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A PEACEFUL EASY FEELING

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A PEACEFUL EASY, PROFITABLE FEELING

Many CPTI traders will sleep well tonight. We have plenty of cushion on our trades and all's right with the world - at least our trading world. We're only a Friday morning opening away from a $5,000+ profitable month for our CPTI portfolio - our 41st out of 44. It was a nice bounce-back from a close call in June. However, by placing our credit spreads at the appropriate levels, we survived some dramatic swings in both directions, a nasty spike up in volatility, and all without even breathing hard.

Don't Forget
Do you plan to trade tomorrow? Fridays are always fun. Remember that a good broker will release your maintenance dollars as soon as the settlement numbers are released. The benefit for using your dollars on a new Friday trade is that you will be able to take in a little extra premium - rather than waiting until Monday and watching premium erode away for over two days.

Settlement Symbols
S&P 500 - $SET
Russell 2000 - $RLS
The S&P 500 settlement number often is released about noon. The RUT is normally released later in the afternoon. Your broker should know. If he doesn't, you can always call 1-888-OPTIONS. The Option Industry Council is always there to answer questions and provide data if you need it.

Reader Q&A
Mike -- I like your approach to trading and the conservative strategy you choose for CPTI. One thing that confuses me is how tradable are the recommendations in the letter? For such a short period I cannot judge, but on a few trades that I came across it seemed difficult for both sides of the IRON CONDOR to be filled at the same time for the required credits - or near them. From other side, if the students fill only one side of the IRON CONDOR - put or call - and wait for the right time to fill the other side...may be it will come next day, but maybe never... How you deal with this issue? - Dl, London, England

Dear DL - When I send out trade suggestions, they are based on the prices at that moment. During the course of the day, subscribers are usually able to enter into one, or both, sides of the Iron Condor. The market bounces around and so do the option prices.

Some traders put on each spread separately while others try to do both spreads simultaneously. Personally, I like to do them separately, but both ways can work. It's a matter of personal preference.

If someone is only able to fill one side of the Iron Condor, it's not the end of the world. On occasion, we are only able to fill one side. It's better to only fill one side than to compromise the strike prices on the other side.

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New Quarterly Options
I don't really know if these will be of any use to us, but it's good to know they're available. The quarterly options have begun a one-year experiment on the ISE (International Securities Exchange). The optional assets include S&P 500 (SPY), the Dow Jones Diamonds (DIA), the friendly QQQQs, the Russell Small Cap Fund (IWM), and the Select Sector Energy Fund (XLE).

The SEC recently approved the new product. The quarterly options contract will have all of the standard specifications of other listed options. The only difference is that, rather than expiring on the Saturday following the third Friday of the expiration month, the Quarterly will expire at the end of the calendar quarter.

The ISE exchange will offer the four nearest calendar quarters and the fourth quarter of the following year. Right now, the quarterly expirations include September, December, March 2007, June 2007, and December 2007.

Occasionally, there will be situations where the expiration month already exists. Traders can distinguish the quarterly contract because it has a different symbol. Will these quarterly options be useful? Other than offering perhaps a few extra expiration months, I can't really see how. Well, if nothing else, at least now when you see a weird symbol on an option chain, you'll have an idea of its origin.

Chicago, Phoenix Spots Still Available
It's going to be fun - and INFORMATIVE! If you haven't already reserved your spot for the upcoming Chicago seminar, don't put it off. Seats are limited. Seats are also available for September's CPTI Phoenix seminar. See below for more details.

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CPTI CURRENT JULY POSITIONS
CPTI July Position #1 - SPX - Bull Put Spread - 1249.13
On Friday, 5/26, we put on our first position for July - 12 contracts of a bull put spread 1165/1150 for a credit of $.60 ($720). 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 - 683.61
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.

CPTI July Position #3 - SPX Iron Condor - 1249.13
On Friday 6/16, we sold 12 July SPX 1165 puts and bought 12 July SPX 1150 puts for a credit of about $.60 ($720). Then we sold 12 July SPX 1320 calls and bought 12 July SPX 1335 calls for a credit of about $.55 ($660).

Total net credit and profit potential of $1.15 ($1,380). The maximum profit range is 1165 to 1320 - 155 points. Maintenance is $18,000 - IF you have the right broker.

CPTI July Position #4 - RUT Iron Condor - 683.61
On Friday 6/16, we sold 15 July RUT 610 puts and bought 15 July RUT 600 puts for a credit of about $.50 ($750). Then we sold 15 July RUT 770 calls and bought 15 July RUT 780 calls for a credit of about $.55 ($825). Total net credit and profit potential of $1.15 ($1,575). The maximum profit range is 610 to 770 - 160 points. Maintenance is $15,000 - IF you have the right broker.

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CPTI CURRENT AUGUST POSITIONS
CPTI August Position #1 - SPX - Bull Put Spread - 1249.13
On Thursday morning, 7/6, with the SPX at about 1273, we put on our first position for August - 12 contracts of a bull put spread 1175/1160 for a credit of $.60 ($720). I watched as hundreds and hundreds of the 1165/1150 spreads were filled throughout the day at that credit limit. At this writing, we have a nice fat 90 point cushion.

CPTI August Position #2 - RUT - Iron Condor - 683.61
On 7/10, with the RUT trading at about 713 we sold 15 RUT August 780 calls and bought 15 RUT August 790 calls for a credit of $.65 ($975). Then we sold 15 RUT August 630 puts and bought 15 RUT August 620 puts for a credit of $.50 ($750). Total net credit of $1.15 ($1,725). Max profit range is 630 to 780. 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 June 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: SPX Iron Condor - 1249.13
On Friday 6/16, we sold 20 July SPX 1165 puts and bought 12 July SPX 1150 puts for a credit of about $.60 ($1,200). Then we sold 20 July SPX 1320 calls and bought 12 July SPX 1335 calls for a credit of about $.55 ($1,100).

Total net credit and profit potential of $1.15 ($2,300). The maximum profit range is 1165 to 1320 - 155 points. Maintenance is $30,000 - IF you have the right broker.

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CPTI SUMMER SEMINAR DATES!
AUGUST 12/13 - CHICAGO
SEPTEMBER 16/17 - PHOENIX

Now you have two choices for which CPTI seminar you'd like to attend. Don't put off making the reservation. Airline tickets get more costly the closer you get to the event. If you really want to take your trading from a "hobby" to a potentially profitable "business," you'll want the information you'll learn at my CPTI seminar. You'll learn more than the "how to's" of trading our strategies. You'll learn a new lifestyle - and a nice lifestyle - one that can last a lifetime.

DO YOU HAVE PROFIT-ABILITY?
It's always a challenge (and a pleasure) for me when I have a roomful of bright people who have a passion for, and are excited about, 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 Chicago. Contact me and I'll call you with all the details.

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. Our CPTI seminars are limited to ONLY 25 ATTENDEES.

The San Francisco 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!

40 OUT OF 43 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 should 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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