Option Investor
Updates

NEW FEBRUARY CPTI POSITIONS

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With a three-day weekend ahead of us, if we're going to put on a trade, we want to try and do it on Friday - to retain the three days of premium that will erode away by the time the market opens on Tuesday. Let's see if we can find a way to put it into our pockets.

With our first February position we're going to use a strategy we haven't used in a long time - the Sure Thing Credit Spread. Is there any strategy that is a "sure thing?" Hell no, but this is the next best thing. It requires some common sense and a large brokerage account - just in case. This strategy is not for newbies, the meek, or those with only $15,000 or $25,000 in their account.

I believe that the market is done going up for awhile - or if it does go up, it isn't going very far. So, I'm going to put on a 25-point bear call spread above where the SPX is trading and try to take in a minimum of $7.00 of premium.

Why are we only doing two contracts? Because, if we're wrong, we will need to establish a position going in the opposite direction for more contracts. That will keep up profitable, but if we get whipsawed, could use up substantial margin.

We will hold this position until the market convinces us it is going up a lot further - when it costs $14 to unwind the initial bear call spread.

CPTI February Position #1 - SPX Sure Thing Credit Spread - 1254.42
Sell 2 February SPX 1275 calls - SZPBO
Buy 2 February SPX 1300 calls - SXYBT
Credit of about $7.40 ($1,480).

The initial maintenance requirement is $5,000. But, later on, if the market reverses, the maintenance requirement can get hefty. Our profit potential is $1,480. Notice how we were able to put our short position above a rather solid (hopefully) resistance level. That's ideal. We'll have to be patient, but I like our chances of success.

You might get a little more or a little less depending on when you put in your order. Remember, the posted prices are just guides. I'll give you a hint. If you have learned to negotiate properly, you'll get more. If not, you won't. Where can you learn to negotiate between the large bid/ask spreads? At a CPTI Seminar, of course.

CPTI February Position #2 - SPX Iron Condor - 1254.42
Sell 10 February SPX 1175 puts - SPTNO
Buy 10 February SPX 1160 puts - SPTNL
Credit of about $.80 ($800)

Sell 10 February SPX 1325 calls - SXYBE
Buy 10 February SPX 1340 calls - SXYBH
Credit of about $.65 ($650)

Total net credit and profit potential of about $1.45 ($1,450). Maximum profit range of 1175 to 1320 = 150 points. Maintenance requirement is $15,000 (IF you have the right broker). Sometimes there is a probloem with the SPX in that we are limited by the strike prices that are available. I have discovered that sometimes, even though we don't see a strike price on your option chain, that it DOES exist and is available for trading. If you don't see the one you want, check alternative quote sources and/or call your broker. Initially, I didn't see the 1340 calls listed, but I checked another quote source and there they were. Missing strike prices may not always be available, but if you don't make the call, you'll never know.

There may be other trades available at, or near, these levels. I know some of you prefer 10 point spreads. The recommendations are just guidelines for you. Use some initiative and come up with your own ideas.

Remember . . .
I am using end of day prices based on Thursday's close. By Friday's open, things may have changed a bit. Use your common sense to determine what you should ask for when placing your credit limit orders. Don't know what to ask for? Attend one of the seminars (see below).

Also, always double check the symbols before you place the orders. Don't blindly put in the ones I include in the recommended trades. I'm human and I make mistakes - of which I'm reminded constantly.

Be careful trading and on New Years Eve. We don't want to lose money and we certainly don't want to lose any of our valued CPTI students.

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DO YOU HAVE WHAT IT TAKES TO PROFIT IN 2006?
That Extra Bit Of Knowledge Can Make A Huge Difference!!
TWO NEW CPTI 2-DAY ADVANCED SEMINAR DATES ANNOUNCED

Did you get a new shirt for Christmas? Was it a welcome gift because you've lost yours trading directionally? It's nothing to be embarassed about. All successful CPTI students once were directional traders -- traders who finally saw the error of their ways. Now, using our non-directional strategies and the wisdom they acquired from our CPTI seminars, CPTI students now position themselves for profit -- every month.

It's the start of a new year. Time to turn over a new leaf. There are profits waiting for you there. But you have to make the effort. Give yourself the 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! Vegas spots are going fast!

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.

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CPTI CURRENT JANUARY POSITIONS
CPTI January Position #1 - RUT Iron Condor - 677.96
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 - 572.81
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 - 1254.42
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.

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ONGOING STRATEGIES
ZERO-PLUS Strategy - January RUT Iron Condor - 677.96
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.

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QQQ ITM Strangle - $40.72
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 December expiration, with the QQQQs, we rolled our short December $37 calls to the short January $37 calls.

The total of generated premium (through the January cycle) is still $5,950.

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

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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?

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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 (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.

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