Option Investor
Updates

ARE YOU READY TO ROLL -- OUT?

HAVING TROUBLE PRINTING?
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The market continues to be weak - even after an attempt to hold on Wednesday and Thursday. A number of you are concerned. So, here is an alternative. This is based on an assumption that the market will continue down, find a bottom, and begin to work its way back up in the near future.

How do we define near future? How long is the process? Good question. If the market continues down, it will likely find a bottom in the next week or so. Watch for a reversal day. Then it will begin the tedious journey back up. It won't necessarily be a smooth trip. There will be a lot of volatility.

For the purposes of this example, let's give it a few months. The question is - how do we adjust out position(s) to give ourselves the time they may need to come back up and ultimately expire worthless? We'll use our April OEX 630/620 as an example.

Step One
Let's calculate how much it will cost to close the current position. Based on Friday's closing prices, we could likely buy back the 630 put and sell the 620 put for a debit of about $3.00. We originally took in a credit of $.45. So, we have a net debit of about $2.55. We traded 20 contracts. Therefore, we have a debit of about $5,100.

Step Two
Where do we go from here? Based on our two-month time estimate, let's check out the May cycle first. That would give us a good 11 weeks. A lot can happen in 11 weeks.

If we were to duplicate the OEX spread we currently hold, we could sell the May 630 put and buy the May 620 put for a credit of about $3.30. If we also duplicated the number of contracts (20), we would take in a credit of about $6,600. That means we would have replaced the $5,100 we just spent to close out the April OEX 630/620 spread - plus, we would have an extra $1,500 of potential profit - if our prognostication (guess) works out. Our maintenance would be the same $20,000 on the 20 contracts traded.

Now, there is a way to reduce our risk a bit here. If our goal is to just escape with our family jewels intact, we might choose to only trade 16 contracts of the new May 630/620 bull put spread. Sixteen contracts would generate a credit of about $5,280 - which would replenish our $5,100 debit and leave a few bucks to cover commissions and 10 pounds of tasteless tofu.

Trading 16 contracts instead of 20 would also reduce our exposure and maintenance requirement to $16,000 instead of $20,000.

Alternatives
We could also opt to gain some extra safety in the form of another 10 points of cushion. Instead of rolling to the May 630/620 bull put spread, let's check out the May 620/610 bull put spread.

If we sold the May 620 put and bought the May 610 put, we could bring in a credit of about $2.10 - or $4,200 (on 20 contracts). That's $900 less than the $5,100 debit we spent when closing our original position. We could either up the number of May contracts to 25 to make up the difference - or we could accept the $900 short as a cost of doing business and be happy we now have an extra ten points of safety.

That is the thought process behind the rolling out process. This can be applied to any position that is being threatened. There are a lot of choices at this point. Sharpen your pencils and come up with a plan.

Just because I've outlined the "rolling out" process here does not necessarily mean I'm ready to do it with our CPTI portfolio positions. We will have seven weeks left to April expiration - which may very well be sufficient time for the market to bottom and come back. I'll let you know if/when I'm making an adjustment, but ultimately the decision is yours. Everyone has their own risk tolerance. If you're waking up at 3 a.m. in a cold sweat worrying about the OEX, the cost of oil, and the China markets, then it's time for you to rock and ROLL OUT -- or GTFO, GTFI and LAC.

Be careful, my friends. Trade smart and focus. It's your money that's out there.

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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 - 775.44
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 - 635.28

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 - 1387.17

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 - 775.44
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 - 635.28

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 - 823.69

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, 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. You snooze, you lose.

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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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