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THE PAUSE THAT REFRESHES

HAVING TROUBLE PRINTING?
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Well, the market finally pulled back a bit. It was nice to see and very welcome - especially for the more timid members of our CPTI family. We were within about 25 points of the short 800 call on our RUT bear call spread. Is it a sign of things to come? Or is it just a test of support?

The fact that Friday's market finished at the lows of the day is encouraging. A couple more days of 10 point drops will provide peace of mind for the masses (and me too).

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Here are just a few of the questions I received in the last few days. How would you have answered them?

QUESTION: Mike -- After last week's close of the RUT and SPX, and you response to Gary's email; I have a much better understanding of your timidity with regard to get more premium at the risk of smaller cushion. I agree with you in that you feel that a large pull back is coming. Having said that,,... with RUT at 774 today, what do you think about a bear call spread of 810/820 for a credit of approx. 0.85 (8.5%) or even 800/810 for 1.55 (15%). These would be higher risk, but with a down turn coming, what is the likelihood that it will be this high at the end of the cycle? That would get the higher premium without the risk for the big downside that is coming. I know that this is tending to be directional trading, but what do you think? -- Brad

ANSWER: Brad, I would be reluctant to put on a bear call spread at this point. Remember, don't fight the trend. We had a nice pullback on Friday, but there is no knowing if this is the beginning of a larger pullback, or just a test of support. I would rather stay out of the market than make a directional trade -- essentially a guess -- and I'm a lousy guesser. There is simply too much at stake. Keep the ideas coming.

QUESTION: Good Morning Mike -- What I have been doing is as soon as my trade executes, I submit a GTC to buy back the short option @ .05. When that executes, it triggers second GTC to sell the long @ .05. I normally fill on or before that last Thursday. I'm safe and my money is freed up. -- Ed

ANSWER: Ed, It's an excellent idea. It costs nothing to put out an order. Since it's a Good Till Cancel, you can just leave it out there. And, as you state, I have found that the second order - to sell the long option for a nickel - will often get filled. So, in essence, you have closed the position for the cost of a few commissions.

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SUPPORT & RESISTANCE
Here are some support and resistance levels for the S&P and the NASDAQ. I know we don't have any S&P positions this month, but the chart is pretty similar to our MID position. The NASDAQ trades pretty closely to our RUT. Unfortunately, my source doesn't publish support and resistance levels for the MID & RUT.

S&P 500: Closed at 1377.34
Resistance:
1389 is a low from November 1999
1398 is a low from January 2000
1401 is a low from April 2000

Support:
1378 is a low from May 2000
1371 to 1373 is the December 2000 peak and the January 2001 peak
The 10 day EMA at 1374
The 18 day EMA at 1365
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high and the February 2002 low at 1360.
1339 is the late September closing high
The 50 day EMA at 1337
1334 is an October 1999 peak
1326.70 is the May 2006 high
1324 to 1329 from the October 2000 lows.

NASDAQ: Closed at 2350.62
Resistance:
2368 is October handle high.
2376 is the April high, the post-2002 high. Just cracked through this level.
2384 is an interim peak from January 1999
2493 is an interim peak from February 1999

Support:
The 10 day EMA at 2348
2333 is the top of the Q1 2006 trading range (the January and mid-March 2006 highs)
The 18 day EMA at 2330
2316 from interim tops in January and March 2006 trading range
2273 is the recent September peak
The 50 day EMA at 2266
2250 is the March 2006 closing low.
2234 is the June 2006 peak (intraday)
2230 is the August 2004/April 2005 up trendline
The 200 day SMA at 2229

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Ft. Lauderdale SOLD OUT!!
I'm proud to announce that Ft. Lauderdale is sold out. With two weeks left, you can put your name on a waiting list. Because life is unpredictable, there may be a cancellation. It happens.

What are you waiting for? Contact me and come experience a weekend you'll never forget. Then, go home with wisdom that will last you a lifetime. Spots are still available for our L.A. December seminar is La-La Land.

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NOVEMBER CPTI PORTFOLIO POSITIONS
CPTI November Position #1 - RUT - Iron Condor - 765.84
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 - 787.24
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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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 October RUT Iron Condor position expired worthless - according to plan. We can now officially add another $3,800 of premium to our cash stash. We have now generated $51,050 ($47,250 + $3,800).

October Zero Plus Position: RUT Iron Condor - 762.13 - PROFIT: $3,800

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 was 610 to 790 -- 180 points!!

Watch for a new Zero Plus position - COMING SOON!!

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CPTI SEMINAR SCHEDULE!
November 11/12 - Ft. Lauderdale
(SOLD OUT!)
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!

44 OUT OF 47 PROFITABLE MONTHS!!
WANT TO ACHIEVE SUCCESS WITHOUT STRESS?
OF COURSE YOU DO!!
USE OUR CPTI WEALTH-BUILDING TECHNIQUES!

You should definitely attend 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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