and that the time erosion continues -- that Theta is working for us every single day.

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

FEBRUARY POSITIONS

I know it's early, but I'm going to start looking for February positions for our CPTI portfolio. As usual, in this low premium environment, we have to put on positions earlier. Our increased risk is in the additional time exposure to the market. The benefit is that the ranges we can create are larger. It's a balancing act. I'll let you know what I turn up.

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

QQQQ ITM Update

Once again, we simply rolled out the short $37 calls from December to January. We're waiting for our pullback into the $30's before we initiate any new positions. We have no short put position for January. This is a real test of our patience, but the lack of decent premium should not tempt us to establish short positions closer to where the QQQQs are trading.

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

DO YOU HAVE WHAT IT TAKES TO PROFIT IN 2006?

That Extra Bit Of Knowledge Makes A Huge Difference!!

TWO NEW CPTI 2-DAY ADVANCED SEMINAR DATES ANNOUNCED

It's that time of year. Don't give yourself a wallet. Give yourself t. he gift that will teach you how to fill your wallet. It's a gift that will last a lifetime. Attend a CPTI seminar and learn strategies that work -- over and over and over again!! I'll teach you how making money can be boring -- and profitable. I'm booking reservations every day. Don't wait too long! Only 8 spots left for Las Vegas!

Email me for information -- but only if you're a SERIOUS trader who wants to learn. I'm here for you. I'll be glad to send you all the details and contact you to go over your questions. The seminars are both fun and informative. Contact me today: mparnos@optioninvestor.com.

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

CPTI CURRENT JANUARY POSITIONS
CPTI January Position #1 - RUT Iron Condor - 684.08
We sold 15 Jan. RUT 620 puts and bought 15 Jan. RUT 610 puts for a credit of $.65 ($900). Then we sold 15 January RUT 740 calls and bought 15 RUT January 750 calls for a credit of $.55 ($825). Total premium and profit potential is $1,725. Our maintenance is $15,000.

CPTI January Position #2 - OEX Bull Put Spread - 579.35
We sold 15 OEX January 545 puts and bought 15 OEX January 535 puts for a credit of $.50 ($750). Maintenance is $15,000.

We're going to be waiting for an opportunity to put on the bear call spread to complete the Iron Condor. If we get the opportunity, great! If not, we'll be satisfied with just holding the bull put spread.

CPTI January Position #3 -- SPX Iron Condor - 1268.12
We sold 15 SPX January 1200 puts and bought 15 SPX January 1190 puts for a credit of $.60 ($900). Then we sold 15 SPX January 1320 calls and bought 15 SPX January 1330 calls for $.65 ($975). Total premium and profit potential of $1,875. Maintenance is $15,000.

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

ONGOING STRATEGIES
ZERO-PLUS Strategy - January RUT Iron Condor - 684.08
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.

As we did in our CPTI portfolio account, we closed our 1235/1245 Nov. bear call spreads for a loss of $1,350. We deduct the $1,350 from our previous cash position of $37,600 to establish our new cash position of $36,250.

Current Zero Plus Position:
With the RUT trading at about 685, we sold 20 Jan. RUT 620 puts and bought 20 Jan. RUT 610 puts for a credit of about $.65 ($1,300). Then we sold 20 Jan. RUT 750 calls and bought 20 of the Jan. RUT 760 calls for $.45 ($900). Our maintenance is $15,000. Our maximum profit range is 620 to 750. Our net credit and profit potential is $1.10 = $2,200.

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

QQQ ITM Strangle - $41.39
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.

Near October expiration, with the QQQQs trading near $38, we rolled our short October $37 puts and calls to the short November $37 puts and calls.

Based on these figures, the new total of generated premium (through the November cycle) is $5,950 ($5,350 plus the $600).

We currently are short the December $37 calls. We have no short put position at this time.

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

NEW DATES FOR CPTI 2-DAY
ADVANCED SEMINARS -
February 4 & 5 - Atlanta, GA
February 18 & 19 - Las Vegas, NV

Our next CPTI seminars will be on Saturday & Sunday, February 4th & 5th in Atlanta and Saturday & Sunday, February 18th & 19th in Las Vegas.

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 the profit from one Iron Condor trade -- and you'll have a two-day experience that you'll remember, and profit from, for a lifetime.

The recent Denver CPTI Seminar was a great success (no surprise, 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!

34 OUT OF 37 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 (though many often do) 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