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JUST ANOTHER BORING DAY IN THE MARKET

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JUST ANOTHER BORING DAY IN THE MARKET

Today was boring if you're used to seeing the S&P 500 down 52 points. It was boring if you're used to seeing the DOW down almost 450 points. It was boring if you're used to seeing a 40-point position cushion quickly turn into 10. It wasn't World War III and there wasn't a terrorist attack (that I know about). It was like someone yelled "fire," and there was only one exit.

Today was not the day to be out playing golf. Today, as any other day, you need to check in and see what's going on with the market. If you were taking in a double feature or having a rendezvous with your girlfriend at the No-Tell Motel, you missed at least one kind of excitement. There was a different kind of action going on - the kind that sends buy and hold investors looking for a tall building.

To start the day, we had very respectable cushions on all of our positions. By about 2 p.m. it was time to GTFO of one of our August positions - the RUT 770/760 bull put spread.

The one silver lining to all of this nonsense is that the chaos happened very early in the option cycle. That gave us a number of choices - the best one (IMHO) being to make an adjustment to another position in the current cycle.

We could have just closed the position and absorbed the loss. We could also have rolled the spread into September. But, after reviewing the numbers, it made more sense to try and get the position resolved in August.

So, with the RUT at about 785, we bought back the 20-contract August 770/760 bull put spread for $3.30. That was an expenditure of $6,600. If we had left it there, we would have had a loss of $5,700 ($6,600 less the $900 premium we took in when establishing the position.)

Since there are more than three weeks remaining to August expiration, I looked at the option chain and saw that there was a nice bit of premium available ($1.50) in the August 730/720 bull put spread. The fact that the market was coming down hard increased the VIX to as high as 23.36 during the day. That means a lot of premium being available. It hadn't been anywhere near that level since last February.

I then upped the number of contracts from 20 to 30 and sold the 730/740 bull put spread for $1.50 and took in $4,500. That left about $2,100 from the $6,600 we paid to close the original position.

We hadn't put a bear call spread on the original 770/760 bull put spread to complete the Iron Condor. Well, with the market headed down, it seemed like an opportune time to put on a bear call spread and take in some more premium. I was able to find about $.70 of premium in the August 850/860 bear call spread. I sold 30 contracts of the 850/860, taking in the $.70 and effectively replacing the $2,100.

We have established a new maximum profit range for this new August Iron Condor of 730 to 850. With the RUT closing near 790, we now have a 60-point cushion to the downside and a 60-point cushion on the call side. Will the market cooperate and stay in that range? Who the hell knows? But, even with the market moving in chunks, we have a better than fighting chance of coming out of this smelling like a rose.

Plus, don't forget that we will still show a profit of the original $900. We did go through a few extra commissions, but that's just the cost of doing business. We'll keep a close eye on this position.

The market was bouncing around all afternoon - mostly down. However, there were a number of opportunities to get this, or a similar, trades filled. You might have chosen a different number of contracts or different credit limits. As you know, I always encourage creativity and resourcefulness. That comes from knowing the strategies and knowing the adjustment alternatives. That's what we spend hours discussing at my two-day seminars.

This situation is another perfect example of why it's important to keep some powder dry - to have maintenance dollars available, just in case. Our original maintenance was $20,000 on the 20 contracts in the original bull put spread. The new 30-contract position requires $30,000 in maintenance. If your whole account value was tied up as maintenance for credit spread positions, and you didn't have the extra $10,000, you would be SOL - and it would have been particularly costly to make any constructive position adjustment.

It might have been a very costly round of golf or the most expensive happy ending you ever had. Real couch potatoes rarely leave the couch. If they do leave the couch, they don't go too far. You never know when you'll have to leap into action - financial action.

NOTE: We will be keeping a close eye on our MID position and will be prepared to use the same roll out strategy as we did today with the RUT. Right now, we still have about a 20 point cushion. For those of you who are antsy, you don't have to wait for me to make an adjustment. Remember, we all have different risk tolerances.

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New Trading Ideas

For those CPTI traders who have larger accounts and some extra money available, this is a great time to be seeking out new positions. With all of the premium out there, there are a lot of interesting opportunities.

CPTI seminar grad, Dave R., sent me an email saying that he was filled for 20 contracts on the September 1300/1290 bull put spread for $.40. Now, THAT is a SAFE TRADE.

Tomorrow, I'll be looking around for additional September trades along with a trade for our Zero-Plus strategy.

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NEW SEMINAR DATE ANNOUNCED

Seattle (Oct. 20th & 21st)
As a result of many emails I received, we will venture to Seattle, WA this fall. The dates are Saturday & Sunday, October 20th & 21st. Seattle is supposed to be a great place to visit. The early bird special for the Seattle seminar is in effect until September 1st. Take advantage and save $100. It's a hell-of-a-deal.

There are three "retake" spots available for the Seattle 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.

Charlotte (Sept. 22nd & 23rd)
Don't wait to make your reservation. The seats go quickly and you'll want to take advantage of the $100 early bird savings if you complete your reservation before August 15th.

There are two "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.

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CURRENT AUGUST CPTI PORTFOLIO POSITIONS
CPTI August Position #1 - RUT - Bull Put Spread - 791.48

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 - 1482.66

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 #3 - RUT - Bull Put Spread - 791.48

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.

Adjustment: On 7/26, we closed the original 20-contract bull put spread position and established a 30-contract Iron Condor consisting of the 730/720 bull put spread and the 850/860 bear call spread. Maintenance is now $30,000 and the new maximum profit range is 730 to 850. The profit potential of $900 remains the same.

CPTI August Position #4 - MID - Bull Put Spread

On 7/23, with the MID at 916, we sold 20 August MID 850 puts and bought 20 MID August puts for a credit of $.50 ($1,000). The credit so far is $.50 ($1,000). Our maintenance is $20,000.

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CURRENT SEPTEMBER CPTI PORTFOLIO POSITION

CPTI September Position #1 - RUT - Bull Put Spread - 792.48

On 7/24, with the RUT at 822.70, we sold 20 September RUT 700 puts and then bought 20 September RUT 690 puts for a credit of $.70 ($1,400). Total net credit and profit potential (so far) of about $.70 ($1.40). Our maintenance is $20,000. We'll look for opportunities to complete our Iron Condor if/when the market pops up.

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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. With the July profits, our new cash total is $55,060 ($52,210 + $2,850).

ZERO PLUS POSITION -

RUT - June Iron Condor - 100% PROFITABLE

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 30 July RUT 900 calls and bought 30 July RUT 910 calls for a credit of about $.40 ($1,200). Total net credit and profit potential of about $.95 ($2,850). We were 100% profitable and pocketed $2,850.

We'll be looking to put on a new Zero Plus position soon.

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CPTI SEMINAR SCHEDULE!

SEPTEMBER 22nd & 23rd - CHARLOTTE, NC

OCTOBER 20TH & 21ST - SEATTLE, WA


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 personally call you with all the pertinent information. The price is a bargain - ONLY $995.00 -- less than the profit from one Iron Condor trade. Take advantage of the "early bird special" and save $100. You'll have a two-day experience that you'll remember, and profit from, for a lifetime. I limit my 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!

52 OUT OF 56 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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