Option Investor
Updates

GETTING ON THE SCALE

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It's cold and snowy here in Chicago, but the heat is working just fine in the meeting room where we're having our two-day seminar. We've been going over potential Iron Condor positions and I think we've come up with a few good ones -- which I will share with you below.

One of the things we've discussed was the concept of scaling into a trade. Normally, when I suggest a trade, we just try to put it on at, or near, the suggested strikes and, at or near, the suggested credit limit.

Let's take a look at a very palatable plan B. With the market in turmoil right now, I'm reluctant to put on any more positions for February. We've already initiated our first March position.

With March expiration being eight weeks away, there is plenty of time for the market to do most anything - and it's impossible to predict where it's going (let the directional traders try). Even though a position may look appealing today, in a week it might not look quite so good. A lot can happen in a week.

So, I propose that we scale into our next position, trading 10 contracts now and then giving the market a chance to do its thing (whatever that may be) and then putting on the other 10 contracts perhaps a week later - likely at new strikes and different credit limits. It should improve our probability of success.

The slight drawback is that we will have to pay attention to two separate positions, instead of one. That shouldn't be too much of a burden for sophisticated traders like us, right? Right.

For the first portion of our new official CPTI Portfolio position, with the S&P at 1330, let's:

Sell 10 March SPX 1150 puts - SPTOJ
Buy 10 March SPX 1140 puts - SPTOH
Credit of about $.60 ($600)

Sell 10 March SPX 1490 calls - SXZCR
Buy 10 March SPX 1500 calls - SXMCT
Credit of about $.55 ($550)

Net credit of about $1.15 ($1,150). Maintenance is $10,000. Maximum profit range is 1150 to 1490 (340 points!).

These prices are based on Friday's closing prices. They will likely be different when the market opens on Monday. Be creative if necessary. Remember, the suggested strikes and credit limits are just guidelines.

There's a Fed meeting coming up this week. The landscape might look a lot different a few days from now. If you prefer to wait for the smoke to clear before putting on the initial position, that's just fine. Use your discretion.

Always double check the option symbols before placing the order. Check the futures on Monday morning before placing the order. If it looks like the S&P is going to open dramatically up or down, be flexible. You can change the strikes and the credit limits. You have my permission. Just don't be greedy. Position safety is more important than a few extra dollars of premium.

Depending on Monday's opening, I may also use the above positions for our Zero-Plus Ongoing Strategy - using 15 or 20 contracts instead of 10. I'll let you know when I decide.

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February Position

On Friday the market had a wild swing. In the morning, the S&P was up about 18 points, then it turned around, gave it all back and ended up 21 points down. So, what was a 52-point cushion is now a 30 point cushion. Hmmm . .

With three weeks left, is 30 points enough? Probably not. The volatility will likely continue and the market may very well go back down to test recent levels below 1300. Want to get out? Yesterday, at the seminar, we calculated that it would take about $3.50 to unwind the current 1300/1290 SPX bull put spread (based on Friday's closing prices).

I'm going to hold the position for the time being. I might live to regret it, but that remains to be seen. We all have different risk tolerance. If you need to GTFO for sanity sake, I completely understand.

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NEWARK
I will be presenting a two-day advanced CPTI seminar in New Jersey (Newark) on Friday & Saturday, March 15th & 16th. Contact me (Contact Support) and get your spot reserved - 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. Don't procrastinate! The seminars often sell out.

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CPTI FEBRUARY POSITION
CPTI February Position #1 - SPX Bull Put Spread - 1330.61

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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CPTI MARCH POSITION
CPTI March Position #1 - RUT Bull Put Spread - 688.60

On 1/22, with the RUT at about 670, we sold 20 RUT March 540 puts and bought 20 RUT March 530 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 $58,660 ($56,560 + $2,100).

ZERO PLUS POSITION - The position discussed in the column text may be used for our Zero-Plus strategy - depending on what the market looks like after Monday's opening.

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SEMINAR DATE -

NEWARK, NJ - MARCH 15 & 16

Newark Early Bird Special - Only 5 Days Left To Save!

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). What a deal!!

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!

57 OUT OF 62 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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