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MIERDE HITS THE FAN . . . AND WE'RE DOING FINE

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MIERDE HITS THE FAN . . . AND WE'RE DOING FINE

This week has been a real trip. It has tested the mettle of CPTI subscribers. Traders were popping TUMS like M&Ms. Blood pressure pills were flying off the shelves at CVS, and therapists were called for emergency appointments.

Hell, what's 415 DOW points between friends? The RUT was down about 27 points at one point on Tuesday and the S&P was down almost 50. We knew it was coming, didn't we? We didn't know exactly when, or how hard or how fast, but it was inevitable.

I spent a lot of time on the phone today - with seminar grads, clients, my broker, and subscribers -- discussing the market and a variety of scenarios. Being calm under fire comes from education, preparation, experience and confidence. "Chance favors the prepared mind." I heard that quote in an old Steven Seagal movie. It's very true. Actually, the bad guy said it and he ended up dead. Guess he wasn't as prepared as he thought.

Today the VIX (volatility index) went nuts - and it was great. It spiked up to 19.40 shortly during today's big down open. I only wish we weren't already extended in our CPTI portfolio for March and April. There were (and still are) a lot of interesting trading opportunities. I'll look around and possibly post some "unofficial" trading ideas tomorrow.

The fact is, we were pretty lucky (and a little good, too). The correction came when the indexes were near the top of our ranges. So, when the shit hit the fan this week, it basically brought the RUT and SPX down to the middle of our maximum profit ranges. It appears that, as of now, our positions are holding up pretty well.

Our only position that may need a little attention at some point is our OEX April 630/620 bull put spread. The OEX got down to 635 Tuesday and 632 today -- and it shook out some traders. With the higher volatility, it took a lot more to close out the position and some folks took a hit. The bid/ask spreads have also widened significantly. Do you know how to negotiate within those big bid/ask spreads? You should by now. CPTI seminar grads do.

Personally, I wasn't really tempted to get out. My risk tolerance in this environment is probably higher than most. Even if the OEX were to venture into the money, I would likely hold on. There are still seven weeks left to April expiration and there's a lot of cash out there - waiting for the fire sale bargains that we've been seeing. It's likely to find its way back above 630. But, I've been wrong before and I could be wrong now.

It would cost about $2.40 to unwind the April 630/620 bull put spread at this point. We took in $.45. That means our net per contract would be $1.95 x 100 = $195.00. We have 20 contracts so it would be a little under $4,000 - certainly not the end of the world. Considering how much we've been bringing in month after month after month, a $4,000 hit would barely make a dent in our profits. Remember, it's just a cost of doing business. If you can't stand the heat, get out of the kitchen.

Today's Suggested Trade
While the market was bouncing around today, I saw the opportunity to complete our MID Iron Condor. We put on the MID April 900/910 bear call spread and were pleasantly surprised to negotiate a $.65 fill. By the time the posting reached everyone, the MID had popped up. I saw some fills at as much as $.75.

I think it's pretty safe. Under current conditions I have a hard time imagining MID bouncing back, breaking through its 52-week high of 870 and moving past 900 by April. That extra $1,300 feels good in our pockets. If the market tanks substantially more, we may need it. But, it's not likely.

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The Anniversary
Jonathan was in trouble. He forgot their wedding anniversary. His wife was really angry. She told him "Tomorrow morning, I expect to find a gift in the driveway that goes from 0 to 200 in less then 6 seconds...AND IT BETTER BE THERE!!!"

The next morning Jonathan got up early and left for work. When his wife woke up, she looked out the window and sure enough there was a gift-box for her wrapped in the middle of the driveway. Confused, the wife put on her robe, ran out to the driveway and brought the box back in the house. She opened it and found a brand new bathroom scale.

Jonathan is missing and assumed dead.

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NEW SEMINAR DATE - VEGAS, HERE WE COME!!

A year ago I presented a seminar in Las Vegas and that was a huge success. I just completed arrangements for us to return to the same venue on Saturday & Sunday, June 2nd & 3rd.

By popular demand, I'll be offering the $100 early-bird discount for those who complete their reservation by April 10th. Join the family of nearly 300 traders who have attended my two-day advanced seminars and emerged with the knowledge and skills that can make the difference between occasional success and consistent success.

There is only one retake spot remaining for the Las Vegas seminar. It's first come, first served.

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CURRENT MARCH CPTI PORTFOLIO POSITIONS
CPTI March Position #1 - RUT - Iron Condor - 791.03
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).

CPTI March Position #2 - OEX - Bull Put Spread - 642.05

We sold 20 March OEX 620 puts and bought 20 March 610 puts for a credit of $.45 ($900). Maintenance is $20,000. We'll keep watch for an appropriate bear call spread to complete our potential Iron Condor.

CPTI March Position #3 - SPX - Iron Condor - 1403.17

We sold 12 March SPX 1335 puts and bought 12 March 1320 puts for a credit of $.65 ($780). Then we sold 10 March 1490 calls and bought 10 March 1505 calls for a credit of $.80 ($800). Total net credit is $1,580. Maintenance is $18,000 - IF you have the right broker.

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CURRENT APRIL CPTI PORTFOLIO POSITIONS
CPTI April Position #1 - RUT - Iron Condor - 791.03
We sold 20 April RUT 720 puts and bought 20 April RUT 710 puts for a credit of $.45 ($900). Then, we sold 20 April RUT 870 calls and bought 20 April 880 calls for a credit of $.50 ($1,000). Our potential profit is $1,900. Maintenance is $20,000 - IF you have the right broker.

CPTI April Position #2 - OEX - Bull Put Spread - 642.05

We sold 20 April OEX 630 puts and bought 20 April OEX 620 puts for a credit of $.45 ($900). Our potential profit is $900. Maintenance is $20,000.

CPTI April Position #3 - MID - Iron Condor - 836.45

We sold 20 April MID 800 puts and bought 20 April MID 790 puts for a credit of $.55 ($1,100). Then, we sold 20 April MID 900 calls and bought 20 April MID 910 calls and were filled at $.65 ($1,300). Our maximum profit range is 800 to 900. Maintenance is $20,000. Our potential profit is now $2,400. It will be great if this one works out.

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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 $52,425 ($51,050 + $1,375).

ZERO PLUS POSITION -

Our February RUT bull put spread expired 100% worthless. We pocketed $1,375. I'll be looking for an April position and announce it in the near future.

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CPTI SEMINAR SCHEDULE!
Dallas, TX - March 10 & 11

Washington, DC - April 21 & 22 - SOLD OUT!!

Las Vegas, NV - June 2 & 3

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!

48 OUT OF 51 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. 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.

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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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