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WAITING FOR THE SETTLEMENT

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AWAITING THE SETTLEMENT

It seems we're well on our way to our 52nd profitable month out of 56 months. It looks as though we're going to make back a huge chunk of last month's misfortune. It's taken awhile - five l-o-o-o-n-n-n-g weeks. Hopefully, it will have been worth the wait.

We added a new August position today - a bull put spread (770/760) on the RUT. Some were filled at $.45, but it appeared that most traders were filled at $.40 - not bad. As we know, the RUT can be particularly tough to trade. I wouldn't be surprised if many orders were put in at $.45 and never got filled. Why another RUT bull put spread? It's hard to fight the trend - and the trend is up until it shows us otherwise.

Well, based on Google's earnings miss, the market was trading down after hours (Google was down 40 points). It may provide those who didn't get filled with another opportunity. It may even offer more than the $.45. But, as I say, don't get greedy. With the short 770 put, we have over an 80-point cushion for about four weeks. Usually, we're happy to have that size cushion for six to seven weeks of exposure. If there's a 10% correction in the next four weeks, we'll still be safe.

For those who will be closely watching the settlement numbers, here are the symbols of our most frequently traded indexes.

S&P 500 - $SET
Russell 2000 - $RLS
S&P Midcap 400 - $MIV
Nasdaq 100 (NDX) - $NDS

Also, let me remind you that the quality options brokers will release your maintenance dollars on Friday - to use as you wish. That, of course, is if you are a safe distance from where the underlying closed on Thursday night. This is important because you may want to use those dollars on Friday - to save the time erosion that will take place over the weekend. If your broker doesn't release these funds, you have the wrong broker!

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Quickie Talk
The July quickies are actually looking very good. In spite of all the market volatility and big moves, it appears that it will come to rest somewhere within the parameters we established on both the SPX and RUT trades. These trades are certainly risky, but when they work out, the rewards can be substantial.

Those who wanted to lock in profits on the RUT could have closed both spreads for a total of $.45. We took in about $4,000. So, giving back $900 "ain't no big deal." It's highly unlikely the RUT will settle over 20 points from the close, but why take the chance?

The same holds true for the SPX Iron Condor. Those spreads may have cost a total of $.50 to close both - locking in $3,125 of profit.

Here is something I always discuss at my seminar. Whatever decision you make about how you handle a position, you don't have to do it with your entire position. In the above RUT example, you could choose to close out 10 of the 20 Iron Condors and lock in a certain amount of profit. Then, you could let the other 10 contracts ride. Trading your positions is not all or nothing. You have many choices.

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Charlotte Seminar Update
In the first three days since the announcement, seven folks have signed up for my Charlotte September 22 & 23 seminar. That's a great start. Don't wait to make your reservation. The seats go quickly and you'll also want to take advantage of the $100 early bird savings if you complete your reservation before August 15th.

There are three "retake" spots remaining for the Charlotte seminar. These retake spots are free for those who have paid for attending one of my previous seminars and who want to retake the seminar a second time. They're reserved on a first come first serve basis. These spots go fast.

I'm working on a second seminar date for this fall. Hopefully, I'll be able to announce it in my Sunday column. Here's a hint: Think Pacific Northwest.

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Choose Your Words Carefully

In a small town, an elderly couple had been dating each other for a long time. At the urging of their friends, they decided it was finally time for marriage. Before the wedding, they went out to dinner and had a long conversation regarding how their marriage might work. They discussed finances, living arrangements and so on. Finally, the old gentleman decided it was time to broach the subject of their physical relationship. "How do you feel about sex?" he asked, rather trustingly. "Well," she said, responding very carefully, "I'd have to say... I would like it infrequently."

The old gentleman sat quietly for a moment, then over his glasses, he looked her in the eye and casually asked, "Is that one word or two words?"

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CURRENT JULY CPTI PORTFOLIO POSITIONS

CPTI July Position #1 - SPX - Iron Condor - 1553.08

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 - 1553.08

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 - 851.85
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 - 851.85

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 - 1553.08

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 ($780). Then we sold 12 August 1615 calls and bought 12 August 1630 calls for a credit of $.80 (960). The total net credit of $1.45 and profit potential is $1,740. Maintenance requirement is $18,000.

CPTI August Position #2 - RUT - Bull Put Spread - 851.85

On 7/19, with the RUT at about 851, we sold 20 August RUT 770 puts and bought 20 August RUT 760 puts for a credit of $.45. The credit so far is $.45 ($900). Our maintenance is $20,000. We'll see if it's prudent to put a bear call spread on the topside to complete our Iron Condor.


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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 - 851.85

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!

SEPTEMBER 22nd & 23rd - CHARLOTTE, NC


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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