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THE UNSETTLING SETTLEMENT NUMBERS TOMORROW

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THE UNSETTLING SETTLEMENT

The October cycle came in like a lion and went out like a pork chop. Tomorrow morning, the Friday settlement number may make a liar out of me (wouldn't be the first time, nor the last), but it seems things have leveled off - at least for the moment.

It's a good feeling to have our three CPTI portfolio positions virtually untouchable by the Friday morning settlement. The market even came down enough to ease the pressure on most of those who dared to put bear call spreads on our bull put spreads.

Also, if you're with a progressive broker (and you certainly should be), you should have your maintenance dollars available to you relatively early tomorrow for other uses. No need to wait until Monday. I know many of you chose to close out some, or all, of your bull put spreads to make maintenance available for our November positions.

In the last two months, we've put on hypothetical Siamese Condor positions and have taken in a nice piece of change. Later on this month, we'll look for another Siamese Condor.

In the meantime, to continue with our education, let's look at a hypothetical position using the Boston Strangle strategy. Basically, we're going to be selling deep in the money puts and calls and taking in a nice chunk of premium.

Based on Thursday's closing prices, we'll:
Sell 3 XEO November 740 puts
Sell 3 XEO November 700 calls
Credit of about $10.00 ($3,000)

We've created a maximum profit trading range of 700 to 740. Our profit range extends by another 10 points to 690 to 750. Those are also the exit parameters.

The problem is that not all of you will be able to put on the Boston Strangle as described above. Why? Because of the maintenance requirements - and, also, your trading approval level. The maintenance requirements are steep. Your trading approval level is between you and your broker. I suspect that most of you are not set up to sell naked index options.

Traders who cannot sell naked options, will likely have to purchase some far out of the money puts and calls to turn the short ITM puts and calls into credit spreads. Check out the November 670 puts and the November 770 calls. You could buy them for a total of about $2.85. That reduces your potential profit for $7.15, but at least it gets you into the game.

It also opens up a few more considerations for position management, but it's certainly manageable. It's another one of the positions we go over in depth at my two-day advanced seminar.

The Boston Strangle is a position that is not necessarily meant to be held to expiration. One certainly could hold it for the duration, but many experienced Boston Strangle traders are perfectly happy locking in a nice profit after only a few weeks - reducing the time exposed to the market.

I'll be following this position in my newsletter updates, but it is not officially a CPTI portfolio position. It is hypothetical. I know that doesn't stop some of you, but I suggest you don't trade a strategy unless you know what the hell is going on -- and how to deal with it if you need to GTFO.

To read up on the Boston Strangle (also known as Short Guts), check the archives for my columns on 6/25 & 6/29/2006.

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CPTI Seminar - Next Stop L.A.
Per a number of requests, from new Couch Potato subscribers and former seminar attendees, I'll be presenting my two-day advanced seminar on Saturday & Sunday, December 8th & 9th.

Join us as we discuss, for hours, trade selection, entry points, exist strategies and alternatives, premium negotiation, maintenance alternatives, taxes, and much more - all subjects necessary to help maximize your trading business. As you know by now, the seminars typically sell out. As in trading, opportunities aren't there for long. Reserve your spot as soon as possible.

Give yourself the gift of knowledge. It lasts a lifetime - often even longer.

Early Bird Special - SAVE $100
If you complete your registration for the upcoming Los Angeles seminar prior to November 9th, you will save $100. If you've been paying attention to my column, by now you know that every $100 you save is $150 you don't have to make. Plus, for most, it's all deductible for you.

There are no more retake spots available for the Los Angeles seminar. There is now a waiting list for possible cancellations. Contact me if you would like to be on the waiting list.

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CURRENT OCTOBER CPTI PORTFOLIO POSITIONS

CPTI October Position #1 - RUT - Bull Put Spread - 825.03

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 ($1,400). Our maintenance is $20,000. We'll look for opportunities to complete our Iron Condor if/when the market pops up.

CPTI October Position #2 - SPX - Bull Put Spread - 1540.08
On 9/20, with the SPX at 1518, we sold 20 October SPX 1395 puts and bought 20 RUT 1385 puts for a credit of $.60 ($1,200). Total net credit and profit potential (so far) of about $1,200. Our maintenance is $20,000. We'll look for opportunities to complete our Iron Condor if/when the market pops up.

CPTI October Position #3 - MID - Bull Put Spread - 900.45
On 9/24, with the MID at 881, we sold 20 October MID 810 puts and bought 20 MID 800 puts for a credit of $.60 ($1,200). Total net credit and profit potential (so far) of about $1,200. 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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CPTI November Position #1 - SPX - Bull Put Spread - 1540.08
On 10/9, with the SPX at 1553.50, we sold 20 November SPX 1425 puts and bought 20 November SPX 1415 puts for a credit of $.50 ($1,000). Maintenance is $20,000. We may put on a bear call spread in the future - IF it makes sense.

CPTI November Position #2 - RUT Bull Put Spread - 825.03

On 10/11, with the RUT at 835, we sold 20 November RUT 740 puts and bought 20 November RUT 730 puts for a credit of $.50 ($1,000). Maintenance is $20,000. We may put on a bear call spread in the future - IF it makes sense.

CPTI November Position #3 - MID Bull Put Spread - 900.45
On 10/16, with the MID at 902, we sold 20 November MID 820 puts and bought 20 November MID 810 puts for a credit of $.50 ($1,000). Maintenance is $20,000. We may put on a bear call spread in the future - IF it makes sense.

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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 -

CPTI Zero-Plus Position #1 - RUT Bull Put Spread - 841.17

On 10/11, with the RUT at 835, we sold 30 November RUT 740 puts and bought 30 November RUT 730 puts for a credit of $.50 ($1,500). Maintenance is $20,000. We may put on a bear call spread in the future - IF it makes sense.

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CPTI SEMINAR SCHEDULE!

LOS ANGELES, CA - DECEMBER 8 & 9


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 will 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!

53 OUT OF 58 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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