Option Investor
Updates

IT'S QUICKIE TIME

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With our September positions in reasonably good shape, let's take a few minutes and turn our attention to a few of those "I Dare You" high risk trades we call our monthly Quickies. The market has been bouncing around. Granted, it's been bouncing in big chunks, but it hasn't broken out in either direction - yet!

That being said, let's look at a few risky one-week trades that are appropriate for the more experienced traders out there - particularly traders who have the time to monitor the position and who have a high risk tolerance. Also, keep in mind that I don't trade these quickies and they are NOT considered official CPTI portfolio positions. So, what the hell? Let's see what we can dig up. Just be careful and remember that you don't always have to be in the market if you don't like the way it looks. I know a lot of traders who are patiently waiting for things to calm down a bit before they jump back in.

September Quickie #1 - SPX Iron Condor - trading at 1483.95
Sell 15 Sept. SPX 1450 puts
Buy 15 Sept. SPX 1440 puts
Credit of about $1.70 ($2,550)

Sell 15 Sept. SPX 1520 calls
Buy 15 Sept. SPX 1530 calls
Credit of about $2.30 ($3,450)

Total net credit and profit potential of about $4.00 ($6,000). The bid/ask spreads on the SPX are very wide and it's difficult to figure out where the market makers are. The above premiums are approximate, but you have to start somewhere. The maintenance is $15,000.

September Quickie #2 - RUT Iron Condor - trading at 780.35
Sell 20 Sept. RUT 740 puts
Buy 20 Sept. RUT 730 puts
Credit of about $1.10 ($2,200)

Sell 20 Sept. RUT 820 calls
Buy 20 Sept. RUT 830 calls
Credit of about $.80 ($1,600)

Total net credit and profit potential of about $1.90 ($3,800). The above premiums are just guidance - a starting point. The maintenance is $20,000.

If either of these positions appeal to you and you can't resist the urge, be conservative and just trade a few contracts. These are risky and it's not for the meek of body, mind, or brokerage account.

September Quickie #3 - OEX Short Strangle - trading at $695
Sell 10 Sept. XEO 695 puts
Sell 10 Sept. XEO 695 calls
Credit of about $18.50 ($18,500)

This is the most risky of the Quickies. Also, because these are uncovered options, you may not be able to place this trade. It will depend on your account size and the policy of your broker. We've created a profit range of 674.50 to 713.50. The closer the OEX closes to 695, the more of the $18,500 you'll be able to keep. Again, do not trade this without adult supervision. It can get really hairy!!

All of the above trades look exciting, don't they? Lot's of premium out there, right? Well, if you're going to play the game, consider closing out the positions once you can lock in a reasonable profit. We've seen how the Friday morning settlement numbers can be outrageous. Don't let a decent profit get away by being greedy.

Siamese Progress - Time To Close?
Back on 9/2 I wrote a column about Siamese Condors in which I proposed a hypothetical September trade using the XEO (European version of the OEX). The point of this exercise is to illustrate that we don't have to hold this position through expiration. As premium erodes away, we may have opportunities to exit the trade and lock in a respectable profit - without having that extra week of exposure.

Our short puts and calls were at 685. Our long calls were at 735 and our long puts were at 635. Let's take a look and see how the trade is progressing. We'll check out the values of each of the four options.

XEO 685 put: Buy Back @ about $5.90
XEO 685 call: Buy Back @ about $16.20
XEO 735 call: Sell @ about $.05
XEO 635 put: Sell @ about $.20

We took in a net credit of $24.00 when we initiated the trade. The OEX is at 695.00 as of Thursday's close. It would cost us (at this point in time) $21.85 to unwind the spread. That would leave us a profit of $2.15 x 4 contracts = $860.00.

Is that enough profit for you? You have to decide. Premium will be eroding away pretty rapidly in this last week to expiration. But, while you're waiting for the premium to go away, the market might take off in one direction or the other and your profit could turn to pancake mix.

Free Up Some Maintenance?
For those of you who are holding the September SPX 1260/1250 bull put spread, you may be able to close it out for a nickel - if you need your maintenance dollars for other purposes.

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SEMINAR DATE - Only a week left to Charlotte

Charlotte (Sept. 22nd & 23rd)

There are still a few spots remaining for the upcoming Charlotte seminar.

There is one "retake" spot 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.

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CURRENT SEPTEMBER CPTI PORTFOLIO POSITIONS
CPTI September Position #1 - RUT - Bull Put Spread - 780.35

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 - 1483.95
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 - Iron Condor - 780.35
(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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CURRENT OCTOBER CPTI PORTFOLIO POSITION
CPTI October Position #1 - RUT - Bull Put Spread - 775.79

On 9/7, with the RUT at 775.53, we sold 20 October RUT 630 puts and bought 20 October RUT 620 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 - New Position To Be Announced Soon

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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 57 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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