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ARE WE ON THE WAY UP?

HAVING TROUBLE PRINTING?
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Four weeks to go - and I'm finding out that many CPTIers might be looking at some potential problems to the upside. I've received more than a few emails from students who used the big down movement, and volatility spike, a few weeks ago as an opportunity to put on bear call spreads. Well, it seemed like a good idea at a time.

However, the damn market doesn't want to make things easy for us. We'll keep our eyes open and be ready if/when we need to adjust or GTFO. The upper trend-line on the SPX chart is about 1455. We can look for the market to work its way up there and possibly test the highs. Will you still be there?

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A Great Time To Start?
Mike -- This is the first month that I've tried your strategies. I like the concept of trading the indexes instead of individual stocks. I've been selling options on stocks for the past year and been fairly successful, but I like your ideas better. However, I think I just picked a bad time to start.

On Monday, I sold my first round of April contracts - SPX 865/875 bear call spread, MID 880/890 bear call spread, and the RUT 840/850 - 700/690 iron condor. I sold all the calls above the 52-week highs and thought I had some room to play with -- especially with the market trending down. Apparently I was wrong. My question to you is -- at what point do you get worried? I've seen my account drop this week from 95,000 to about 83,000. Since there are still four weeks left in this cycle, would it be better to get out of these positions and live to fight another day, or wait and see? I'm not looking for any hand-holding, just a little advice. Love the newsletter. Thanks. -- John

Hi John -- April might prove to be a difficult month, but it looked that way for March too, and it worked out. I hope in your first month you only traded a few contracts each. When you're trying something new - a new style of trading -- you should put your toe in the water first. You should also have a complete understanding of the strategy and know the exit alternatives.

Everyone has a different exit point based on a number of variables - account size, risk tolerance, which support and/or resistance levels you used, and your personality.

SPX 865/875 bear call spread? Did you mean 1465/1475? Your spread might be just fine. 1460 is right above the 52-week high. But, for resistance to work, you have to give it a chance. That means that the SPX might go all the way to 1460 (or past) before it bounces back (if it bounces back). If it does go to 1460, your account will look like (on paper) that you're losing a lot of money. Can you handle that? If you're going to worry every day about where the account is, you might not have the right temperament for this style of trading. You have to keep your emotions out of it and you have to be properly capitalized and able to take a loss if necessary. If you hold on, you may lose on this trade. It may take you three months to make back what you lost -- IF you're doing things right. That's all part of the business.

When do I get worried? I know ahead of time (when I put on the position) that I've traded a conservative number of contracts in relation to my account size so that I can be patient and let the market bounce around and do its thing. If I take a loss, it's not the end of the world. It doesn't happen too often, but I'm perfectly okay with it. If we're going to use charts to help decide where we put our strike prices, then we have to live with those decisions and should give the support and resistance levels a chance to work. Otherwise, why bother to look at the charts in the first place? Getting out 10-15-20 points from the resistance levels defeats the purpose. But, for some, it may be the right thing to do.

BTW, where are your bull put spreads for the SPX and the MID? The premium you took in on these bull put spreads will help to defray the cost of closing the bear call spread if the situation calls for it. In the last week (especially on Monday and Tuesday), there has been sufficient premium to come up with something safe on the bottom side.

Keep in mind that what I do works for me. It's not necessarily going to work for everyone. Different strokes for different folks.

Also, for future reference, I hope you've taken the time to go back and read my archived columns. If you did, you would have noticed that I rarely put on more than one position a day. That's partly for the sake of a little additional diversification. It often happens that, within minutes of my posting a suggested trade, the market decides to move a chunk in one direction or the other. Many CPTI students can attest that it's tough to get into a trade when the option chain has changed that much. That kind of movement requires, on the part of the trader, thought, imagination and a bit of creativity in perhaps establishing a new strike price and credit limits. And, sometimes, it's appropriate to take a step back and wait.

That trading skill (or mindset) comes from a combination of common sense, instruction and experience - plus having an open mind doesn't hurt either. We discuss these scenarios, and many others, at length at my seminars - along with entry alternatives, exit and adjustment methods, negotiation with market makers, and a lot more.

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S&P 500: Closed at 1436.11
Resistance:
1440 is the mid-January high
1444 from February 2000
1455 is the late November to February up trendline
1461.57 is the February 2007 high.
1475 from peaks in December 1999 and January 2000

Support:
1432 is the December 2006 high
1425 is an interim high from November 1999
The 90 day MA at 1418
The 50 day EMA at 1416
1410 is the 'hump' high
1408 is the November high
1389 is the October peak.
1374 is the early March low
1371 to 1373 is the December 2000 peak and the January 2001 peak
1369 from early October 2006
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high and the February

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VEGAS - ONLY 6 SPOTS LEFT!
The June Las Vegas two-day advanced seminar is filling up fast. Take advantage of the $100 early-bird special by completing your reservation by April 10th. There are only six spots remaining. Washington is sold out. Las Vegas will likely follow suit soon. Don't be left out. Reserve your spot for the Las Vegas June 2nd & 3rd seminar today!

Join the family of over 300 traders who have attended my two-day advanced seminars and left with the knowledge and skills that can make the difference between occasional success and consistent success.

Sorry, there are no more retake spots remaining for the Las Vegas seminar.

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CURRENT APRIL CPTI PORTFOLIO POSITIONS
CPTI April Position #1 - RUT - Iron Condor - 809.51
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 - 655.98

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 - 855.68

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.

CPTI April Position #4 - SPX - Iron Condor - 1436.11

We sold 12 April SPX 1315 puts and bought 12 April SPX 1300 puts for a credit of $.65. Then we sold 12 April SPX 1470 calls and bought 12 April SPX 1485 calls for a credit of $.65. Our net credit and profit potential is $1.30 ($1,560). Our total maintenance is $18,000.

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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).

NEW ZERO PLUS POSITION - SPX Iron Condor - 1436.11

We sold 12 April SPX 1315 puts and bought 12 April SPX 1300 puts for a credit of $.65. Then se sold 18 April SPX 1470 calls and bought 18 April SPX 1485 calls for a credit of $.65. Our net credit and profit potential is $1.30 ($2,340). Our total maintenance is $27,000.

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CPTI SEMINAR SCHEDULE!
Las Vegas, NV - June 2 & 3

Dallas, TX - March 10 & 11 - SOLD OUT!!

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

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 to 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, 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. Send me your phone number. 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. You'll have a two-day experience that you'll remember, and profit from, for a lifetime. I limit our CPTI seminars to ONLY 25 ATTENDEES. And, as a bonus, if you attend one of my CPTI seminars, you are entitled to RETAKE the seminar a SECOND TIME at NO CHARGE!

49 OUT OF 52 PROFITABLE MONTHS!!
WANT TO ACHIEVE SUCCESS WITH LESS 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?

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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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