Option Investor
Updates

DIRECTIONAL TRADERS ARE EVERYWHERE!!

HAVING TROUBLE PRINTING?
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I'm in Atlanta getting ready for the second day of our CPTI seminar. I have a great group of guys here and we're picking out potential trades for next week. There are some interesting possibilities.

Saturday morning, before the seminar started, a guest from the hotel struck up a conversation with one of my students. He was an avid football fan with a type-A personality. This guy was absolutely positive that Pittsburgh was going to win the Superbowl tonight. He was also positive that selling covered calls is the best strategy in the world.

I explained that covered calls is a dangerous strategy. It has the same risk graph as selling a naked put. He wouldn't hear any of that. "Well, it's worked for me," he boasted.

The moral of this story: Bet on Seattle. This guy has no clue as to what's going on. He's a directional trader through and through. He and his money will soon be parted - and he won't understand why. Maybe someday he'll come to a CPTI seminar and find out the right way to trade covered calls. He won't likely show up, though, until he's learned some expensive lessons.

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Friday's Trade
On Friday afternoon, I sent out a trade - another SPX Iron Condor for March with a 1190/1175 Bull Put spread and a 1335/1350 Bear Call spread. Well, there's some good new and some not-so-good-news. We got filled without much difficulty on the Bull Put spread for a $.75 credit.

However, shortly after I posted the trade on the website, the market moved down a bit and that took the premium out of the 1335/1350 Bear Call spread. It didn't bounce back up, so we didn't get filled.

I received emails asking, "What do I do now?" Well, be patient. The market bounces around and there's a pretty good chance that it will give us another chance to be filled. There are a number of alternative ways to approach the situation. We can reduce our credit limit for the spread. We can also move our Bear Call spread to 1330/1345.

For those who haven't been filled on the Bull Put spread, based on Friday's closing prices, you may still have a good chance to get $.75 or perhaps $.80 on Monday. Obviously, the opening on Monday can affect this opportunity.

Remember, it's also a possibility that we don't get filled at all on a Bear Call spread. Although it's not the optimal use of our maintenance dollars, it's not the end of the world either.

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Notes On Email Questions
I really enjoy answering your email questions. I try to respond as quickly as possible, but there is a built-in time lag for those of you who are sending them to "support." The way the email system is set up, your messages don't come directly to me. They go to OptionInvestor first, are scrutinized, and are then are forwarded to me. That can take anywhere from 20 minutes to a day.

The same is true for my responses to your messages. The responses don't go directly back to you. They first go back through OptionInvestor and are then forwarded to you. It's the way the system was devised. I apologize for the delays.

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ONLY 2 WEEKS TO LAS VEGAS
That Extra Bit Of Knowledge Can Make A Huge Difference!!

Want to learn how to get those extra nickels and dimes on your spread trades? They really add up. Come join me in Atlanta for two days of information and fun. It seems like most people have signed up for Vegas. There are still spots open in Atlanta and only a few left in Vegas. Don't put it off!! It's an investment in your future. They say that money can't buy love. Wouldn't you like to see for yourself?

We won't miss a minute of the Super Bowl. We'll be having our own Super Bowl party!!

There are profits waiting for you out 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! Only two Vegas spots left!

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.

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CPTI CURRENT FEBRUARY POSITIONS
CPTI February Position #1 - SPX "Sure Thing" Credit Spread - 1264.03
We originally 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 was $5,000. Our profit potential was $1,480. When the market started back up, we reversed our position and put on four contracts of the 1280/1255 bull put spread. Our current adjusted profit potential is $1,420 and the new maintenance is $10,000. Now, we can root for the SPX to close above 1280.

CPTI February Position #2 - SPX Iron Condor - 1264.03
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 - 724.22
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 ($1,500). Maximum profit range is 640 to 750 = 110 points. Maintenance requirement is $15,000 (IF you have the right broker).

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CPTI CURRENT MARCH POSITIONS
CPTI March Position #1 - SPX Iron Condor - 1264.03
We sold 10 SPX March 1340 calls and bought 10 SPX March 1355 calls for a credit of $.85 ($850). Then we sold 10 contracts of SPX March 1190 puts and bought 10 contracts of SPX March 1175 puts for a credit of $.90 ($900)

Our total net credit and profit potential is $1.75 ($1,750). Our maximum profit range is 1190 all the way up to 1340 (150 Points!!). The maintenance is $15,000 (IF you have the right broker).

CPTI March Position #2 - RUT Iron Condor - 724.22
On Wednesday 2/1, we sold 15 March RUT 660 puts and bought 15 March RUT 650 puts for a credit of about: $.40 ($600). Then we sold 15 March RUT 790 calls and bought 15 March RUT 800 calls for a credit of about: $.50 ($750).

Total net credit and profit potential of $.90 ($1,350). Maintenance is $15,000 (IF you have the right broker). Maximum profit range is 660 to 790.

CPTI March Position #3 - SPX Bull Put Spread - 1264.03
With the SPX at about 1265 we sold 10 March SPX 1190 puts and bought 10 March SPX 1175 puts for a credit of $.75 ($750)

Total net credit and profit potential of $1.40 ($1,400Maintenance is $15,000.

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ONGOING STRATEGIES
ZERO-PLUS Strategy -
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.

With the successful RUT position generating $2,200, our new cash position is $38,450 ($36,250 + $2,200).

Current Zero Plus Position: March SPX Iron Condor - 1264.03
On Friday, we entered the same SPX Iron Condor for our Zero Plus position that we put on in our first CPTI March portfolio position. However, we did an extra few contracts.

We sold 12 SPX March 1340 calls and bought 12 SPX March 1355 calls for a credit of $.85 ($1,020). Then we sold 12 contracts of SPX March 1190 puts and bought 12 contracts of SPX March 1175 puts for a credit of $.90 ($1,080)

Our total net credit and profit potential is $1.75 ($2,100). The maintenance is $18,000.

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QQQ ITM Strangle - $40.92
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 January expiration, with the QQQQs, we rolled our short January $37 calls to the short February $37 calls. The total of generated premium (through the January cycle) is still $5,950. We currently are short the February $37 calls. We have no short put position at this time.

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UPCOMING CPTI 2-DAY
ADVANCED SEMINAR -
February 18 & 19 - Las Vegas, NV

Our next CPTI seminar will be on 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!

35 OUT OF 38 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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