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A FEW IRON CONDOR RULES TO LIVE BY

HAVING TROUBLE PRINTING?
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Anyone who reads my columns knows that the Iron Condor is the basic strategy for our CPTI trading portfolio. Every month there are more and more people subscribing to the Couch Potato Trader. That's great! Our family is growing - and I welcome you. However ...

There are those who subscribe who really want to learn (bless you). Then, there are those who subscribe who want to be spoon fed. They see my track record and want to put some of those profits in their pockets. They think that they can take my suggested trades and pocket the profits without paying their dues - without doing a little homework. Those who have never traded an option in their life expect their hand to be held through the entire process. You need a reality check. I don't have that many hands.

My Couch Potato Trader column is for traders who have been around the block a few times. It's for option traders who have lost their ass as directional traders and want to stop the bleeding. It's for those who are flexible and creative thinkers - or for those who want to be! It's for students, not robots. The Couch Potato Trader is more than a tout sheet. Learn the strategy and the thought process, and this column will give you guidance and be your best friend. If you don't learn, you're taking a big risk. In other words, don't try this at home without adult supervision.

It's funny when I get some emails from those who want me to send suggested trades out when it's convenient for THEM. Then, with every trade I send out, I regularly get emails saying, "I don't see any premium" or asking "I didn't get filled, what should I do?" or "When are you going to make your next recommendation?"

Many of these same questioners are frustrated when I suggest they go back and read the archive of past columns. Gee, that would require a little effort, wouldn't it? The question also comes, "Aren't you going to explain to us how to place the trade?" NO, I'm not. I may suggest that you place both options of the spread simultaneously, but I'm not going to explain that you need to type the options symbol in one little box and the credit in another little box and the quantity in a third little box and then hit the "submit" button. If you need that kind of hand-holding, call your broker or your mommy, not me!

Our successful subscribers, and there are hundreds, will, to a man (or woman), attest to the fact that it's not as easy as it looks. Once established, our style of trading doesn't require constant monitoring. Checking the market once or twice a day should be sufficient. But, for the most part, the trades are hands off. These successful subscribers are making anywhere from $500 to $10,000 a month. Once you have the knowledge, it can last you a lifetime.

Entering our trades often takes a little patience, a little ingenuity and even some creativity to get filled. If you don't have those qualities, you may get filled, but it will often be by accident. Then, what will happen if the trade goes bad? What will you do?

First, you should know what you would do if the trade goes bad BEFORE you even enter the trade. Have an exit strategy. Don't expect the cavalry to ride in to save the day. The cavalry died along with Gene Autry, Zorro, and the Lone Ranger.

How do you acquire these skills and/or qualities? They don't grow on trees. They don't come gift-wrapped. You won't find them under your Xmas tree. You have to earn them. They come from experience and reading the column archives - and, for those who want to speed up the learning curve, attending a seminar.

I'm around to answer specific questions as you work your way through the column archives. It's my pleasure to respond to inquiring minds. And, most of all, recognize that trading these strategies is not like Minute Rice. Be diligent, be patient and you will ultimately be profitable.

The moral of this story is: Don't cry over spilled premium. You can do something about it.

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BASIC IRON CONDOR CONCEPTS - Plus some miscellaneous thoughts

1. Trade ONLY broad based indexes. Many have traded Iron Condors on equities and have lived to regret it. Do they learn from their experience? Unfortunately, only a few do.

2. Have a broker that holds maintenance on only one of the credit spreads. You'd be amazed how many traders still use Neanderthal brokers. Either they're stupid or have too much money for their own good. They likely won't have it for long.

3. Use a broker that enables you to place contingency orders. You're not always going to be able to be there.

4. Look for bull put and/or bear call spreads about six weeks away from expiration. This can fluctuate depending on the volatility environment.

5. Look for an index that is not trending. If the index is obviously trending, putting on a credit spread opposite the trend is acceptable, but don't compromise on the cushion size.

6. Get at least a $.40 credit limit on 10-point spreads.

7. Get at least a $.60 credit limit on a 15-point spread.

8. Maximum spread size should be 15-points (preferably less). Why? Because the value of the long option will be of little, or no, help if the trade goes bad.

9. Look for bull put spreads far out-of-the-money and well below support levels, moving averages, etc.

10. Look for bear call spreads far out-of-the-money and well above resistance levels, moving averages, etc.

11. What is your money management plan?

12. Determine your stop loss. What are you willing to risk on this trade?

13. Are you diversified? Or, is your entire account in one position (dangerous stuff here)

14. Don't trade if you don't have a comprehensive knowledge of the strategy. It can be very costly.

15. Accept the fact that, during the learning process, you will make some mistakes - and they may cost you some money. If you're successful right away, it's because you're a genius, you just have a knack or you're damn lucky. Take a wild guess at which of those applies to you.

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SAVE $100 with our EARLY BIRD SEMINAR SPECIAL - 11 Days Left!
For traders interested in attending both the Dallas seminar on March 10th & 11th or Washington, DC seminar, I offer you an "Early Bird Special." If you reserve your spot prior to January 15th, you will SAVE $100. There's nothing to compare to the one-on-one instruction, the passion, the camaraderie, and the entire experience of my seminars.

So far, over 20 CPTI students have taken advantage of the "Early Bird Special." There are still spots left in both seminars. Don't wait too long. Seminar grad, Ed, will be attending the Dallas seminar. It will be his fourth time. He already understands the strategies. He keeps coming back for the experience.

Note to former CPTI seminar graduates: There are NO free retake spots remaining for Dallas and only two free retake spots remaining for Washington, DC. He who hesitates . . .

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CURRENT JANUARY CPTI PORTFOLIO POSITIONS
CPTI January Position #1 - RUT - Bull Put Spread - 789.95
We sold 20 January RUT 690 puts and bought 20 January RUT 680 puts for a credit of $.50 ($1,000). Our net credit and profit potential is $.50 ($1,000). Maintenance is $20,000. If the market stops trending, we'll look for a bear call spread to complete our Iron Condor.

CPTI January Position #2 - SPX - Iron Condor - 1418.34
We sold 12 January SPX 1300 puts and bought 12 January SPX 1285 puts for a credit of $.70 ($840). Our net credit is $.70 ($840). We also sold 12 SPX January 1470 calls and bought 12 SPX January 1485 calls for a credit of $.60 ($720). Total net credit and profit potential of $1.30 ($1,560). Maintenance is $18,000. Maximum profit range is 1300 to 1470.

CPTI January Position #3 - OEX - Bull Put Spread - 661.00
We sold 20 January OEX 615 puts and bought 20 January 605 puts for a credit of $.40 ($800). Maintenance is $20,000. We'll keep watch for an appropriate bear call spread to complete our potential Iron Condor.

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CURRENT FEBRUARY CPTI PORTFOLIO POSITIONS
CPTI February Position #1 - RUT - Bull Put Spread - 789.95
We sold 20 February RUT 690 puts and bought 20 February RUT 680 puts for a credit of $.55 ($1,000). Our net credit and profit potential is $.55 ($1,100). Maintenance is $20,000. If the market stops trending, we'll look for a bear call spread to complete our Iron Condor.

CPTI February Position #1 - SPX - Bull Put Spread - 1418.34
We sold 12 February SPX 1325 puts and bought 12 February SPX 1310 puts for a credit of $.70 ($840). Our net credit and profit potential is $.70 ($840). Maintenance is $18,000. If the market stops trending, we'll look for a bear call spread to complete our Iron Condor.

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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. We have now generated $51,050 ($47,250 + $3,800).

NEW ZERO PLUS POSITION -
Zero Plus - February Position - RUT - Bull Put Spread - 789.95
We sold 25 February RUT 690 puts and bought 20 February RUT 680 puts for a credit of $.55 ($1,375). Our net credit and profit potential is $.55 ($1,375). Maintenance is $25,000. If the market stops trending, we'll look for a bear call spread to complete our Iron Condor.

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CPTI SEMINAR SCHEDULE!
Dallas, TX - March 10 & 11
Washington, DC - April 21 & 22

If you really want to take your trading from a "hobby" to a potentially profitable "business," you need 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 - 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 Los Angeles. Contact me and I'll personally 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!

46 OUT OF 49 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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