Option Investor
Updates

WELCOME TO "QUICKIE WORLD"

HAVING TROUBLE PRINTING?
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- DO YOU MEASURE UP?

Today I received a call from Ben, a relatively new CPTI student. He was so proud that he got filled this afternoon on the SPX March 1320/1335 bear call spread at a credit of $.95 - MORE than what I suggested when I sent out the original recommendation.

Is that an accomplishment? Or not? Well, you'd have been proud of me. I was really tactful. I took into consideration that he was a new trader. But I had to introduce Ben to part of the real world of successful trading.

I asked if he had considered any other alternatives before he put on the 1320/1335 bear call spread. "Alternatives?" he asked. "What do you mean?"

At the time he put on the trade, I explained, the market was trading more than 15 points higher than when I originally recommended the trade last week. The current cushion was only about 45 points instead of 60. Are the posted trade strike prices still viable? Yes, there is still a high probability of success - though maybe not as much as before.

I also explained that a seasoned trader would have been an opportunist and thought outside the box. Believe me, it's not that big of a box. Would it have occurred to him to first look at the 1325/1340 bear call spread? Or maybe the 1330/1345 bear call spread? The 1325/1340 could have brought in about $.75. The 1330/1340 might have brought in $.60.

That extra five or 10 points of cushion, IMHO, are a lot more valuable than the extra $.20 or $.30 of premium. Our couches need cushions - big ones!! But you have to be looking for it. Strange things happen in the market during the day. Lots of opportunities - IF you're paying attention.

Another good lesson to be learned here is that Ben could have tossed an order out there for the 1325/1340 bear call spread at $.80 and probably would have been filled when the market spiked up. Remember, it doesn't cost anything to put out orders - and, you'd be surprised how often they get filled.

Chances are that Ben's 1320/1335 bear call spread will expire worthless. As you know, almost all of our trades work out. I just hope he remembers the lesson. If he does, it will serve him well over time. (At this writing, the market reversed, gave back its gains, and came all the way back down to finished negative for the day).

I always emphasize safety in our trading. Those extra cushion points are priceless. They often make the difference between profit and loss. Safety is one of the main reasons why our results regularly put to shame the directional trading pundits who play with fire day after day.

The moral of this story is: Don't trade with blinders on. Be aware of alternatives. Watch for opportunities. The trades I suggest should be used as guidelines. Very often, you can do better - IF you're an opportunist.

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QUICKIE WORLD - AN AMUSEMENT PARK FOR YOUR MONEY

OK. Here we go again. It's that time of the month - time when our more experienced and aggressive CPTI students may venture into Quickie World. It's like a trading Disney World. The pile of money in your brokerage account has to be taller than a 10 year old before you can go on the rides. The rollercoaster-like trades may cause you to regurgitate your profit in a hurry and the Friday morning open may leave you dizzy. Still, it may be an adventure you'll never forget. If you make money, you'll remember it fondly. Quickie World may be an amusement park for your money, but it's not always so amusing. If you lose money, you'll learn that you may have been in over your head. Hopefully you'll remember that as well and seek further education. We've had some quickie success in recent months. Let's see how we do this month.

February Quickie Position #1 - SPX Iron Condor - 1263.78
Sell 10 February SPX 1240 puts - SZPNH
Buy 10 February SPX 1230 puts - SZPNF
Credit of about $.55 ($550)

Sell 10 February SPX 1280 calls - SZPBP
Buy 10 February SPX 1290 calls - SZPBR
Credit of about $.75 ($750)

Total net credit and profit potential of $1.30 ($1,300). Maximum profit range is 1240 to 1280. Maintenance is $10,000 (IF you have the right broker).

February Quickie Position #2 - OEX Siamese Condor - 574.91
Sell 10 February OEX 575 puts - OEBNO
Buy 10 February OEX 555 puts - OEBNK
Credit of about $3.25 ($3,250)

Sell 10 February OEX 575 calls - OEBBO
Buy 10 February OEX 595 calls - OEBBS
Credit of about $3.20 ($3,200)

Total net credit and profit potential of $6.45 ($6,450). We've created a profit range is 569.55 to 581.45. Maintenance is $20,000 (IF you have the right broker). Exit points are 569.55 and 581.45.

Remember to double check the symbols before placing your order. The closer OEX finishes to 575, the more money you will make. OEX (S&P 100) options are American style. That means the settlement is at the close on Friday. There is no scary Friday morning open. Just because it closes on Friday doesn't mean you have to hold it to the bitter end. If you have a chance to take a reasonable profit, DO IT!!!!!

I do not trade the quickies, nor do I send out trade adjustments. You're on your own. That's why it can be dangerous and should be done by experienced traders. The quickies are not part of our CPTI Portfolio. All that being said, welcome to Quickie World! Enjoy the ride.

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VEGAS SEMINAR = SOLD OUT!!!

1 WEEK TO LAS VEGAS
That Extra Bit Of Knowledge Can Make A Huge Difference!!

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. WATCH FOR THE ANNOUNCEMENT OF NEW CPTI SPRING SEMINAR DATES.

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 Iron Condor - 1263.78
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 #2 - RUT Iron Condor - 718.16
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 - 1263.78
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 - 718.16
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 Iron Condor - 1263.78
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). Then, a few days later on a bounce, we sold 10 SPX March 1320 calls and bought 10 March SPX 1335 calls for a credit of $.80 ($800).

Our total net credit is $1.55 ($1,550). Our maximum profit range is 1190 to 1320 - a 140 point range. The maintenance is $15,000 (IF you have the right broker).

CPTI March Position #4 (Formerly Feb. Position) - SPX "Sure Thing" Credit Spread - 1263.78
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. We reversed our position and put on four contracts of the 1280/1255 bull put spread. Our current adjusted profit potential is $1,420 with new maintenance of $10,000. We had to reverse again. Our new position is a 1280/1305 bear call spread with a profit potential of $1,600. We now want the SPX to close below 1280.

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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 - 1263.78
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 - $40.71
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
(SOLD OUT)

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 Atlanta CPTI Seminar was a great success (no surprise, they all are). There are now many 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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