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THOUGHTS ON SUPERBOWL SUNDAY

HAVING TROUBLE PRINTING?
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I don't know who to root for in today's Superbowl. I'm torn. The part of me that appreciates excellence wants New England to complete their perfect season. The part of me that likes to root for the underdog is intrigued by the Giant's chances. Also, I lived in New York City for almost eight years - an amazing experience. The conflict continues. But, the truth is, I have nothing at stake in the game and will not lose any sleep regardless who wins. Basically, IDGAS.

Let's take a look at how these same feelings can manifest themselves in the market. Our portfolio is a perfect example. We are still holding the February SPX 1300/1290 bull put spread. We've been through hell and back with this spread. The market has been on drugs lately and has spiked to 1395.42 - providing us with a 95-point cushion. That's the good news.

The less-than-good news is that we also have a March SPX Iron Condor position with a 1490/1500 bear call spread - with only a 95-point cushion and seven weeks to wait. Food for thought.

So, what do we root for? February's bull put spread? Or March's bear call spread? In this volatile market, 95 points can disappear in two or three sessions. It only took eight trading days for the SPX to go from a low of 1270 to 1395. Maybe we should just ignore it until the short strikes are being threatened. After all, isn't this is supposed to be a "hands-off" kind of strategy?

I received emails from folks who have put on a March RUT bear call spread to complete the March RUT Iron Condor - some at 790/800. That's only 60 points away from the RUT which is currently at 730 - with seven weeks left.

Actually, I've been giving some thought to putting out an order to close our March 540/530 RUT bull put spread for a dime. After all, we took in $.60. We could possibly lock in a $.50 profit and not have to wait the seven weeks for the extra dime. Some folks took in even more. We may or may not get filled, but it makes sense, doesn't it? One thing we know for sure is that, if we don't put an order out, you don't even have a chance of getting filled.

A number of you were able to get into the RUT 530/520 bull put spread. That's ten points further out of the money, so chances of closing the spread out for a dime are a little better.

Those with limited maintenance dollars would be able to free up bucks for other opportunities. However, we actually have so few positions at this point that you should have plenty of extra cash available - for adjustments and/or new positions.

Short Straddle Update
Another day, another bit of chaos. Our February short strike is 1375 and we took in 56 points of premium on a single contract. Friday's action was a mixed blessing. As they say, "there's good news and there's bad news."

The increase took us away from our short strike by 20 points. That's the bad news. The good news is, as the market moved up, the volatility came down over 2 points. As of Friday's closing prices, our spread could have been bout back for about 54 points - yielding a profit of about two points ($200). Not bad.

But, I figure that we can be patient. The market has been up big the last few days, so it's due for a rest. Sooner or later, it's going to test the near term bottom. Here's the risk. If the market continues up, our short 1375 call will be moving further and further into the money. Because of the higher delta, the value of the call option will be increasing more rapidly than the short put will be decreasing. That's not good.

On the positive side, there are less than two weeks left to expiration. The time value will be eroding away quickly. It'll be interesting to see how much premium disappears over the weekend.

The only thing that seems certain is that the market will continue to be fragile and volatile. So, in this uncovered position, we need to be flexible and attentive. Remember, we have no intention in riding the straddle to the bitter end. If we can take in a respectable profit for a few days or a week, we'll grab it and smile all the way to the bank.

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S&P 500 Support & Resistance Levels - Closed at 1395.42
Resistance:
1406 is the August and November 2007 closing low
1409 is a longer term trendline from the August 2003/September 2004 lows
The 50 day EMA at 1418
1430 from the August interim lows
1440 - 1437 from January and March peaks
1459 is the February peak
1466 is the June/July 2006 up trendline
1475 from peaks in December 1999 and January 2000
The 200 day SMA at 1484

Support:
1376 is the 18 day EMA
1374 is the March 2007 closing low
1370 is the August 2007 intraday low
1366 is the 10 day EMA
1325 from May 2006 peak prior to the summer 2006 correction
1315 is an ancient trendline
1305 to 1302 from an August 2006 peak and matches a range of support from March and April 2006.
1294 from the January 2006 peak
1288 from June 2006
1280 from June and August 2006
1255 from June 2006 lows

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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.

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 - 1395.42

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 POSITIONS
CPTI March Position #1 - RUT Bull Put Spread - 730.50

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.

CPTI March Position #2 - SPX Iron Condor - 1395.42

On 1/28, with the SPX at about 1330, we sold 10 SPX March 1150 puts and bought 10 SPX March 1140 puts for a credit of $.50 ($600). Then, we sold 10 SPX March 1490 calls and bought 10 March 1500 calls for a credit of $.55 ($550). Total net credit is $1.15 ($1,150). Maximum profit range is 1150 to 1490 (340 points). This is the first part of what we anticipate will be a 20 contract position. We plan to scale in and enter the second ten contracts in the near future.


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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 - To Be Announced

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SEMINAR DATE -

NEWARK, NJ - MARCH 15 & 16

Newark Early Bird Special - Only 2 Days Left To Save!

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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