Option Investor
Updates

CAN WE SURVIVE ANOTHER WEEK?

HAVING TROUBLE PRINTING?
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We got a reprieve on Friday. After the SPX was down 22-plus points early in the day, it managed to fight its way back to about even. The Fed fed money into the system creating the liquidity and easing the pressure. It may be a temporary fix, though - a band aid, or a finger in a dyke (I actually tried that once).

Hopefully, other solutions are in the works (perhaps a rate cut). Why? Because this could very well be a multi-legged problem and there is no telling how many more shoes are going to drop. I understand that a rate-cut would have an adverse affect on the US dollar. But, if it doesn't come, it could have a much worse affect on our dollars - we'd have a lot less of them.

For the moment we're OK. Our August MID bull put spread has a 31.44-cushion. Our RUT bull put spread has a 58.78-point cushion and our SPX bull put spread has a 53.64-point cushion. Four more trading days and a Friday morning settlement remain to expiration. In this market environment, we're going to be in for an adventure. Keep the faith. We'll get through it together - one way or another.

So much for analysis - or at least my version of it. If you like charts and want to get more technical, check out Linda Piazza's market wrap on today's OI daily market wrap. She does a real nice job.

Would You Believe?
People never fail to shock me. Yesterday I received an email from a long-time CPTI subscriber. I mean this guy has been reading my column for years. I do have a bit of compassion, so I'm not going to add his problems and won't include his name. Consider that my good deed for 2007.

Mike - How do I make money on the Siamese condor for the RUT? I got 11,544.00 for the 780 call and put and I bought the 830 call and 730 put for 1544.00.

The RUT ended up at 788.78 on Friday gaining 3.91. How do you get profit potential please?

How am I supposed to respond to that? Do you see the problem? Responsible traders have no business putting on a trade and not have a clue as to how the strategy works. To make matters worse, this was a Quickie recommendation - trades that even I don't try.

If I do my job, I should scold and try to use the word "foolish" rather than "FS." Those of you who know me, know that it's tough for me to bite my tongue. "Foolish" rarely gets anyone's attention.

The problem is that this trade could conceivably work out. That would send the wrong message and be totally counter productive. Last month's Quickies worked out well. This market is incredibly unpredictable. The RUT could close within the range parameters and be profitable. Then, the nameless emailer would think that would give him blanket permission to continue diving into the pool before knowing how to swim.

I don't wish ill for anyone, but it's a hard fact that some folks only learn from expensive lessons - whether they are financial or emotional. Let me, once again, strongly recommend that you only trade strategies that you comprehend really well. Take your time to read and learn before putting your hard-earned money at risk. And, when you're think you're ready, start out with just a few contracts until you experience the emotions involved in the various scenarios. Learning trading is a lot more than just placing an order. It's like going to college. It takes time and practice to become proficient at anything. Be patient, but persevere.

Suffice it to say that I have presented a plethora of material on our strategies. It's there in the archives for all to view. However, after August expiration, I will devote column space to review the strategies for a few reasons. Our subscribership has risen significantly and I also recognize that the OI archives are a real pain to navigate through.

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PAN HANDLING WORKS - If You Understand Marketing
Jose and Carlos are panhandling at a freeway off ramp.
Jose drives a Mercedes, lives in a mortgage free house and has a lot of money to spend.
Carlos only brings in 2 to 3 dollars a day.
Carlos asks Jose how he can bring home a suitcase full of $10 bills every day.
Jose says, "Look at your sign. It reads: 'I have no work, a wife and 6 kids to support'"
Carlos looks at Jose's sign.
It reads: 'I only need another $10.00 to move back to Mexico.
That's first class marketing!

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CPTI SEMINAR NOTE: Only Three Days Left To Save $100

Only three days remain to take advantage of the "Early Bird Special" for our Charlotte seminar. You'll save $100. Procrastination can be costly.

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 - 1453.64

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 - 788.78

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 - 851.44

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 - 788.78

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 - 1453.64
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 - 788.78
(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 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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