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.
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
OF FEBRUARY POSITION
January Settlement Numbers
NEWARK - March 15th & 16th
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.
CPTI FEBRUARY POSITION
CPTI February Position #1 - SPX
Bull Put Spread - 1349.99
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
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?
If you're a SERIOUS options trader, you want to learn the
nuances of our advanced non-directional trading strategies and hone your
Contact me ASAP at firstname.lastname@example.org. 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!
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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: email@example.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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