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ANOTHER NEW MARCH POSITION

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Now you see it, now you don't. Yesterday, the VIX sank to near historic lows, closing at 9.89. For a minute there, it seemed like the bull was back. Today was a different story. The market gave back everything it gained on Wednesday and then some. The VIX spiked to as high as 11.38 interday before closing at 11.22.

In my humble opinion, I think the market may have topped out. There was no follow through to the big up day on Wednesday. I feel pretty good about putting on the bear call spread to complete our March RUT Iron Condor. We sold 20 March RUT 850 calls and bought 20 RUT 860 calls for a net credit of $.45 ($900). IF you have the right broker, this trade should require no additional maintenance. Over 1,000 contracts traded on our bear call spread. If you missed it, there's a reasonably good chance you'll be able to get a fill tomorrow.

Tomorrow is Friday - always one of my favorite trading days. The market finished relatively close to its lows. We'll see if there is some follow through to the down side. Let's see if we can add to our March CPTI portfolio with this OEX trade. With the OEX at 661.34, let's:


Sell 20 OEX March 620 puts - OEYOD
Buy 20 OEX March 610 puts - OEYOB
Credit of about $.45 ($900)

 

Net credit and profit potential of $.45 ($900). Maintenance is $20,000. Double check the option symbols before you trade. Make sure to scale up or down your contract size to your account size and risk tolerance. Also, you shouldn't use up all of your maintenance dollars - especially if you have Iron Condors positions. Always leave some free cash to deal with positions that you may have to exit. If you don't, it can get messy, costly, and confusing.

Our current cushion on this new OEX position is 41.34 -- and it has to last for another seven weeks. Be prepared for a wild ride. The market is bouncing around - up, down, and sideways. It will probably keep bouncing until it corrects or settles into a range. Keep the tranquilizers handy, we may need them.

In the meantime, if you want to free up some maintenance dollars, you should throw out orders to close out the RUT 690/680 bull put spread and the OEX 615/605 bull put spreads for a nickel each. It doesn't cost anything to put out the order. You might make it a CTC (good till cancel) order. That way, you won't have to concern yourself with re-entering the order every day. There's certainly no guarantee that you're going to get filled, but I can guarantee one thing - if you don't have an order out there, not a damn thing is going to happen.

I'm we're going to look for other March opportunities on the SPX. here are some SPX support and resistance levels that might come in handy.

S&P 500: Closed at 1440.13
Resistance:
1444 from February 2000
1475 from peaks in December 1999 and January 2000

Support:
1425 is an interim high from November 1999
The 18 day EMA at 1424
1408 is the November high
The 50 day EMA at 1408
1401 is a low from April 2000
1390 is the October high.
1389 is a low from November 1999
1378 is a low from May 2000
1371 to 1373 is the December 2000 peak and the January 2001 peak
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high
and the February 2002 low at 1360.

Don't Procrastinate . . .
There are only a few spots left for the April 21/22 Washington DC seminar. There are still spots left for the March 10/11 Dallas seminar. Don't put it off. Contact me soon. If you snooze, you lose.

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CURRENT FEBRUARY CPTI PORTFOLIO POSITIONS
CPTI February Position #1 - RUT - Bull Put Spread - 784.19
We sold 20 February RUT 690 puts and bought 20 February RUT 680 puts for a credit of $.55 ($1,100). 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 - Iron Condor - 1423.90

We sold 12 February SPX 1325 puts and bought 12 February SPX 1310 puts for a credit of $.70 ($840). On Jan. 8, we also sold 12 February SPX 1475 calls and bought 12 February 1490 SPX calls for a credit of $.75 ($900). Our net credit and profit potential is $1.45 ($1,740). Maintenance is $18,000.

CPTI February Position #3 - OEX - Bull Put Spread - 661.34

We sold 20 February OEX 615 puts and bought 20 February 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 MARCH CPTI PORTFOLIO POSITIONS
CPTI March Position #1 - RUT - Bull Put Spread - 784.19
We sold 20 March RUT 700 puts and bought 20 March RUT 690 puts for a credit of $.65 ($1,300). Then, on 1/25, we sold 20 March RUT 850 calls and bought 20 RUT 860 calls for a net credit of $.45 ($900). Our net credit and profit potential is $1.10 ($2,200).

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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.

ZERO PLUS POSITION -

Zero Plus - February Position - RUT - Bull Put Spread - 784.19
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

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. 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!

47 OUT OF 50 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?

Note to the hundreds of former CPTI seminar graduates: There are no free retake spots remaining for Dallas or for Washington, DC. He who hesitates . . .

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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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