Option Investor
Updates

A NICE BEGINNING FOR JULY

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The rollercoaster ride continued on Friday. It's enough to make you nauseous, but with every queasy feeling comes an opportunity. On Friday, in the first half hour of trading, there were 2-3 opportunities to get our RUT bear call spread filled and then it was all downhill from there. Did you get filled on the 770/760 bull put spread? Or, were you patient? If you waited, you had the chance to get the same premium (about $.55) for the 760/750 bull put spread.

That's what I mean when I write about being flexible and creative. As the market fell, there wasn't much doubt about the 770/760 bull put spread being filled at, or near, the $.55 suggested premium. The question was whether or not the RUT would go down far enough to make the 760/750 bull put spread worthwhile.

According to the volume figures, there were thousands of contracts traded - most of which were the suggested 770/760 bull put spreads. They were filled at anywhere from $.55 up to $.70.

On the other hand, some traders exercised patience, and a degree of creativity, in putting on the safer 760/750 full put spreads. They were filled anywhere from $.40 up to $.63. Remember, when placing orders on the RUT, you can do it in penny increments.

I fully expect another bounce-back day (but what do I know?). It might come in handy for those who didn't fill their bear call spreads. I have no idea where the market goes from there. But, there will likely be some bargain hunters with lots of money ready to buy the dips. That's what has happened time and again on recent seemingly severe daily pullbacks.

Now, we have three positions for July. I'm keeping an open mind to put on another Butterfly Net position if it looks like the market is really going to roll over. Last month we anticipated the roll-over. We guessed wrong, but maybe our timing was off a bit. We only allowed a week for the market to move. If we put on a similar position for July, we'll have almost four weeks to be right - and our risk will still be a fraction of the potential profit.

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The Best Quote of 2007 (so far)
By Chris Rock, comedian

"You know the world is going crazy when the best rapper is a white guy, the best golfer is a black guy, the tallest guy in the NBA is Chinese, the Swiss hold the America's Cup, France is accusing the U.S. of arrogance, Germany doesn't want to go to war, and the three most powerful men in America are named Bush, Dick, and Colon.

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CURRENT JULY CPTI PORTFOLIO POSITIONS

CPTI July Position #1 - SPX - Iron Condor - 1502.56

On 5/30, we sold 15 July SPX 1400 puts and bought 15 July SPX 1385 puts for a credit of $.70 ($1,050). On 6/4 we put on the bear call spread to complete our Iron Condor. We sold 15 July SPX 1625 calls and bought 15 July SPX 1640 calls for a credit of $.70 ($1,050). Our net credit and profit potential is $2,100. Our maintenance is still $22,500.

CPTI July Position #2 - SPX - Iron Condor - 1502.56

On 6/4, with the SPX at about 1536, we sold 12 July SPX 1440 puts and bought 12 July SPX 1425 puts for a credit of $.70. Then we sold 12 July 1625 calls and bought 12 July 1640 calls for a credit of $.70. The total net credit of $1.40 and profit potential is $1,680. Maintenance requirement is $18,000.

CPTI July Position #3 - RUT - Iron Condor - 834.75
On 6/21, with the RUT at 839.81, we sold 20 July RUT 770 puts and then bought 20 July RUT 760 puts for a credit of $.55 ($1,100). Then we sold 20 July RUT 900 calls and bought 20 July RUT 910 calls for a credit of about $.40 ($800). Total net credit and profit potential of about $.95 ($1,900). We have a 130-point maximum profit range- from 770 to 900. Our 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. Our new cash total is $52,210 ($49.610 $2,500).

NEW ZERO PLUS POSITION -

RUT - Iron Condor - 834.75

On 6/21, with the RUT at 839.81, we sold 30 July RUT 770 puts and then bought 20 July RUT 760 puts for a credit of $.55 ($1,650). Then we sold 20 July RUT 900 calls and bought 20 July RUT 910 calls for a credit of about $.40 ($1,200). Total net credit and profit potential of about $.95 ($2,850). We have a 130-point maximum profit range- from 770 to 900. Our maintenance is $20,000.

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CPTI SEMINAR SCHEDULE!

NEW DATES TO BE ANNOUNCED SOON.
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!

51 OUT OF 55 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 Trader 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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