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FIVE WEEKS SEEMS LIKE FOREVER

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FIVE WEEKS CAN SEEM LIKE FOREVER

The October option cycle is a 5-weeker - and it seems like it's never going to end. We still have two weeks left - and with it, perhaps a test of our resolve and our self discipline.

Friday'S pullback was a bit of a reprieve. The question is whether the reprieve will be an execution. I know a bunch of Couch Potato traders have already bailed on the SPX 1365 position - and justiafiably so. It may prove to be a very wise decision. Others are holding on. Exciting, isn't it?

Right now, at about 1350, the SPX is in questionable, and risky, territory. The RUT is at about 740, and, with our short position at 770, our cushion is only 30 points. It's in the danger range. Remember that old saying that, if the enemy is in range, so are you? Well, we better keep a close eye on the market and be prepared to act if the situation calls for action -- because we're in range.

Technically, the SPX (S&P 500) is overbought. But, it's been overbought for awhile now and that hasn't stopped the it from moving up. Those who think they know, say that the S&P may be running out of steam and that the money may be rotating into tech stocks. We shall see. Keep the TUMS handy.

A Breath Of Fresh Air
Read an interesting, and even inspirational, article this morning. It reinforces the belief that there are still some good folks out there who care and are willing to put their money where their mouth is.

Here, in metro Detroit, we've been having our problems - much of which is a result of the ongoing problems in the auto industry. The rest are problems inherent in In that atmosphere, Detroiter Dan Gilbert, the owner of the incredibly successful mortgage company (Quicken Loans), is launching a program creating a residential boot camp to develop young entrepreneurs and fund the start-up costs for businesses created within the city.

Gilbert will pony up about $10 million in January for a class of 10 to 20 students for the two-year project called Bizdom U. He expects recruits to be 18 to 22 years old and high school graduates with street smarts, not necessarily college degrees. "We love PhDs," Gilbert says, "but a specific kind of PhD - poor, hungry and driven!" (Gee, I always thought PhD stood for "piled high and deep.").

The entrepreneurial kids will get a stake in their new companies. The rest of any profits will be funneled back into Bizdom U to make it self-sustaining financially. Gilbert has already lined up an impressive list of teachers and mentors to be an integral part of the program. Guidance will be continuing - not ending at the completion of a business plan.

What a great idea! Hopefully, other cities will take notice and do the right thing. There is hope. There is a light at the end of the tunnel - and hopefully, it's not a train coming the other way.

Notice how the same concepts apply to our option trading? Why? Because trading should be treated as a business. Too many people go into business unprepared, uneducated, and undercapitalized. That's a recipe for failure. There IS a light at the end of the tunnel for option traders, too. Finding the non-directional tunnel is the first step. Education is the next.

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Two People
A woman and her young daughter were visiting the grave of the little girl's grandmother one Sunday. As they passed through the cemetery on the way back to their car, the little girl said, "Mommy? Do they ever bury in the same grave?"

"Oh no, of course not, dear!" the mother replied. "Why on earth would you think that?"

"Well, that one back there said, 'Here lies a marketmaker and an honest man.'"

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OCTOBER CPTI PORTFOLIO POSITIONS
CPTI October Position #1 - RUT - Iron Condor - 739.81
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 - 1349.58
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 - 739.81
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 STRATEGY - THE ZERO-PLUS Strategy
In the past, I outlined a strategy based on an initial investment of $100,000. At that time, $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 dramatically 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 - 739.81
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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NOVEMBER CPTI PORTFOLIO POSITIONS
CPTI November Position #1 - RUT - Iron Condor - 739.81
With the RUT at about 722, we sold 20 November RUT 620 puts and bought 20 November RUT 610 puts for a credit of about $.50 ($1,000). Then we sold 20 October RUT 800 calls and bought 20 October RUT 810 calls for a credit of about $.60 ($1,200). Our total net credit and profit potential is $1.10 ($2,200). Maximum profit range of 620 to 800 -- 180 points!! Maintenance is $20,000 -- IF you have the right broker.

CPTI November Position #2 - MID - Bull Put Spread - 764.10
With the MID at about 755, we sold 20 November MID 690 puts and bought 20 November 680 puts for a credit of $.75. Our potential profit is $1,500. Maintenance is $20,000. I'll keep on the lookout for a safe bear call spread to complete our Iron Condor. However, if I don't find an appropriate bear call spread, I'm perfectly content to sit with this bull put spread to expiration.

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CPTI SEMINAR SCHEDULE!
November 11/12 - Ft. Lauderdale -
Only 4 Spots Left!
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 to 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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