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A FEW TRADES FOR THE “OCTD” CROWD

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A FEW TRADES FOR THE "OCTD" CROWD

The quickies this month are really scary - even more so than most months. Why? Because investors are nuts and they're pouring money into the market. Today dozens of records were broken and new 52-week-highs were made at every turn. Lots of green numbers - and possibly more to come. Traders over-reacting to virtually every newsbyte.

Fortunately, our current July positions still have comfortable cushions and we look to be in relatively safe territory for the last week of this five-week option cycle. These damn things seem to go on forever.

Every month I come up with some quickie trades and this month isn't any different. The strategies we use are best suited for non-trending markets - which doesn't describe the fiasco we're experiencing now. So, since you are cruisin' for a bruisin', let's throw on a few positions. Remember, these are not official CPTI portfolio positions. These are plays for traders who live in rubber rooms and who believe those little voices in his head saying "go ahead, it's only money."


July Quickie #1 - RUT Iron Condor.
With the RUT at 855.18, let's

Sell 20 July RUT 830 puts - RUZSF
Buy 20 July RUT 820 puts - RUZSD
Credit of about $.85 ($1,700)

Sell 20 July RUT 870 calls - RUZGN
Buy 20 July RUT 880 calls - RUZGP
Credit of about $1.15 ($2,300)

Total credit and profit potential of about $4,000. Maximum profit range is 820-870. Maintenance is $20,000.

July Quickie #2 - SPX Iron Condor
With the SPX at 1547.70 let's:
Sell 15 July SPX 1520 puts - SXMSD
Buy 15 July SPX 1505 puts - SXMSA
Credit of about $1.40 ($2,100)

Sell 15 July SPX 1575 calls - SXMGO
Buy 15 July SPX 1590 calls - SXMGR
Credit of about $1.15 ($1,725)

Total credit and profit potential of about $3,825. Maximum profit range is 1520-1575. Maintenance is $22,500.

Let me repeat. These are dangerous trades - especial in this trading environment. I don't trade them and only those with a financial death wish should put these on. It's Russian Roulette with puts and calls. Who knows, they may work out OK and there's a nice profit to be had. But we're supposed to be trying to put the probabilities in our favor. This is not the way to do it.

Remember, for those of you with OCTD (Obsessive Compulsive Trading Disorder), adjust the number of contracts to your account size and risk tolerance. Be sure to watch the positions carefully and be prepared to GTFO.

I actually wanted to come up with a few XSP Butterfly Net trades for those with a downside bias and those with an upside bias, but the XSP quotes are screwed up on my eSignal tonight.

Here are a few supplemental butterfly idea, using IWM (Russel 2000 Equivalent). They are relatively low risk trades. Again, these are not official CPTI portfolio trades. With IWM at 84.82, let's:

If you're bearish, consider this:
Buy 10 July IWM 84 puts - IOWSF
Sell 20 July IWM 83 puts - IOWSE
Buy 10 July IWM 82 puts - IOWSD
Debit of about .11 ($110)

If you're bullish, consider this:
Buy 10 July IWM 86 calls - IOWGH
Sell 20 July IWM 87 calls - IOWGI
Buy 10 July IWM 88 calls - IOWGJ
Debit of about .15 ($150)

If you're bullish or bearish, these are a few choices for you. You could conceivably do both. By now, you know how to do the math on a butterfly. Just remember to figure in the commission costs. They can add up, but shouldn't prevent you from using this strategy.

Always double check your strikes and symbols before placing the trade.

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CURRENT JULY CPTI PORTFOLIO POSITIONS

CPTI July Position #1 - SPX - Iron Condor - 1547.70

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 - 1547.70

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 - 855.18
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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CURRENT AUGUST CPTI PORTFOLIO POSITIONS
CPTI August Position #1 - RUT - Bull Put Spread - 855.18

On 6/29, with the RUT at 844, we sold 20 August RUT 740 puts and then bought 20 August RUT 730 puts for a credit of $.45 ($900). Total net credit and profit potential of about $.45 ($900). Our maintenance is $20,000. We'll look for opportunities to complete our Iron Condor if/when the market pops up.

CPTI August Position #2 - SPX - Iron Condor - 1547.70

On 7/3, with the SPX at about 1524.50, we sold 12 August SPX 1400 puts and bought 12 August SPX 1385 puts for a credit of $.65. Then we sold 12 August 1615 calls and bought 12 August 1630 calls for a credit of $.80. The total net credit of $1.45 and profit potential is $1,740. Maintenance requirement 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. Our new cash total is $52,210 ($49.610 $2,500).

ZERO PLUS POSITION -
RUT - Iron Condor - 855.18

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!

WATCH FOR 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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