Option Investor
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LOOKING FOR BURIED TREASURIES

HAVING TROUBLE PRINTING?
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We make nice profits month after month and year after year. But, we may be leaving some money on the table that would look a lot better in our pockets. Well, that would be a sin. We may commit sins from time to time, but none of them involve money.

As you know, when we put on our credit spreads and Iron Condors, there are maintenance requirements. The requirements for our trades are typically anywhere from $15,000 to $18,000 per credit spread or Iron Condor. So, while these funds are being held in are account, are they doing anything? Are they being, in any way, productive? Nope. Not if they're in the form of cash.

The cash that is in your account will be earning money market interest - which is, at this writing, about 4%. The cash that is in your account, being used for your maintenance requirements, is earning gornished, bupkus, nada, zero.

How can we get these dollars being held for maintenance requirements to work for us? Let's take a look at U.S. Government Treasuries. Currently, treasuries are yielding about 5%. The full 100% of your cash used to buy the Treasuries will be earning 5%. And, 90% of the value of the Treasuries can be applied against your maintenance requirements - that's an extra percent over what the money markets are earning. It may not seem like a lot, but it adds up - and it's easy to do.

These Treasuries can be purchased in various lengths of time. Three month and six months are the most common. They can be purchased through most brokerage houses for a small fee.

Other Forms Of Maintenance
Some, more experienced CPTI traders and seminar graduates, take advantage of other forms of maintenance. Maintenance for our credit spread positions do NOT have to be in the form of cash. You can hold other assets in your account and use their marginable value to satisfy maintenance requirements.

As much as I harp on the dangers of owning stocks, I know there are many who still have shares of stocks or mutual funds hidden away in a brokerage account somewhere. If you have 1,000 shares of MSFT (value of $25,840), you can use 50% of the value (about $13,000) to apply towards your maintenance requirements.

Note: The value of the Microsoft shares will vary from day to day. Therefore, the amount of useable maintenance will vary daily as well. You don't want to cut it too close.

Note: These maintenance policies and values may vary from broker to broker. Contact your broker to get their interpretations.

Note: The ability to use the margin value of other assets as maintenance for your positions is NOT available in IRA accounts.

A Typical Account
Let's look at how a typical account might be structured, using our current September and October positions.

3 September positions total maintenance requirement: $48,000
1 October position total maintenance requirement: $20,000
Total of maintenance requirements: $68,000.

Assets In Your Account (not including credit spread positions)
$7,500 cash = (cash value = $7,500)
$45,000 of Treasury Bills - (marginable value = $40,500)
1,000 shares of MSFT ($25.84) - (marginable value = $12,970)
500 shares of AAPL ($68.38) - (marginable value = $17,095)

The total amount of margin available for this account holder is $78,065. Since $68,000 is being used for maintenance, remaining available maintenance is $10,065.

The benefits of using assets other than cash are:
The $7,500 is earning money market interest (about 4%)
The $45,000 in treasuries is earning 5% APY
The 1000 shares of MSFT are doing whatever stocks do
The 500 shares of AAPL are doing whatever stocks do

Nobody knows if the stocks will go up or down. But, we do know that $40,500 is serving a dual purpose. Now in Treasuries, the $40,500 is earning some additional moolah at 5% -- and it's also helping to satisfy your maintenance requirements. If you are a CPTI loyalist, it's likely that the Treasury interest will add up nicely over the course of a year. If, on the average, you are using $40,000 per month as maintenance, you should end up with about an extra $2,000 in your pocket. That should keep you in movies, quarter-pounders, hot dogs with everything and occasional companions named Bambi.

Note: You don't want to tie up all your cash in Treasuries. If positions go bad, you may need some cash to buy back some options.

Note: Experienced traders and CPTI seminar grads know that, if you own a stock, and have it collared, its margin value can still be used toward maintenance requirements.

And finally, let me repeat, all brokers are not created equal. Call your broker. MAKE SURE you have a good understanding of their policies before doing anything. If you don't like what they have to say, there are some very good brokers out there - and the transferring of an account from one broker to another is not complicated.

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CPTI SEMINAR DATE - Nov. 11/12 - Ft. Lauderdale
The Couch Potato Trader has a great following in Florida. We had an excellent seminar in Jacksonville last year and now I have finalized the arrangements for another visit to the Sunshine State - this time to Ft. Lauderdale. So, adjust your schedules and plan to attend. Contact me. I will personally call you to go over the details and answer all of your questions.

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SEPTEMBER CPTI PORTFOLIO POSITIONS
CPTI September Position #1 - SPX - Bull Put Spread - 1311.01
On Monday, August 7th, with the SPX at about 1280, we sold 12 SPX September 1190 puts and bought 12 SPX September 1175 puts for a credit of $.70 ($840). Maintenance is $18,000. I'll be looking for an opportunity to put on a bear call spread to complete the Iron Condor.

CPTI September Position #2 - RUT - Iron Condor - 721.56
On Thursday, August 10th, with the RUT at about 686, we sold 15 RUT September 590 puts and bought 15 RUT September 580 puts for a credit of $.55 ($825). Then we sold 15 September RUT 750 calls and bought 15 September 760 calls for a credit of $.50 ($750). Net credit and profit potential of $1.05 ($1,575). Maximum profit range is 590 to 750. Maintenance is $15,000.

CPTI September Position #3 - RUT - Iron Condor - 721.56
On Thursday, August 17th, with the RUT at about 708, we sold 15 September RUT 640 puts and bought 15 September RUT 630 puts for a credit of $.45 ($675). Then we sold 15 September RUT 760 calls and bought 15 September RUT calls for a credit limit of $.80 ($1,200). Net credit and profit potential of $1.25 ($1,875). Maximum profit range is 640 to 760. Maintenance is $15,000.

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CPTI October Position #1 - RUT - Iron Condor - 721.56
With the RUT at about 708, we sold 20 October RUT 610 puts and bought 20 October RUT 600 puts for a credit of about $.50 ($1,000). Then we sold 15 October RUT 790 calls and bought 15 October RUT 800 calls for a credit of about $.60 ($900). Our total net credit and profit potential is $1.10 ($1,900). Maximum profit range of 610 to 790 -- 180 points!! Maintenance is $20,000 -- 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 August RUT Iron Condor position expired worthless - according to plan. We can now officially add another $2,300 of premium to our cash stash. We have now generated $47,250 ($44,950 + $2,300).

October Zero Plus Position: RUT Iron Condor - 721.56
With the RUT at about 708, we sold 40 October RUT 610 puts and bought 40 October RUT 600 puts for a credit of about $.50 ($2,000). Then we sold 30 October RUT 790 calls and bought 30 October RUT 800 calls for a credit of about $.60 ($1,800). Our total net credit and profit potential is $1.10 ($3,800). Maximum profit range of 610 to 790 -- 180 points!! Maintenance is $40,000 -- IF you have the right broker.


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CPTI SUMMER SEMINAR!
NOVEMBER 11/12 - FT. LAUDERDALE

Don't put off making your 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 Ft. Lauderdale. 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. Remember, if you attend one of my CPTI seminars, you are entitled to RETAKE the seminar a SECOND TIME at NO CHARGE!

42 OUT OF 45 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: 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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