Option Investor
Updates

WE MADE A KILLING “ $4,300 DEAD PRESIDENTS

HAVING TROUBLE PRINTING?
Printer friendly version

WE MADE A KILLING - $4,300 DEAD PRESIDENTS

Another big payday ($4,330) at the CPTI. Nothing new, but it's always a good feeling to see those Friday morning settlement numbers pop up far away from any of our short strike prices. Are we good? Or are we lucky? Well, 38 out of 41 profitable months should be sufficient proof that we know what we're doing - that this style of trading can consistently produce a healthy profit. Sure, we get a little luck from time to time. But, being good at what we're doing puts us in the position to be lucky. We're planning another killing next month. More premeditated profits to come.

How does one measure credibility? This week I reached a new multi-year high. I've been writing about options and consistently generating money on OI for almost four years now. My columns and especially my seminars have impacted hundreds of lives. People are making thousands of dollars every month from the skills they have learned and I'm truly gratified.

I was shocked when, a few days ago, I learned the meaning of credibility. Credibility is when your ex-wife asks you to help her trade some of her money (formerly mine, of course). How about that? She even wants to attend my seminar - and she will - when she's ready.

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

Oil Is Still Leaking Higher

Oil closed Friday at 75.17 (+1.48) -- an inflation adjusted 24 year high. Personally, as a dyed in the wool couch potato, these ridiculously high gas prices don't affect me a lot. Why? Because other than the Philippines, I don't venture too far from my condo. However, I see numbers indicating that the huge paycheck-to-paycheck segment of the population is cutting back on driving vacations, they're carpooling to and from work and shopping at Costco to reduce trips to the supermarket. Sooner or later, reduced demand will haven an affect on the prices at the pump - and hopefully soon.

Hooters is having a sale on chicken wings. On Thursday's, if you buy 10, you get 10 free. That's a savings of about $6.00. Now, Hooters is about 10 miles away. A round trip is 20 miles and that's about a $3.00 gallon of gas. I'm actually have a net savings of about $3.00. Is it worth it? Sure. Those wings are great - and so is the view.

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

TRACKING CPTI PORTFOLIO RESULTS
We just completed the sixth month (April) of CPTI tracking year number four. The market was a little volatile in the April cycle, but it's just the way we like it. The market ended up higher, but still comfortably in our ranges. We've now been profitable for 38 OUT OF THE LAST 41 months -- something we can be VERY proud of. Our total profit for the first six months of our fourth tracking year is $18,365 ($14,035 + $4,330).

RECAP OF APRIL POSITIONS

(See Position Detail Summary Below)
RUT Iron Condor - PROFIT: $950
SPX Bull Put Spread - PROFIT: $600

SPX Iron Condor - PROFIT: $1,320

SPX Sure Thing - PROFIT: $1,460

TOTAL APRIL PROFITS: $4,330

APRIL SETTLEMENT NUMBERS

SPX ($SET) - 1320.70

RUT ($RLS) - 783.08

OEX (OEX) - 593.13

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

S&P Support & Resistance Levels (Closed at 1311.28)
Resistance:
1311 is the March intraday resistance on this move.
1315 is the May and May 2001 peaks
1324 to 1329 from the October 2000 lows.
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high
and the February 2002 low at 1360.
1371 to 1373 is the December 2000 peak and the January 2001 peak

Support:
The October/March up trendline and the January high at 1303
The 18 day EMA at 1300
1297.57 is the recent February high.
The 50 day EMA at 1292
The late January peak at 1285
The December highs at 1275 (intraday) and 1273 (closing)
1264 from the December 2000 lows
1254 is the February low
1248 to 1250 is the bottom of the November/December 2005 range

Some people asked why I don't do this for the RUT. Well, the truth is that I copied these numbers from another source - and they haven't done this for the RUT.

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

Bad News

"More bad news for President Bush. His approval rating has dropped again, now at 33%. I tell you, when he was at college his blood alcohol level was higher than that. I'll give you an idea of how bad Bush's approval rating is, today he got turned down by Di-Tech." -Jay Leno

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

SUMMARY OF CPTI APRIL POSITIONS
CPTI April Position #1 - RUT Iron Condor - 772.12
With the RUT trading at 732.45: We sold 10 April RUT 650 puts and bought 10 April RUT 640 puts for a net credit of $.50 ($500). Then we sold 10 April RUT 800 calls and bought 10 April RUT 810 calls for a credit of about $.45 ($450). Our total net credit and profit potential of $.95 ($950). Maximum profit range 650 to 800. Maintenance is $10,000 (IF you have the right broker). Profit: $950.

CPTI April CPTI Position #2 - SPX Bull Put Spread - 1311.28
With the SPX trading at 1287.79, we put on one half of a possible Iron Condor. We sold 10 April SPX 1195 puts and bought 10 April SPX 1180 puts for a credit of $.60 ($600). Our credit and profit potential is $.60 ($600). We have an 82 point cushion. That's a good sleeping cushion. We'll wait on the bear call spread to see if the market is going to break out to the upside. Then we'll make a decision about what strikes to use for the bear call spread, if any. Profit: $600.

CPTI April Position #3 - RUT Iron Condor - 772.12
On Friday, March 3rd, with the RUT trading at about 740, we put on our second RUT Iron Condor for April. We sold 12 April RUT 670 puts and bought 12 April RUT 660 puts for a credit of about $.55 ($660). Then we sold 12 April RUT 800 calls and bought 12 April RUT 810 calls for a credit of about $.55 ($660). Our total net credit and profit potential is $1.10 ($1,320). Our maximum profit range is 670 to 800 and our maintenance is $12,000. Profit: 1,320.

CPTI April Position #4 (Formerly March Position) - SPX "Sure Thing" Credit Spread - 1311.46
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 $1,460 with new maintenance of $35,000 ($2,500 x 14). Our current position is the 14 contracts of the April 1295/1270 bull put spread. Profit: $1,460.

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

Countdown To Newark

Less than a week remains to the 2-day CPTI advanced seminar (April 29th & 30th) in Newark, N.J.. There are still spots left for a few SERIOUS east coast option traders. Come and hone your trading skills and pick up that extra premium on your trades. Contact me. (Contact Support). I'll call you to go over all your questions and all the details. Don't put it off!! Procrastination, especially in our business, is a bad habit. If you wait too long to pull the trigger on a trade, often the opportunity disappears.

Spots still remain for my CPTI San Francisco seminar. See below for details.

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

CPTI CURRENT MAY POSITIONS

CPTI May Position #1 - RUT Iron Condor - 772.12

On 3/22, with the RUT trading from 733 to 745, we sold 15 May RUT 650 puts and bought 15 May 640 puts for a credit of $.55 ($825). Then, RUT moved up and we sold 15 May RUT 810 calls and bought 15 May RUT 820 calls for a credit of $.55 ($825). Total net credit and profit potential of $1.10 ($1,650). Maximum profit range is 650 to 810. Maintenance is $15,000 (IF you have the right broker).

CPTI May Position #2 - SPX Iron Condor - 1311.28

On 3/23, with the SPX trading from 1298 to 1304, we sold 12 May SPX 1225 puts and bought 12 May SPX 1210 puts for a credit of $.70 ($840). Then we sold 12 May SPX 1375 calls and bough 12 May SPX 1390 calls for a credit of $.75 ($900). Our total net credit is $1.45 ($1,740). Our maximum profit range is 1225 to 1375 - 150 points!! Maintenance is $18,000 (IF you have the right broker).

CPTI May Position #3 - SPX Bull Put Spread - 1311.28

On 4/17, with the SPX trading at about 1290, we sold 12 SPX May 1215 puts and bought 12 SPX May 1200 puts for a credit of about $.55 ($660). Maintenance is $18,000.

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

ONGOING STRATEGIES
ZERO-PLUS Strategy -
A few years ago$, 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. We are not compounding our profits by dramatically increasing the number of contracts we trade. Just think of how well we would be doing if we had increased the number of contracts, even a little.

Our March SPX Iron Condor position expired worthless - according to plan. We can now officially add the $2,100 of premium to our cash stash - to take us well over the $40,000 mark. We have now generated $40,550 ($38,450 + $2,100).

Current Zero Plus Position: RUT Iron Condor - 772.11

When we put on the RUT Iron Condor as a CPTI position a few days ago (see May CPTI Position #1), we put on the same position for our Zero Plus Strategy, with one exception. Instead of 15 contracts, we put on 20 contracts. Our total net credit was $1.10 and our potential profit is $2,100.

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

QQQ ITM Strangle - Closed Out Previous QQQ ITM Strangle Position
It originally cost us $14,600 to initiate the position. We collected, over the life of the trade, $5,950 in premium. We had $9,500 plus the $5,950 premium for a total of $15,450. Subtracting our initial cost of $14,600 leaves us with a profit of $850. It's not that much considering all the effort we put forth, but a profit is still a profit. Now, the funds that were tied up are free for use in a better opportunity. Our return on the $4,600 risk was about 18.5%.

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

CPTI SPRING SEMINAR DATES:
APRIL 29 & 30 - NEWARK, NEW JERSEY
JUNE 17 & 18 - SAN FRANCISCO, CA

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 Las Vegas CPTI Seminar was sold out and 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!

37 OUT OF 40 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 my 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