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A LONG CYCLE AHEAD

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A LONG CYCLE

The March option cycle is five weeks. The extra week is both a curse and a blessing. The curse is that we are exposed to the market for an additional week. The blessing is that there was additional premium that enabled us to put on the positions in advance and further out of the money than a typical four-week expiration might provide.

Our positions are secure with huge cushions. So, we can sit back and relax and let the market bounce around amid this endless volatility. It's unlikely we'll have much to worry about, but then again, I've said that before and had to eat my words (not fattening words, but very expensive).

We now have about four weeks with nothing to do. That's enough to drive those Type-A personalities crazy. You know the type. They sit in front of the computer all day long and just have to click on something. They want to make money, sure. But, they're in the game for the action. For every dollar they profit from our "hands off" strategies, they lose that back (and then some) by trying to daytrade or swingtrade. Oh well, you can lead a horse to water, but you can't make . . . . .

Contributing To Your Delinquency

I'm going to take a bit of responsibility for some of the new short-term traders in our trading family. Recently, I've been introducing a few short-term strategies. The butterflies, short straddles, and Siamese Condors are becoming more and more popular with subscribers.

We've been using them successfully during the last week (approximately) of the option cycle. And, we've been pretty profitable - snatching $200 here, $500 there, etc. As you see, there are non-directional strategies for many scenarios.

Do we have to wait for expiration week? Actually, it depends on the strategy you want to use. Butterflies can be established for very little at any point. Putting them on early simply means additional exposure to the market.

Our short straddles rely mostly on premium decay. As you know, most of the premium decay takes place in the last week or two of the cycle. That's the ideal time to use the short straddles.

Here's a thought. I've heard of a few traders who use the short straddle and/or the Siamese Condor strategies on the weekly options. That might work. I haven't explored it thoroughly though. One thing I remember, when looking at the weekly options, I noticed that they are offered on a limited number of strike prices.

If the strike prices and premiums are appealing, consider it. Just don't force any trades.

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NEWARK - March 15th & 16th
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 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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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.

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CPTI MARCH POSITIONS

CPTI March Position #1 - RUT Bull Put Spread - 696.28

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 - 1342.53

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 - 1342.53

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.


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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 - SPX - 1342.53

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.

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SEMINAR DATE -

NEWARK, NJ - MARCH 15 & 16

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!

58 OUT OF 63 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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