Option Investor
Updates

HOW ARE WE DOING?

HAVING TROUBLE PRINTING?
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So far, so good. There are only four trading days left, plus the PIA Friday morning settlement.

Our December positions look very good - and by "good" I mean safe. On our RUT bull put spread, we have about a 64 point cushion. Our SPX Iron Condor has over a 100 point cushion in each direction.

As a matter of fact, for those of you who want to free up maintenance dollars, you can toss out a few orders to close your positions.

There's a lot of economic data this week, along with option expiration. Earnings from Goldman Sachs and RIMM could make things interesting, along with some Fed auctions. We may get a bounce, or at least stem the selling for the moment.
I noticed something interesting in Friday's trading. Not being much of a technical analyst, I leave it to the spaghetti interpreters to figure out what it means - if anything. Typically, when the market goes down, the volatility goes up. On Friday, we had a pretty big down day, but the VIX increased only .72. I would have expected at least double that, maybe more. In TA lingo it's called a divergence. Can one day of strange trading qualify as a divergence? I don't know.

What does it all mean? Maybe it means the recent downward movement is coming to an end. Maybe it means nothing. Maybe it means that I should stick to watching television.

Bonus Quickie Idea
For those of you who have crystal balls (be careful how you walk) and who anticipate the market continuing down next week, here's an idea for you. It's a way to be directional, but not take much money out of your pocket. Plus, if the stars line up just right, you can make a handsome return on your money.

It's an inexpensive butterfly, using the XSP (which tracks the SPX and is popular among dyslexics).

Buy 10 December XSP 145 puts - SXKXO
Sell 20 December XSP 143 puts - XSKXM
Buy 10 December XSP 141 puts - XSKXK
Debit of about $.23 ($230)

You'll make the most money on the butterfly trade the closer XSP settles to 143 (or 1430 on the SPX). The XSP is a cash settled index. Watch for an opportunity to close it prior to expiration for a profit.

No, there is no maintenance requirement for the butterfly. It's a debit spread. The only money at risk is what you paid for the spread. It's a little commission intensive, but certainly not the end of the world.

If you're bullish, you could create a similar butterfly on the call side near where you think the market will be going, maybe using the 149/151/153 strikes. Have fun with it, but be careful. And, always double check the option symbols.

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S&P 500 Support & Resistance: Closed at 1467.95
Resistance:
1475 from peaks in December 1999 and January 2000
The 200 day SMA at 1486
The 50 day EMA at 1486
1490.72 is the early June closing low and early August peak.
1530 to 1535 are the June twin peaks
1534 is the early July high
1539 is the mid-June intraday high
1541 is the early June high
1549 is the July 2006/March 2007 up trendline

Support:
1459 is the February peak
1440 - 1437 from January and March peaks
1441 is the June/July 2006 up trendline
1438 is the November low
1430 from the August interim lows
1425 is some minor support.
1406 is the August closing low
1375 is the March closing low
1370 is the August intraday low

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A Localized Bath
Billy Bob and Leroy are walking down the street and there, lying in the yard, is a large dog giving himself a "very selective and localized" bath. Billy Bob said, "Boy, I sure wish I could do that."

Leroy said, "Well, you want me to hold him for you?"

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I Still Need Your Input
I'm planning to present a seminar on the East coast (NY, NJ, PA) in mid-March. Let me know if the timing is good for you and if you'd be interested in attending. I'd hope to finalize the arrangements in the next 4-5 days and I'd appreciate your input. I haven't been to the East coast since April of 2006 and the natives are getting restless. Contact me at Contact Support. Send me your phone number and I'll call you to go over the possibilities.

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SEMINAR DATE -

CHICAGO - JANUARY 26 & 27

Chicago is both centrally located and easily accessible. We've been there twice before and filled the room. I've chosen a hotel convenient to the airport - eliminating the need to rent a car. You take the airport shuttle right to the hotel, convenient and easy. Take advantage of the early bird special and save $100. See the details below.

Join us as we discuss non-directional strategies, trade selection, entry points, exit alternatives, premium negotiation, maintenance alternatives, taxes, and much more - all subjects necessary to enlighten and to maximize your trading business. As you know by now, the seminars typically sell out.

There is now only one retake spot available for the Chicago seminar. Contact me as soon as possible if you would like to join us.

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CPTI DECEMBER POSITIONS
CPTI December Position #1 - RUT Bull Put Spread - 753.93

On 11/1, with the RUT at 806, we sold 20 December RUT 690 puts and bought 20 December RUT 680 puts for a credit of $.70 ($1,400). Maintenance is $20,000. We may put on a bear call spread in the future - IF it makes sense.

CPTI December Position #2 - SPX Iron Condor - 1467.95
On 11/16, with the SPX at about 1450, we sold 20 December SPX 1320 puts and bought 20 December SPX 1310 puts for a credit of $.90 ($1,800). Then we sold 20 December 1570 calls and bought 20 December 1580 calls for a credit of $.70 ($1,400). Total net credit and profit potential of $1.60 ($3,200). Maintenance is $20,000.

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CPTI JANUARY POSITIONS
CPTI January Position #1 - RUT Bull Put Spread - 753.93

On 12/4, with the RUT at 752, we sold 20 January RUT 620 puts and bought 20 January RUT 610 puts for a credit of $.60 ($1,200). Maintenance is $20,000. We may put on a bear call spread in the future - IF it makes sense.

CPTI January Position #2 - SPX Iron Condor - 1467.95
On 12/10, with the SPX fluctuating, we sold 20 January SPX 1340 puts and bought 20 January SPX 1330 puts for a credit of $.60 ($1,200). Then, we sold 20 January SPX 1630 calls and bought 20 January SPX calls for a credit of $.55 ($1,100). Net potential profit is $2,300. Maintenance is $20,000.

CPTI January Position #3 - SPX Bull Put Spread - 1467.95
On 12/13, with the SPX at 1472, we sold 20 January SPX 1330 puts and bought 20 January SPX 1320 puts for a credit of $.70 ($1,400). 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 $56,560 ($55,060 $1,500).

ZERO PLUS POSITION - SPX Bull Put Spread - 1467.95

On 12/13, with the SPX at 1472, we sold 30 January SPX 1330 puts and bought 30 January SPX 1320 puts for a credit of $.70 ($2,100). 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!

CHICAGO, IL - JANUARY 26 & 27


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!

55 OUT OF 60 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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