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WHEN YOU GOTTA' GO, YOU GOTTA' GO

HAVING TROUBLE PRINTING?
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It was time to GTFO. With the market topping out - or it seems like it might happen soon - we couldn't take the chance on getting buried with a huge continued breakout to the upside. As I mentioned in the earlier posting, tomorrow morning is a big jobs number. And, lately, the market has been taking all economic numbers, good or bad, and spinning them positive. We're due for a correction, but this nonsense can go on for a long time before the market exhausts the supply of last minute buyers.

So, when we rolled our May SPX Iron Condor, we bought some time and gave ourselves a bit of a cushion. If the market continues straight up, we may very well find ourselves in another uncomfortable situation.

Remember me harping on you keeping some powder dry? Today is a perfect example why. We needed those additional funds for maintenance on the additional contracts we traded as we rolled into June. Those with smaller accounts, who didn't have the necessary dollars to roll out, found themselves at a distinct disadvantage.

There are a number of ways to deal with a position that is being threatened. This particular tact is our attempt to increase our probability of success. The added time and the added cushion give us a fighting chance.

Today's SPX Adjustment
Let's take a closer look at what we did today. Our Iron Condor's 1505/1520 bear call spread was being threatened. Not knowing what the future holds, we couldn't hold on any longer. Our original position had a maximum profit range of over 200 points. But, we had to put on the position so far in advance to get reasonable premium that we were exposed to the market too long. We're usually able to get away with it, but not this time. So, with the SPX at 1501 and over two weeks to go, we were sitting with:

Short 12 SPX 1505 calls, Long 12 SPX 1520 calls. Short 12 SPX 1300 puts, Long 12 SPX 1285 puts. We took in $1.30 x 12 contracts = $1,560.

To roll our position to June, we first had to close out our 1505/1520 bear call spread. We were able to do that for a debit of $6.90 x 12 contracts = $8,280.

Now, we have to look at our maintenance. Closing the bear call spread did not release our maintenance because we still had the 1300/1285 bull put spread. Fortunately, we were able to close the bull put spread for a debit of $.10 x 12 contracts = $120. Our total debit was $8,400 ($8,280 $120).

Next, we found our new position. If we put on the SPX June 1535/1550 bear call spread, we could take in $4.30 x 18 contracts = $7,740. Notice what we increased the number of contracts by 50% - from 12 to 18. So, when you increase the number of contracts, you also increase your exposure and risk. In this instance, the maintenance requirement went to $27,000 from $18,000 - an increase of $9,000.

With $7,740 now back in our pocket, we were able to find a bull put spread (far far OTM) to take in some additional credit and complete our new Iron Condor. The June 1410/1395 bull put spread filled the bill. We took in $.70 x 18 contracts = $1,260.

Our total credit for the new June Iron Condor is $9,000. So, we spent $8,400 to close our May SPX Iron Condor. Then, we took in $9,000 on our new June SPX Iron Condor. We actually picked up an extra $600 in premium. Don't go out and spend that $600 quite yet. All this bobbing and weaving and maneuvering required a bunch of commissions. There will still be a few bucks left over. Also, note that our original profit of $1,560 is still built into the position. That's a small extra cushion, but don't go spending that either.

The actual logistics of rolling out can be cumbersome. The locating of strike prices and planning out the adjustment is something you need to do ahead of time. If you wait until you're sitting at the computer during trading hours, you'll be scattered and likely to make a mistake. We saw this one coming. We were calculating each roll-out alternative along the way. We were ready. Were you?

Now the waiting game. If we're right, and the market is over extended, we might just escape from this fiasco with the family jewels intact. If not, we may just bite the bullet or dance our roll-out dance one more time. Just make sure that you have the dollars available to give you the flexibility you need to make a choice, rather than being forced to take a single alternative.

What If . . .
If we had made this roll-out adjustment five points and a week earlier, we likely would have had more choices and might have been able to roll into a May position as opposed to a June position. Or, we might have had an additional strike or two as cushion for our June position. The decision of when to roll is an individual one. Many traders draw a line in the sand at 10 points from the threatened short strike price. Others hold on a bit longer.

Keep the faith, troops. Whatever happens, we'll deal with it. We've made good money for a long time - and we'll keep making it. This is just a bump in the road. Our strategies are sound. It's money management that will determine the degree of our success.

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NEW CPTI SEMINAR DATE - CHICAGO, July 27th & 28th
By special request, the largest number of CPTI students responded and want us to come back to the Windy City. So, check your schedules and contact me to reserve your spots. Take advantage of the EARLY BIRD SPECIAL. You'll SAVE $100, if your reservation is completed by June 15th.

I'm arranging a tour of the Chicago Board Of Options Exchange (CBOE) for attendees on the Friday prior to the seminar for those who can make it. Have you ever wondered how our orders are processed? Where do they go? How does the system work? Here's your chance to find out first hand.

There are still two spots remaining for my June 2nd & 3rd Las Vegas seminar. It's always a great time in Vegas and a great learning experience. Don't wait too long. These spots will be gone soon.

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CURRENT MAY CPTI PORTFOLIO POSITIONS
CPTI May Position #1 - SPX - Iron Condor - 1502.39

On 3/28, with the SPX at about 1419, we sold 12 May SPX 1300 puts and bought 12 May SPX 1285 puts for a credit of $.70. Then we sold 12 May SPX 1505 calls and bought 12 May SPX 1520 calls for a credit of $.70. Our net credit and profit potential is $1.40 ($1,680). Our maximum profit range is 1300 to 1505. Our total maintenance is $18,000.

CPTI May Position #2 - RUT - Iron Condor - 828.87

We sold 20 May RUT 710 puts and bought 20 May RUT 700 puts for a credit of $.45 ($900). Then, we sold 20 May RUT 870 calls and bought 20 May 880 calls for a credit of $.60 ($1,200). Our potential profit is $2,100. Maintenance is $20,000.

CPTI May Position #3 - OEX - Bull Put Spread - 689.40

We sold 20 May OEX 615 puts and bought 20 May OEX 605 puts for a credit of $.45 ($900). Our potential profit is $900. Maintenance is $20,000.

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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).

PREVIOUS ZERO PLUS POSITION - SPX Iron Condor

We sold 12 April SPX 1315 puts and bought 12 April SPX 1300 puts for a credit of $.65. Then we 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.

Closed out above April zero-plus position for $2.10. We had taken in $1.30, so we had a loss of $80 per contract (x 18 = $1,440).

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

Chicago, IL - July 27th & 28th

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!

50 OUT OF 53 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?

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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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