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YOU'RE NOT ALONE - EVERYONE GOT HURT

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YOU'RE NOT ALONE - EVERYBODY GOT HURT

You're not alone. Everybody got hurt today. That doesn't make it easier to swallow. It was one of those days. It was a capitulation day - but, that was something we couldn't know. We knew it would come, but not when. Hell, I capitulated. So did a lot of other people. The SPX was down 30 points and roared back to close back to close positive 4.57. Crazy. If we had held on, there's a good chance that we would not have incurred any losses - but that wouldn't have been the prudent thing to do. How does this happen? I'll let the technical people figure it out. Personally, I'm exhausted.

Tomorrow morning is our Friday morning settlement number. I don't know what to expect - especially in this wild-swing environment. There is some upward momentum which, if we're lucky, will spill over into tomorrow's open.

Fortunately, this type of event happens rarely -- about once a every 5-10 years. It's tough to deal with, to say the least. In this downward spiraling environment, you simply can't block out emotions. Sitting there watching the S&P 500 index go straight down - with no relief in sight - makes you anxious and fearful. Then, when you can't get your orders filled because the market is moving too fast, you get angry and frustrated. Then, your computer screen doesn't refresh fast enough. Then, you hear that the CBOE is overloaded and suspends trading. Then you just want to kill somebody or something - wives, children and pets - whoever is within reach.

In our CPTI portfolio, we got nailed. We closed two out of our three positions - and it wasn't pretty. We got out early - before the market totally turned to shit. Who knew it was going to rebound like that? Hopefully, you read last night's posting and were ready to act. Let's look at the two positions and how they were closed.

August SPX Iron Condor (see below for details). With the futures down significantly, I increased the debit to close out the 1400/1385 bull put spread from $5.20 to $6.00. The fill came about 11 a.m. Was I worried? Hell yes. Things looked pretty bleak. So, it cost $7,200 (12 X $6.00) to close the position. Then, I watched in horror as the S&P went all the way down to 1370.

We originally took in $1,740 on the Iron Condor. That leaves us with a loss on the SPX position of $5,460 ($7,200 - $1,740).

August MID Iron Condor (see below for details). Basically, I did the same thing on the MID 820/810 bull put spread. It trades pretty much like the S&P 500, so my fill also came at about 11 a.m. on the market bounce. I had increased the debit limit from $3.00 to $3.80. So, it cost $11,100 (30 X $3.80).

We had $600 of premium remaining from our rollout of the MID. Our cost for closing the bull put spread was $10,500 ($11,100 - $600).

I decided to hold onto the RUT 730/720 position. Throughout the day the RUT hung in there and showed a lot more strength than the rest of the market. It looks like that might have been a good decision (for a change). The RUT actually ended up over 17 points on the day. Go figure.

I also decided to postpone any rolling out of the closed positions. Truthfully, the market was just too hectic and I want to have a clear head before venturing into new positions. There was no urgency. We'll make the money back a little at a time. For now, we'll just suck it up - and hopefully learn something from it. Besides, we already have some September positions, so we're not without profit potential.

How Could We Have Known?
Based on the closing prices, had we been irresponsible and held on through all the turmoil, we might have escape unscathed and even profitable for the month. Actually, in retrospect, we probably should have exited the positions earlier. But, what's done is done. Now we can move on.

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SEMINAR DATE

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.

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CURRENT AUGUST CPTI PORTFOLIO POSITIONS

CPTI August Position #1 - SPX - Iron Condor - 1411.27

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. (See main article)

CPTI August Position #2 - RUT -- Iron Condor - 768.83

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. (See main article)

CPTI August Position #3 - MID - Iron Condor - 820.83

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. (See main article)

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CURRENT SEPTEMBER CPTI PORTFOLIO POSITION
CPTI September Position #1 - RUT - Bull Put Spread - 768.83

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 - 1411.27
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 - 768.83
(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


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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