Option Investor
Updates

58 OUT OF 63 PROFITABLE MONTHS!

HAVING TROUBLE PRINTING?
Printer friendly version

58 MONTHLY PROFITS OUT OF 63

This month we recorded our 58th profitable month out of the 62 months the Couch Potato Trader Portfolio has been in existence. You may say that this month's success was nothing to shout from the rooftops because we had only one position. But I beg to differ. Our one SPX 1300/1290 bull put spread position was the kind of position that makes for ulcers and makes strong men weep.

Seriously, how many of you held on when the S&P 500 traded down to 1270 at the beginning of the February cycle? That was 30 points in the money. Was holding on the right thing? Or the wrong thing? I felt there was still plenty of time left for the market to recover - or plenty of time to make an adjustment. That's what I was thinking.

It was a calculated risk - based on years of experience and a pinch of wishful thinking. I'm not kidding anyone, here. Even though we escaped unscathed, I know that a portion of it can be attributed to good fortune. But, I'll take it - and I'll grin all the way to the bank.

Remember, they say that whatever doesn't kill you makes you stronger. Do you feel stronger? Or just luckier?

Please note, and I have to emphasize, that those who did get out of the position were not wrong to do so. You did the prudent thing and will live to trade another day (or week, or month, or year). You preserved the majority of your trading capital in that trade and you should be saluted for your self-discipline and your willingness to stick to your trading plan.

The question is - do you trust your instincts? Or do you trust your trading plan? Or both? That's why, when asked about exit strategies, I always say that they depend on one's risk tolerance, account size, trading experience, skill levels, sleeping habits and other contributing factors.

Quickie Update - 100% Profitable

Well those daring folks who played our quickies hit the jackpot this month. They put an $8,800 notch on their six-shooter. Our SPX Iron Condor expired worthless and we pocketed $5,400 (for a 20-contract position). Plus, our RUT Iron Condor also expired worthless with a profit of $3,400 (for a 20-contract position). Good stuff.

Just remember that with these particularly short-term risky trades, sometimes you get the bear and sometimes the bear gets you. This month we got the bear - and it was a big sucker.

Butterfly Results

Our hypothetical XSP 135/133/131 position was almost a big winner. Actually, the futures were down about 10 points prior to Friday's SPX settlement calculations. I thought it was going to dip. But, surprise, surprise!! The unpredictable settlement was down only about a point from Thursday's closing prices. I still think there's something shady going on there.

The result was that the XSP settled at 134.72 (settlement symbol $XSR - or basically one-tenth of the S&P 500 settlement). That means only the long 135 call was profitable by a whopping $.28. Unfortunately, we spent $.33 to get into the position. So, horrors of horrors, we lost a nickel and a few commissions.

But the good part is that we were in position to make a nice piece of change with only a very small risk.

Other February Experiments

We did quite well on our hypothetical short straddles in the last few weeks of the February cycle. We took profits where prudent and didn't let things go to expiration. If, on our last 1335 short straddle, we had let it go to expiration, we would have banked a very impressive profit.

We originally took in $40.70 and we would have had to given back (via the cash settlement) only $12.20 (SPX settled at 137.20) - leaving a profit of $28.50 x 2 contracts would have been $5,600. It's enough to make you drool, isn't it? But, I'm not complaining about my $1,200 profit. With the market as volatile as it has been, I was content to snatch the money and run - and not be exposed for the last week of trading when anything could have happened.

I've received emails from some CPTIers who have been trading these short straddles and who had a fair amount of success this month. As it turned out, a lot of the volatility canceled itself out as the market bounced in both directions. If you used the short straddle or the Siamese Condor, you may find that these strategies will become a welcome addition to your trading arsenal. We go over these strategies, and many more, in depth at my two-day advanced seminar.

From The Other Side Of The World

I just arrived in the city of Davao in the Philippines early this morning - after about 25 hours of travel. Because I had previously accumulated a ridiculous number of frequent flyer miles, I've earned a "Gold Elite" status on Northwest Airlines. It really came in handy on the second leg of the trip when I was upgraded to Business (First) Class seating. Sweet!

There is a huge difference between coach and Business Class, but in reality I'm too damn cheap to pay for it. So this was quite a treat. It's happened a few times before. I could get used to it. But, I still can't justify paying more than double the fare. My butt and those first class seats get along really well.

Now for two weeks of tropical heat, $5.00 massages, karaoke singing and trying to deal with a different currency (Philippine Peso - 40.93 per dollar) and, of course, Lydia's family. I guess you can't have everything. The name of the game is patience. That's what I keep telling myself.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

TRACKING CPTI PORTFOLIO RESULTS
Welcome to our tracking of CPTI portfolio's year number 6! We've just completed the third month (February) of CPTI tracking year number six. Our only position for February was 100% profitable. Our profit for the third month of our sixth year was $1,200. In our sixth tracking year, we accumulated a profit of $6.810 ($5,610 + $1,200).

RECAP OF FEBRUARY POSITION
(See Position Details in February Summary Below)
SPX Bull Put Spread - PROFIT $1,200 TOTAL FEBRUARY PROFIT: $1,200

January Settlement Numbers
S&P 500: $SET - 1347.20
Russell: $RLS - 701.52
S&P 100: OEX - 623.85
MID: $MIV - 793.51

XSP: $XSR - 134.72

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

NEWARK - March 15th & 16th
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.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Beginning The Educational Process . . .

I know there are many trial subscribers out there who may not have the experience or background to fully understand what we're doing here at the Couch Potato Trader. What we do is not for beginners. It's important to have a solid foundation of knowledge of options and how they work to take full advantage of my column.

Some folks see our track record and are excited (justifiably so) to give us a try. A large percentage of these folks are completely new to options. I'm sure you know a few. We want to make the learning process both smooth and enjoyable.

I have recently agreed with OptionInvestor to teach a two-day introductory options course. We're calling it "Up To Speed." It will start from the basics and go through all the information you would need to comprehend options, what they are, how they work individually and together.

After the two days of education, you'll be able to appreciate, and take advantage of, all the newsletters offered on the OptionInvestor site. The first of the "Up To Speed" seminars will be presented in Chicago on Saturday & Sunday, April 12th & 13th.


OptionInvestor is offering these two days of training for as little as $495 - an unbelievable offer. Here is the link to a page that goes into more detail about the "Up To Speed" seminar: www.optioninvestor.com/account/sm08landing.aspx?


Some of you may be interested in a review. Perhaps you know some people who are envying your results from our Couch Potato Trader, but they're intimidated by option trading. This is a great way for them to get "Up To Speed."

As you know, this stuff isn't rocket science. However, it's important for new option traders to have this fundamental knowledge -- or they can kiss their money goodbye.

So, come join me for a couple days of enlightenment and fun. It's a great way to begin one's option education and an experience you'll remember for a long time.

Please Note
Don't confuse the "Up To Speed" seminar with my CPTI 2-day Advanced Seminar. In the "Up To Speed" seminar, we will be covering the basics and discussing the strategies a new option trader should know.

My 2-day Advanced Seminar starts where the "Up To Speed" seminar leaves off. Those who attend my advanced seminar are there to learn and fine tune their trading skills. It's for those who want to explore more advanced trading strategies further in depth.

Take care and I hope to meet many new friends in the "Up To Speed" seminars.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CPTI FEBRUARY POSITION

CPTI February Position #1 - SPX Bull Put Spread - 1349.99
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). PROFIT: $1,200

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

CURRENT CPTI MARCH POSITIONS

CPTI March Position #1 - RUT Bull Put Spread - 701.52

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 - 1349.99

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.

CPTI March Position #3 - SPX Bull Put Spread - 1349.99

On 2/6, with the SPX at about 1342, we sold 20 SPX March 1140 puts and bought 20 SPX March 1130 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.


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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 - SPX - 1349.99

On 2/6, with the SPX at 1342, we sold 30 SPX March 1140 puts and bought 30 SPX March 1130 puts for a credit of $.60 ($1,800). Maintenance is $30,000. We'll look for a bear call spread to complete the Iron Condor - IF it makes sense.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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!

!
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?

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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.

Couch Potato Trader Updates Archives