Option Investor
Updates

A SHAKY START FOR 2008

HAVING TROUBLE PRINTING?
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It's been a tough way to start the year - especially for those who are long stocks. Friday was another one of those days - those days that keep the market a little scary, regardless of how large of a cushion we may have in our CPTI portfolio.

The market looks like it wants to continue on down. Thus far, our January positions aren't close to being threatened, but it makes sense to keep an eye on them. I've been reluctant to put on any additional February positions until I feel a bit more comfortable. There's plenty of time, however. And, with the market coming down, the volatility is moving up. So, there should still be a reasonable amount of premium at safe levels for February positions for awhile.

There's not much economic data this week, but it's the beginning of earnings season. Expectations have been scaled down for this quarter, but there could still be a lot of surprises. There's no rest for the wicked.

Can we expect the Fed to step in at some point and save our asses -- and our money? There are opinions on both sides. Some talking heads are calling for a 50-basis point cut on January 29th while others believe the Fed will stand pat. Ahhh, opinions. That's what makes the world go 'round.
There might be some carry-over selling into the beginning of the week followed by a relief bounce. When the market starts one of these downward trends, traders sell into the relief bounces until the buyers are sucked out of the market and all that remains are more sellers.


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Siamese Condor Update
Maybe I was a little premature in putting on the experimental 1 contract SPX Siamese Condor. It looks like I may have to close (or adjust) the position earlier than planned - like maybe on Monday if the selling continues big.

Let's examine the position as it stands. Here's what we'd be facing if we were to unwind the position based on Friday's closing prices. Obviously, when the market opens on Monday, the prices could be very different. We would:

1) Buy back the 1450 put for about $44.50.
2) Buy back the 1450 call for about $11.00
3) Sell the 1350 put for about $5.70
4) Sell the 1550 call for about $.20
Total debit of $49.60

We took in $46.30 of premium when establishing the position. The result would be a $3.30 loss (x 100) = $330. One of the benefits of trading only one contract is that, if we're careful, we're not risking a great deal of money. Therefore, we can let the strategy run - of course until it's time to act.

Note: 1-4 above are the actions we would take, but not individually. If you are going to close the position, you should put in an order for a bear put spread - to buy back the 1450 put and sell the 1350 for a net debit of $38.80 ($44.50 less $5.70). You should then put in an order for a bull call spread - buying back the 1450 call and selling the 1550 call for a net debit of $10.80. Some brokers, the good ones, have Iron Condor order screens that would allow you to put the entire order in at once for one net debit.

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Idle Thoughts . . .
Do you ever notice how many "gurus" are out there promoting their version of the holy grail of option trading? I recently came across one that claims they use "a powerful organic mathematical software program" to Organic? Maybe you can buy it at Whole Foods Market. Maybe it comes in pill form that you can take orally or anally.

Then there are a few sites out there started by graduates of my CPTI seminar. I guess what I taught them made sense. Imitation is the sincerest form of flattery. I wish them all well. If they do well, that means that we should be doing even better.

And then there is another site that enjoys taking pot shots and criticizing other option sites. He wore out his Thesaurus criticizing me recently. The fact that he didn't have his facts straight (not even close) didn't seem to bother him. The inner child in me wants to respond and explain to him, in detail, how he can shove his Thesaurus where the sun don't shine. But, I'm bigger than that . . . I think. Maybe, after almost 60 years, I'm finally growing up. Maybe.

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S&P 500 Support & Resistance
Closed at 1411.63
Resistance:
1430 from the August interim lows
1440 - 1437 from January and March peaks
1452 is the June/July 2006 up trendline
1459 is the February peak
1475 from peaks in December 1999 and January 2000
The 50 day EMA at 1476
The 200 day SMA at 1491
1490.72 is the early June closing low and early August peak.
1524 is the December high
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
1566 is the July 2006/March 2007 up trendline

Support:
1406 is the August and November 2007 closing low
1403 is a longer term trendline from the August 2003 and September 2004 lows
1374 is the March 2007 closing low
1370 is the August 2007 intraday low
1325 from May 2006 peak prior to the summer 2006 correction

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Time To Grow Up

Dear Abby:
My husband is a liar and a cheat. He has cheated on me from the beginning, and, when I confront him, he denies everything. What's worse is that everyone knows that he cheats on me. It is so humiliating. Also, since he lost his job six years ago; he hasn't even looked for a new one. All he does all day is smoke cigars, cruise around and B.S.'s with his buddies while I have to work to pay the bills. Since our daughter went away to college he doesn't even pretend to like me and hints that I may be a lesbian. What should I do?
Signed: Clueless

Dear Clueless:
Grow up and dump him. Good grief, woman. You don't need him anymore! You're a United States Senator from New York running for President of The United States. Act like one!

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NEW SEMINAR DATE - MARCH 15/16 -

NEWARK, NEW JERSEY

I will be presenting a two-day advanced CPTI seminar in New Jersey (Newark) on Saturday & Sunday, March 15th & 16th. Contact me (Contact Support) to reserve your spot - and save $100! (See below for early bird special information).

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 usually sell out.

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CPTI JANUARY POSITIONS
CPTI January Position #1 - RUT Bull Put Spread - 721.60

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 - 1411.63
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 1640 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 - 1411.63
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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CPTI FEBRUARY POSITION

CPTI February Position #1 - SPX Bull Put Spread - 1411.63
On 12/31, with the SPX at 1472, we sold 20 February SPX 1300 puts and bought 20 February SPX 1290 puts for a credit of $.60 ($1,200). Maintenance is $20,000. We will look to 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 - 1411.63

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 $30,000. We may put on a bear call spread in the future - IF it makes sense.

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SEMINAR DATES -

CHICAGO, IL - JANUARY 26 & 27

NEWARK, NJ - MARCH 15 & 16 (NEW)

The Chicago seminar is filling up nicely. We filled the room twice before in Chicago. I've chosen a hotel convenient to the airport - eliminating the need to rent a car. You simply take the free airport shuttle to and from the hotel -- convenient and easy. The same is true for the newly announced Newark seminar.

Newark Early Bird Special

Take advantage of the early bird special for the New Jersey seminar and save $100. If you complete your reservation by January 31st, you will save $100. My seminar will then cost only $895 (instead of $995).

There are no more retake spots available for the Chicago seminar. If you want to be on the retake waiting list for Chicago, contact me as soon as possible (mparnos@optioninvestor.com).

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!

56 OUT OF 61 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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