Option Investor
Updates

QUICKIE TIME - NOT REALLY!

HAVING TROUBLE PRINTING?
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Do we dare? The Dow is moving triple digits almost every day. That's definitely not the environment in which to use our range-bound strategies. But we can't let a little thing like common sense stop us, can we? Yes we can - at least most of us can.

What's going to happen? The market is searching for a bottom. Perhaps it will happen at the recent lows, but there is a lot of fear out there. The sub-prime story may be just the tip of the iceberg. It's pulling down the whole market. There are, and will be, some damn good bargains out there. Will some new money be put to work? When do these bargains become a "deal that you can't refuse?"

I was going to suggest a September 1260/1250 bull put spread position for our Zero Plus strategy, but I'm gun-shy right now - and you should be too. They say that you should be buying when there's blood in the streets, but that's not our method. We're sellers and we thrive when the market is in a trading range - not in flux. At this point, we can't even guess where to put our credit spreads. You can throw most support and resistance levels out the window. It's time, at least for now, to stay in cash. Some gamblers may make out well in this environment, but I like to think we're not gamblers.

The VIX hit a new 52-week high today at 26.90. It wasn't that long ago that the VIX was about 11 and we were begging for more volatility. Well, be careful what you wish for. We got a huge dose of volatility and it may ultimately cause us a lot of problems.

Below are some quickie ideas. I suggest you ignore these and get a good night's sleep. You're going to need your rest to deal with the market tomorrow. As I write this, the S&P futures are down 12.20. That's not good. Our positions still have a bit of a cushion, but cannot withstand too many more days like today.

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Quickies
Round and round and round it goes, where it stops nobody knows. So let's plant some inexpensive land mines around and see if we can have a profit explosion. Let's use IWM and place one landmine above the market and one below. Here are some ideas.

August Quickie #1 - IWM Butterflies - 77.69
Bearish:

Buy 10 IWM August 76 puts - IOWTX
Sell 20 IWM August 74 puts - IOWTV
Buy 10 IWM August 72 puts - IOWTT
Debit of about $.25 ($250)

Bullish:
Buy 10 IWM August 79 calls - IOWHA
Sell 20 IWM August 81 calls - IOWHC
Buy 10 IWM August 83 calls - IOWHE
Debit of about $.40 ($400)

Neutral:
Buy 10 IWM August 76 calls - IOWTX
Sell 20 IWM August 78 calls - IOWHZ
Buy 10 IWM August 80 calls - IOWHB
Debit of about $.50 ($500)

Name your poison. Do you have an opinion? Of course you do. Since the public's opinion is generally wrong, take your opinion and do the opposite. That's why the "contrarian" indicator has done well in the past. If you prefer not to guess, then do more than one of the butterflies above. Right now it looks like the market wants to continue down for a bit, but we've been faked out before and could well be again - considering the chaotic personality of the market. The positions above are based on Thursday's closing prices.

By now you should know how these butterflies are structured. Be a little creative and come up with strike prices of your own. The risks are relatively small. Plus, once you've established your position, keep evaluating. If you can lock in a decent profit early, go for it! The further out of the money you put the butterfly, the cheaper it normally is.

August Quickie #2 - RUT - Siamese Condor - 784.87
Sell 4 RUT August 780 put - RUTTP
Sell 4 RUT August 780 call - RUTHP
Credit of about $30.90

Buy 4 RUT August 830 call - RUTHF
Buy 4 RUT August 730 put - RUTTF
Debit of about $5.20

Net credit and profit potential of $25.70 ($1,620). Maintenance is $5,000 per contract ($20,000)

A profit range of 805.70 down to 754.30. The closer RUT settles to $780, the more money you make. The exit points are the same parameters and the profit range.

August Quickie #3 - SPX Iron Condor - 1453.09
Sell 10 SPX August 1415 puts - SXZTC
Buy 10 SPX August 1400 puts - SXZTT
Credit of about $$2.20 ($2,200)

Sell 10 SPX August 1510 calls - SXMHB
Buy 10 SPX August 1525 calls - SXMHE
Credit of about $1.50 ($1,500)

Net credit and profit potential of $3.70 ($3,700). Maintenance is $15,000. Maximum profit range is 1415 to 1510. That's a hell-of-a-big range for only one week remaining to expiration. That's what this insane volatility will do. But, along with premium comes uncertainty (to say the least).

Remember, I DO NOT trade these quickies myself and they are NOT official CPTI Portfolio Positions. These positions can be very dangerous and should only be done by skilled traders who have the time to monitor the position and who know how to adjust them if they go bad. Always double check the option symbols and strike prices before you place any trade. In this market, doing any new trades could be setting yourself up for big trouble.

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NEW SEMINAR DATE ANNOUNCED
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 to attend 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.

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 to attend 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 - SPX - Iron Condor - 1453.09

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 -- Iron Condor - 784.87

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 #3 - MID - Iron Condor - 849.80

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.

Adjustment: On 7/27, we closed the original 20-contract bull put spread position and established a 30-contract Iron Condor consisting of the 820/810 bull put spread and the 920/930 bear call spread. Maintenance is now $30,000 and the new maximum profit range is 820 to 920. The profit potential is now about $600.

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CURRENT SEPTEMBER CPTI PORTFOLIO POSITION

CPTI September Position #1 - RUT - Bull Put Spread - 784.87

On 7/24, with the RUT at 822.70, we sold 20 September RUT 700 puts and 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.

CPTI September Position #2 - SPX - Bull Put Spread - 1453.09
On 8/3, with the SPX at about 1463, we sold 20 September SPX 1260 puts and bought 20 September 1250 puts for a credit of $.50 ($1,000). Our maintenance is $20,000. We'll look for opportunities to complete the Iron Condor if/when the market bounces.

CPTI September Position #3 - RUT - Bull Put Spread - 784.87
(Formerly August Position) 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).

Adjustment: On 7/26, we closed the original 20-contract bull put spread position and established a 30-contract Iron Condor consisting of the 670/660 bull put spread and the 840/850 bear call spread. Maintenance is now $30,000 and the new maximum profit range is 670 to 840. The profit potential of $900 remains the same.

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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.

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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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