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Updates

61 OUT OF 66 PROFITABLE MONTHS!!

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It never gets old. The consistent recording of profits month after month after month is what my Couch Potato Trader column is all about. Some months are smoother than others. The last few have been a breeze.

We made a conservative, and safe, $2,200 in the May cycle. Some more aggressive traders chose to put bear call spreads on their May bull put spreads to complete their Iron Condors. They made out well and I congratulate them. As I've said often in the past, so much of one's trading is individual - based on one's risk tolerance and a variety of other variables. I just hope that having these bear call spreads expire worthless doesn't give them false confidence.

We're in a lower volatility environment right now. The VIX is down to 16.47. It hasn't been down at this level since October of last year. What does this mean? Simply that there is less premium available for our bear call spreads. That translates into having to bring those bear call spreads even closer to the index. That's dangerous territory - and not my comfort zone.

In the meantime, our June positions look excellent. As I mentioned in recent columns, some traders may want to try and exit these positions early for very little. Why wait an entire five weeks (June is a five week option cycle) for that last nickel?

I'll keep watching for new June positions, especially now since traders have a lot of maintenance dollars burning a hole in their pockets.

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A New "Short & Sweet" Position Idea
A month or two ago, I talked about a possible long term strategy - for patient traders. Hyperactive traders need not apply. This isn't for those of you who can't go a few days without clicking on something. You know who you are.

We'll call this strategy the "Short & Sweet Strangle." We're going to start by establishing a short strangle all the way out to December and take in some nice premium. Then, we're going to spend some of our precious premium to cover our butts for the first few months of the position.

Keeping in mind that this is a hypothetical position, and is not an official Couch Potato portfolio position, let's give this a go. With the RUT at 741.17, let's:

Sell 4 December RUT 930 calls - RUZLX
Sell 4 December RUT 530 puts - RUWXF
Credit of about $10.30

Buy 4 July RUT 890 calls - RUZGR
Buy 4 July RUT 550 puts - RUWSJ
Debit of about $.60

See what we've done? For about $.60 of the $10.30 we took in, we are now covered for the next nine weeks. Nothing can hurt us. Not that the RUT is likely to move two hundred points, but you never know. For $.60 it's worth it to have the insurance.

What do we do when we get to July expiration? Good question. Obviously, it all depends on where the RUT is trading. We still have $9.70 ($10.30 - $.60) of premium remaining for our profit and for additional insurance. After July there are five uninsured months left for the trade to run.

There are many possible scenarios. If the RUT makes a dramatic move in one direction or the other while insured, we may choose to close a short position early and roll it - or we may take advantage of that opportunity to put on new inexpensive insurance for the next month or two.

The adjustments certainly aren't set in stone. They can't possibly be. The markets will move up and down, but the volatility has waned a bit. I think a 400 point range (530 to 930) is certainly a reasonable expectation.

We'll have to take what the market gives us and make our moves when the opportunities present themselves. Even if we end up using another $2.20 for insurance for the life of the strategy, we will still end up with about $3,000 ($7.50 x 400) of profit - without a lot of hands on activity and without a lot of sleepless nights. Not shabby at all.

Want to have some fun? Call your broker, explain the above position and find out how much maintenance they want to hold in your account. I wouldn't be surprised if you call five brokers and get five different answers. If you have the time, let me know what your broker says.

Also, let me know how many times you have to explain the position to the broker before they give you a maintenance figure. See if they have to check with an "option principal" before you get the information. These are just a few of the things that will let you know if you are with a progressive options broker. Brokers can and DO make a difference.

This is another instance where traders with brokers who offer customer portfolio margining will have a distinct advantage.

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Revisiting The May Quickies
Our Quickies ended up profitably - AGAIN! Gee, what a shock!

The SPX Iron Condor expired worthless, providing a nice $2,900 profit. The OEX uncovered put was 100% profitable yielding $900 in profits. And, finally, the RUT Boston Strangle, showed about a $2,000 profit - if it was closed early - which any sensible (not greedy) trader should have done.

Zero-Plus Profits
As usual, the Zero Plus strategy continues to put money in our pockets - this time, another $1,650. We?ll find a new position soon. Stay tuned to this station . . .

Two Spots Left For Vegas
There's about a month before my June 21/22 seminar in Las Vegas. There are two spots remaining. Want to take your trading to the next level? Want to learn? Here's your chance - if you?re serious. The price is right and you'll have a learning experience you'll never forget. Send me your phone number. I'll call you to answer all your questions. mparnos@optioninvestor.com

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TRACKING CPTI PORTFOLIO RESULTS
Welcome to our tracking of CPTI portfolio's year number six!
We've just completed the seventh month (May) of CPTI tracking year number six. Our positions for May were 100% profitable. Our profit for the seventh month of our sixth year was $2,200. In our sixth tracking year, we accumulated a profit of $14,760 ($12,560 $2,200).

RECAP OF MAY POSITION
(See Position Details in May Summary Below)
SPX Bull Put Spread - PROFIT $1,100

RUT Bull Put Spread - PROFIT $1,100 TOTAL MAY PROFIT: $2.200.

May Settlement Numbers
S&P 500: $SET - 1425.70
Russell: $RLS - 748.67
S&P 100: OEX - 652.15
MID: $MIV - 886.04

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SUMMARY OF CPTI MAY POSITIONS

CPTI May Position #1 - SPX Bull Put Spread - 1423.57

On 3/31, with the SPX at about 1316, we sold 20 SPX May 1130 puts and bought 20 SPX May 1120 puts for a credit of $.55 ($1,100). Maintenance is $20,000. PROFIT: $1,100.

CPTI May Position #2 - RUT Bull Put Spread - 743.38

On 4/11, with the RUT at about 700, we sold 20 RUT May 600 puts and bought 20 RUT May 590 puts for a credit of $.55 ($1,100). Maintenance is $20,000. PROFIT: $1,100

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CPTI JUNE POSITIONS

CPTI June Position #1 - SPX Bull Put Spread - 1423.57

On 4/18, with the SPX at about 1392, we sold 20 SPX June 1235 puts and bought 20 SPX June 1225 puts for a credit of $.70 ($1,400). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.

CPTI JUNE Position #2 - RUT Bull Put Spread - 743.38

On 4/22, with the RUT at about 709, we sold 20 RUT June 590 puts and bought 20 RUT June 580 puts for a credit of $.55 ($1,100). 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 May profits, our new cash total is $62,110 ($60,460 $1,650).

ZERO PLUS POSITION - SPX - Bull Put Spread - 1423.57

On 3/31, with the SPX at 1316, we sold 30 SPX May 1130 puts and bought 30 SPX May 1120 puts for a credit of $.55 ($1,650). Our profit was $1,650.

Watch for a new Zero Plus position to be announced soon.

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SEMINAR DATES -

LAS VEGAS - June 21st & 22nd


WANT TO ACHIEVE SUCCESS WITHOUT STRESS?
OF COURSE YOU DO!!
LEARN OUR CPTI WEALTH-BUILDING TECHNIQUES!

I will be presenting our two-day advanced CPTI seminars in Las Vegas on June 21st & 22nd (Saturday & Sunday). Come on down! As of today, only two spots remain for the Las Vegas seminar.

I've also negotiated an unbelievably low room rate for the weekend. Vegas is great for a getaway as well as for attending a seminar. Check your calendar and contact me as soon as possible. Send me your phone number at - Contact Support. I will personally call you to go over the details and to answer any questions you may have.

Also attending (and speaking) at the Las Vegas seminar will be Mike Cavanaugh, my personal broker and option strategist extraordinaire. Actually, he knows this stuff better than I do. I guarantee you'll be impressed.

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!

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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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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