Option Investor
Updates

I LEARNED AN EXPENSIVE LESSON

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Today we enjoyed watching the markets pull back a bit. Our positions are in pretty good shape, but I'm still a bit concerned about the upside on one of our RUT Iron Condors. We're short the 770 calls - giving us only about a 43 point cushion with four full weeks of trading remaining.

I'm not real comfortable being short the SPX 1365 calls either. It's another position we'll need to keep an eye on.

I wouldn't rush to put a bear call on any additional Iron Condors you may have in mind - unless you're the aggressive type. I'd wait until you feel pretty confident that the upward run is over - or at least stalled for the time being.

You all know that I'm a big chicken when it comes to risk. There was a time that I would tempt fate and damn the torpedoes. But, the very few months we were not profitable were as a result of straying from the rules. I'm trying my best to avoid allowing my emotions to get the best of me. Sometimes I may be overly cautious, but I'd rather miss a few opportunities than put us in harm's way.

Traders Anonymous
At my seminars we have a segment called "Traders Anonymous." It's fashioned after "Alcoholics Anonymous." Each attendee takes a turn standing up and discussing a past trade that didn't go well. We discuss and analyze it. It's a great learning tool and a lot of laughs as well. I've heard some amazing stories. People have lost from a few thousand to a few million dollars. It's mind boggling.

Actually, when I first started trading, the worst possible thing happened to me. I was RIGHT about my first five trades. Like many new traders, I thought I was invincible. I was hooked. About $200,000 of losses later, I realized I wasn't the sharpest knife in the drawer. I didn't even belong in the drawer with the butter knives.

I learned expensive lessons, realized the error of my ways, and it took me over three years to make the money back. I studied the successful traders. I virtual traded. I asked tons of questions from people who spoke from experience. I learned the difference between option buyers vs. option sellers. The next project was to figure out a strategy that would give me the best probability of success.

There's really nothing new under the sun. The Iron Condor existed before I came along and will be there long after I'm gone. I just took the concept, massaged it a little bit and a successful strategy was born. The strategy itself won't make you successful. The knowing how to enter, the strikes to use, the process of getting maximum premium, and the exit alternatives are what make the difference between a consistently profitable trader and a simple mouse clicker.

Your subscription to Couch Potato Trader hopefully means you are serious traders. In my columns and seminars I try to teach you how to make money and, at the same time, how not to lose money. These are skills that can be developed. You can learn from my mistakes and hopefully make fewer of your own. You can also learn from my successes and enjoy some of your own.

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TWO SEMINAR DATES - LA (Dec. 2/3) & Ft. LAUDERDALE (Nov. 11/12)
The Fort Lauderdale seminar is filling up nicely - and now, the reservations are flowing in for the December Los Angeles seminar.

Don't procrastinate!! Check your schedule and plan to attend - but only IF you want to improve your trading results. Contact me. I will personally call you to go over the details and answer all of your questions.

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OCTOBER CPTI PORTFOLIO POSITIONS
CPTI October Position #1 - RUT - Iron Condor - 727.13
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.

CPTI October Position #2 - SPX - Iron Condor - 1318.03
On 9/7, with the SPX about 1295, we sold 12 October SPX 1210 puts and bought 12 October 1195 puts for a credit of $.80 ($960). Then we sold 12 October SPX 1365 calls and bought 12 October 1380 calls for a credit of $.60 ($720). Our total net credit and profit potential is $1.40 ($1,960). Maximum profit range of 1210 to 1365 - 150 points. Maintenance is $18,000 - IF you have the right broker.

CPTI October Position #3 - RUT - Iron Condor - 727.13
With the RUT at about 707, we sold 15 October RUT 630 puts and bought 15 October RUT 620 puts for a credit of about $.60 ($900). Then we sold 10 October RUT 770 calls and bought 10 October RUT 780 calls for a credit of about $.75 ($750). Our total net credit and profit potential is $1.10 ($1,900). Maximum profit range of 630 to 770 -- 140 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 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 - 727.13
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 SEMINAR SCHEDULE!
NOVEMBER 11/12 - FT. LAUDERDALE
DECEMBER 2/3 - LOS ANGELES

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!

43 OUT OF 46 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 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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