Option Investor
Updates

DISCUSSING TODAY'S RUT IRON CONDOR

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While we're waiting for the June cycle to erode away, day by day, we've been dipping our toes into a few July positions.

Today, with the RUT at about 729, we sold 15 RUT July 630 puts and bought 15 RUT July 620 puts for a credit of about $.55 ($825). Then we sold 12 RUT July 800 calls and bought 12 RUT July 810 calls for a credit of about $.55 ($660). Our maximum profit range is 630 to 800 -- that's 170 points!! Maintenance is 15,000 -- IF you have the right broker.

It seems I made a typo on the symbol of the 810 call - which was brought to my attention by a number of the CPTI faithful. I know I can always count on you to catch it. However, I will still write on every trade that traders need to double check the symbols before submitting the trade. Why? Because there are some that won't check.

The next issue is the maintenance held on the above RUT Iron Condor. Notice that there are 15 contracts for the bull put spread and only 12 contracts for the bear call spread. The more progressive brokers will have a policy to simply hold the spread with the higher maintenance - in this example, the 15 contract bull put spread. If your broker doesn't have that policy - and if maintenance dollars are an issue for you - you can sit there with your head where the sun don't shine, or you can be proactive and consider making a change to make the most efficient use of your trading capital.

Be Flexible
Today, when I sent out the RUT Iron Condor trade, the RUT was at about 729. I sent out the 800/810 bear call spread. It had a reasonable premium, but notice that I only suggested a 12 contract position. That was because there was a smaller cushion between 800 and where the RUT was trading than the cushion we enjoy (630) on the bull put spread. It was a was of hedging a bit. Some traders I know put on 10 contracts. There are many ways to hedge and everyone has a different risk tolerance.

Also, and very important, are the way traders dealt with the continued movement of the RUT today. Not everyone reads their email throughout the day. So, not everyone gets into the trade at the same time. The RUT moved up over 7 points - after the trade had been sent out. Depending on when you place your trade, you need to pay attention to where the RUT is trading in relation to where it was when the email was sent.

Those who were a bit late to the party had an opportunity to move the strikes up to 810/820 and still take in a very nice premium. They would have been 10 points safer - with the same, or better, premium. It's common sense, but you'd be surprised how uncommon it is. Most will not even explore the alternatives. What did you do?

Free Up Some Maintenance
If you are looking for a way to free up some maintenance dollars - and have one of those Neanderthal brokers that requires maintenance on both spreads in an Iron Condor, you might consider buying back the RUT June 830 call for a nickel or a dime. Also, keep an eye on the June SPX 1350 calls. In a few days, they might be available cheap to buy back.

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COUNTDOWN TO SAN FRANCISCO - JUNE 17/18
TESTA-MONEY-ALS

Mike -- Just wanted to let you know that one of the things I got the most value out of from your class was how to negotiate with the market makers. Based on the extra premium I made on a couple condors this past month, I made almost enough to pay for the class. J.R.

Hey Mike -- I almost always laugh when I read your newsletters. I have learned a lot since I sat - so very green - in your class, and learned so much. I have been making a living these last 2 1/2 months trading. Thanks for your continued coaching. I plan to retake your class sometime this summer. Doug B.

DO YOU HAVE PROFIT-ABILITY?
There are a lot more where these came from. It's always a challenge for me when I have a roomful of bright people who are excited and have a passion for learning. We go over everything imaginable - from the non-directional strategies to the psychology of trading. We cover a lot more than the mechanics. Inquiring minds want to know the whens and the whys, not just the hows. That way, they're prepared for the best and the worst - and know the best way to handle either situation. There are still spots open for San Francisco. Contact me and I'll call you with all the details.

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CPTI CURRENT JUNE POSITIONS
CPTI June Position #1 - RUT Iron Condor - 736.50
On 5/1, we sold 15 June RUT 690 puts and bought 15 June RUT 680 puts for a credit of $.55 ($825). Then, we sold 15 June RUT 830 calls and bought 15 June RUT 840 calls for a credit of $.55 ($825). Our total credit and profit potential is $1.10 ($1,650). Maximum profit range is 690 to 830 (130 points!). We'll be exposed for about seven weeks. Maintenance is $15,000 - IF you have the right broker.

CPTI June Position #2 - SPX Bull Put Spread - 1285.71
On 5/3, we sold 12 June SPX 1230 puts and bought 15 June SPX 1215 puts for a credit of $.60 ($720). Maintenance is $18,000.

CPTI June Position #3 - SPX - Iron Condor - 1285.71
On 5/16 with the SPX trading at about 1295, we sold 12 June SPX 1220 puts and bought 12 June SPX 1205 puts for a credit of $.50 ($600). Then we sold 12 June SPX 1350 calls and bought 12 June SPX 1365 calls for a credit of $.70 ($840). Total net credit and profit potential of $1.20 ($1.440). Our maximum profit range is 1220 to 1350. The maintenance is $18,000 -- IF you have the right broker.

CPTI June Position #4 - RUT - Iron Condor - 736.50
On 5/22, we sold 15 June RUT 780 calls and bought 15 June RUT 790 calls for a credit of about $.45 ($675). Then we sold 15 June RUT 640 puts and bought 15 June RUT 630 puts for a credit of about $.50 ($750) for a total net credit and profit potential of about $.95 (1,425). Our maximum profit range is about 140 points - from 640 to 780. Maintenance is $15,000 - IF you have the right broker.

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CPTI July Position #1 - SPX - Bull Put Spread - 1285.71
On Friday, 5/26, we put on our first position for July - a bull put spread 1165/1150 for a credit of $.60. I watched as hundreds and hundreds of the 1165/1150 spreads were filled throughout the day at that credit limit.

CPTI July Position 2 - RUT - Iron Condor - 1236.50
On Thursday, 6/1, with the RUT at about 730, we sold 15 RUT July 630 puts and bought 15 RUT July 620 puts for a credit of about $.55 ($825). Then we sold 12 RUT July 800 calls and bought 12 RUT July 810 calls for a credit of about $.55 ($660). Our maximum profit range is 630 to 800 -- that's 170 points!! Maintenance is 15,000 -- IF you have the right broker.

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ONGOING STRATEGIES
ZERO-PLUS Strategy
In the past, 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 May RUT 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 $42,650 ($40,550 + $2,100).

Current Zero Plus Position: RUT Iron Condor - 736.50
On Monday we put on the identical, June RUT Iron Condor - consisting of 20 contracts of a bear/call spread of 780/790 and a bull put spread of 640/630 for a credit of about $.95. Our potential profit is $1,900. The maintenance is $20,000 -- IF you have the right broker. The profit range is 640 to 780.

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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%.

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CPTI SPRING SEMINAR DATE:
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 call you with all the pertinent information. The price is a bargain - 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 Newark CPTI Seminar was a great success (no surprise, they all are). There are now 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!

39 OUT OF 42 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?

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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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