Option Investor
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AN OPPORTUNITY IS NOT ALWAYS AN OPPORTUNITY

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Which way is the market going to go? Those who are supposed to know, don't. Those who say they know are just blowing smoke. Ant those who listen to those people, deserve whatever happens.

We're coming up to the last week of the quarter and there are two opposing forces in the market - the buyers and the sellers. The mutual funds will be buying the winners. Why? So their quarterly reports will look like the funds held these stocks the entire time. Gee, who would have thought there's show business in the financial markets? Why should people expect the truth from mutual funds any more than from company CEOs? Show business backwards is B.S. - and it's certainly a part of the financial markets.

Actually, it's pretty amazing that so many people blindly hand over their life savings to financial planners or fund managers and expect to retire on what these folks make for them. Imagine working for 10, 20, 30 or 40 years, judiciously saving for retirement -- then, giving the control of their retirement funds to a total stranger. The bass-ackwards part of this is that these management types get paid on how much money they manage - not based on the profits they generate.

If these people spent as much time learning to plan their financial future as they do in planning their yearly vacations, they wouldn't need fund managers and/or financial planners.

Many years ago, I was recruited by Prudential. They said they were looking for people to manage money. It sounded like an interesting opportunity. I went in for the interview. They were impressed with my resume and my knowledge of the markets. They gave me an IQ test - which I apparently passed.

Then, it was time for a sit-down conversation. I probably should have had this conversation with them at the very first interview, but I didn't. They started asking me about my background - if I had friends and family with a lot of money. Yes, I did. They wanted to know if I could possibly bring my friend's and family's money into Prudential to be managed. I told them it was likely.

They were salivating at the thought that I could potentially bring in millions of dollars to Prudential. The conversation was going well - to that point. I was confident. I knew, even then, that I could easily outperform 95% of all fund managers.

Then, I asked them how soon I would be able to start managing the funds I brought in. They said, "Oh no, the funds would get sent to the Prudential management team. You don't actually manage the money, you just bring in the funds."

They didn't want someone with management skills. They wanted some flunky, who had connections, to bring in money - for everyone in his world and anyone else with more than $20. They wanted me to network, to introduce myself to people with money, go to their homes, sit at their kitchen tables, and convince them that Prudential would save their financial souls.

As you can imagine, the conversation didn't last much longer. I excused myself, explaining that I couldn't work that way. I have ultimate confidence in my abilities. I know my limitations and my strong points (I have plenty of both). However, I couldn't sell something I didn't believe in. They weren't happy when I left. Que sera, sera.

I watched the Prudential fund results for a few years after. My decision saved my family and friends a fortune. Sometimes, our best life choices aren't things that we do - they're things we don't do.

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SPX Support & Resistance Levels
S&P 500: Closed at 1314.78
Resistance:
1324 to 1329 from the October 2000 lows.
1326.70 is the May 2006 high
1334 is an October 1999 peak

Support:
1315 is the May and May 2001 peaks
1311 is the April closing high.
The 18 day EMA at 1310
1302 the recent August highs
1294 is the January 2006 high and 1297.57 is the February 2006 high.
The 50 day EMA at 1294
The early June high at 1288
The late January peak at 1285
The 200 day EMA at 1281
1280.37 is the recent July peak.
1268 is an old trend-line from the August 2003/August 2004/October 2005 lows.

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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 coming 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 - 718.53
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 - 1314.78

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 - 718.53
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 - 718.53
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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