Option Investor
Updates

BIG CANDLES MAKE FOR BIG FLAMES

HAVING TROUBLE PRINTING?
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The market should be a little seasick by now. Up - down - up - down. Just look at the daily chart of our S&P 500 or the RUT. Those candles are huge! It's not unusual to see 15-20-25 point daily ranges. It's been that way for awhile now. Thus far, the indexes have bounced around and have still stayed within our predetermined ranges. Amazing. Is it much ado about nothing? Hard to say.

Have you ever wondered why the VIX (volatility index) goes up when stocks are tanking and goes down when stocks spike higher? I do. Why does volatility increase when the market moves dramatically in only one direction? I'm going to look into it. It would probably be good to know. I'll look into it myself. However, if any of you know the answer, or anything plausible, send it along.

In the meantime, our positions are in pretty good shape - still comfortably in their respective ranges. With the erratic activity, it pays to keep an eye on things.

New August Positions?
I've been getting emails asking about more new positions for August. Right now, our cup runneth over with positions - four of them. We don't have any more maintenance dollars to play with. We're using about $66,000 right now. For those of you who still have dollars to work with, I suggest you wait. In a few weeks, or possibly sooner, we'll start our search for September positions.

Good News For New Option Traders
Most CPTI students have been around the block a few times. They're not beginners. They typically have a good basic knowledge of options. As a matter of fact, I limit the attendees to my CPTI seminars to experienced option traders.

On the OptionInvestor home page, under Options 101, I will be writing a weekly column for option newbies. It starts at the very beginning and will go, step by step, through what newcomers to option trading will need to know - before they risk the real stuff in the real markets. It's a good review for experienced traders and, as you might expect, there are a few smiles along the way.

By The Way . . .
Last Sunday, as you know, was my wedding. It went very well. A number of people came to Detroit from all around the country. I had to assure them they wouldn't have to wear a bullet-proof vest for the wedding. Detroit has its problems -- like most big cities. But, the public perception couldn't be further from the truth.

I wanted to take my out-of-town guests somewhere special - somewhere that would make a lasting positive impression. I thought about it and decided to take them to the Motown Museum, in the heart of Detroit.

What a great choice! If you ever sang along to a Stevie Wonder song or danced to the Supremes, Four Tops or Temptations, you would love it. The tour guide was a fountain of information. We saw the studio where all the original Motown recordings were made and where Barry Gordy lived. We watched an entertaining and moving historical video, and saw artifacts that brought back a tidal wave of memories.

If your travels ever bring you to Detroit, make sure to find the time to take the tour. It's inexpensive. It's only about an hour. But, it's an hour well spent.

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CPTI CURRENT AUGUST POSITIONS
CPTI August Position #1 - SPX - Bull Put Spread - 1240.29
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 - 671.94
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.

CPTI August Position #3 - SPX - Iron Condor - 1240.29 On 7/17, with the SPX at about 1235, we sold 12 August SPX 1125 puts and bought 12 August SPX 1110 puts for a credit of $.60 ($720). Then we sold 12 August SPX 1310 calls and bought 12 August SPX 1325 calls for a credit of about $.60 ($720). Total net credit and profit potential of $1.20 ($1,440). Max profit range is 1125 to 1310. Maintenance is $18,000.

CPTI August Position #4 - RUT Iron Condor - 671.94

On Friday afternoon, 7/21, with the RUT at about 671, we sold 15 August 600 puts and bought 15 August RUT 590 puts for a credit of about $.65 ($975). Then we sold 15 August RUT 740 calls and bought 15 August RUT 750 calls for a credit of about $.50 ($750). Total net credit and profit potential is $1.15 ($1,720). Maximum profit range is 600 to 740. 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 July RUT Iron Condor position expired worthless - according to plan. We can now officially add the $2,300 of premium to our cash stash - to take us well over the $40,000 mark. We have now generated $44,950 ($42,650 + $2,300).

NEW Zero Plus Position: RUT Iron Condor - 671.94
On Friday 7/21, with the RUT at about 671, we sold 20 August 600 puts and bought 20 August 590 RUT puts for a credit of about $.65 ($1,300). Then we sold 20 August RUT 740 calls and bought 20 August RUT 750 calls for a credit of about $.50 ($1,000).

Total net credit and profit potential of $1.15 ($2,300). The maximum profit range is 600 to 740 - 140 points. Maintenance is $20,000 - IF you have the right broker.

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CPTI SUMMER SEMINAR DATES!
AUGUST 12/13 - CHICAGO
SEPT. 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!

41 OUT OF 44 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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