Option Investor
Updates

RESOLUTIONS “ RULES TO LIVE AND TRADE BY

HAVING TROUBLE PRINTING?
Printer friendly version

RESOLUTIONS - RULES TO LIVE AND TRADE BY

Every year, about this time, people make commitments to themselves called New Years resolutions. They vow to lose weight, stop smoking, stop drinking, and to actually listen to their wife (until you can't stand it anymore). Do people stick to these promises? For a week or two, but, then it's back to the SOS.

All those bad habits can have serious repercussions. Being overweight can kill you. Smoking will very likely kill you. Drinking can kill you. And, if you don't listen to your wife, she'll probably kill you.

In our trading life, there are just as many deadly sins that can kill off a trading account - but CPTI students know better, right? Of course they do. But an occasional reminder can't hurt. So, here are some CPTI New Years resolutions to consider. Do you want to retire in comfort, or be the oldest member on the early shift at Burger King? It's up to you.

CPTI Resolutions For 2006

1. I will not trade every day. Why? Because I don't have. Let day-traders and directional traders drive themselves crazy. I'll go to the movies instead.

2. I will develop a proven non-directional trading system. Plus, I realize that one non-profitable trade does not negate the system. I will accept that, if I incur a loss and made the right trading decisions, it was a success.

3. I will take small losses rather than let them become large losses. I don't expect to be correct with every trade. I also will accept that a loss does not mean personal failure and will not look for a tall building every time.

4. I will learning more and more about my trading strategies. Knowledge is power. I will master the fundamentals and learn how options are simply tools that, working together, can generate consistent profits for me. I prefer to let my money work for me instead of me working for my money.

5. I will become an expert in one or two strategies. I will master every detail particular to those trades. I will be the master of my domain - and the strategies too.

6. I will not set profit targets on a trade by trade basis. I am confident that, if I know my strategy, and am consistent with the proper execution of my non-directional strategies, over time I will be quite profitable.

7. I will not let emotions sway my trade decisions. I will not let my ego manage my trades. Why? Because my ego will soon lose my money - and my ego will not be able to afford that new 46-inch plasma TV I want.

8. I will approach trading as a business. My trading capital is my inventory. I will not piss it away. Why? Because trading beats the hell out of working. If I think otherwise, I need serious psychological help.

9. I will keep a trading journal. Why did you get into the trade? Why did you get out of the trade? - And, most of all, the answer to those questions should not be "because Mike told me to." Have a mind of your own. Remember, a mind is a terrible thing to waste - and money is a terrible thing to lose.

10. I will invest in my success, whether it be a book, a subscription, or a (surprise, surprise) two-day advanced seminar presented by a writer you all know and love - :-)

11. I will act upon what the market is doing, rather than what I think it "should" be doing. Why? Because I admit I don't know where the hell it's going. Alcoholics can't start on the road to sobriety until they admit they have a problem. It's the same in trading.

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

Our New February RUT Trade
On Friday we put on our third February CPTI portfolio trade - an Iron Condor on the Russel 200 index. Our bear call spread was 750/760 and our bull put spread was 640/630. It's a nice big 110 point range.

I spoke to my favorite CPTI broker and he told me that CPTI students were getting anywhere from the posted $1.00 credit to as much as $1.15. Some put in the entire condor as one trade while others put the spreads in separately.

A number of CPTI students emailed me with suggestions for other positions. Some were identical to what I came up with. Others were a little more aggressive (closer to where the RUT was trading). Some used the 740/750 bear call spread instead of the 750/760. Personally, I like the extra ten points of safety. But the 740/750 provided an additional $.25 of premium. If you do get aggressive, you have to pay that much more attention to the trade. If you're a skilled trader, you know what to do. If not, you could get your butt handed to you when you try to get out.

The February "Sure Thing" Isn't Quite As Sure
The market has seemingly moved in the other direction - about enough to convince me it's time to adjust the trade. We will liquidate the bear call spread for about $14. Then we will establish a 25-point bull put spread below where the SPX is trading - trading enough contracts to cover what it cost for us to liquidate the original bear call spread.

January Positions
With two weeks to go to expiration, our January positions look very good. Even though the market looks like it's moving up a bit, we have enough cushion to hopefully carry us through.

More February Positions?
I'm going to be looking around for another February position. I'll keep you posted if something exciting turns up.

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

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

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 daily. 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: Contact Support.

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

CPTI CURRENT JANUARY POSITIONS
CPTI January Position #1 - RUT Iron Condor - 691.77
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 - 580.76
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 waited for an opportunity to put on a bear call spread to complete the Iron Condor, but nothing looked great. So, we are settling for just holding the bull put spread.

CPTI January Position #3 -- SPX Iron Condor - 1273.48
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.

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

CPTI CURRENT FEBRUARY POSITIONS
CPTI February Position #1 - SPX "Sure Thing" Credit Spread - 1273.48
We sold 2 February SPX 1275 calls and bought 2 February 1300 calls for a net 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.

CPTI February Position #2 - SPX Iron Condor - 1273.48
We sold 10 February SPX 1175 puts and bought 10 February SPX 1160 puts for a credit of $.80 ($800). Then we sold 10 February SPX 1325 calls and bought 10 February SPX 1340 calls for a credit of about $.65 ($650). Our total net credit and profit potential of about $1.45 ($1,450). Maximum profit range is 1175 to 1320 = 150 points. Maintenance requirement is $15,000 (IF you have the right broker).

CPTI February Position #3 - RUT Iron Condor - 1273.48
We sold 15 February RUT 640 puts and bought 15 February RUT 630 puts for a credit of $.50 ($750). Then we sold 15 February RUT 750 calls and bought 15 February RUT 760 calls for a credit of $.50 ($750). Our total net credit and profit potential of $1.00 ($1,450). Maximum profit range is 640 to 750 = 110 points. Maintenance requirement is $15,000 (IF you have the right broker).

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

ONGOING STRATEGIES
ZERO-PLUS Strategy - January RUT Iron Condor - 691.77
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 - $41.92
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.

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

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 - ONLY $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, Top Spud, 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