Option Investor
Updates

A BUSY FRIDAY

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We had a busy Friday. The market didn't do much, but we did. We put on a new July CPTI portfolio position with our 1250/1240 bull put spread for $.60. Couch Potatoes were out in mass as the volume on the 1240 put was well over 2,300 for the day.

Then, some of our more advanced traders (at least I hope they are, for their sake) put on the hypothetical Boston Strangle that I discussed in Thursday's column - selling the June SPX 1365 calls and the June 1435 puts. The volume was dramatically, and understandably, lower - in the 30s. But it demonstrates that traders are putting their toes in the water. They're learning, and that's the whole idea behind what we do here.

Once you get comfortable with all aspects of a strategy, you own it. It's yours to use forever. It's a good feeling, knowing you have the skill to generate money - knowing that your money can be working for you instead of you working for your money.

Some of you have become reasonably proficient using our bread-and-butter strategy - the Iron Condor. You're to the point where you can select your own trades. The hundreds of you who have attended my seminar know how to calculate and negotiate premium from the wide bid/ask spreads. You also know a variety of exit and adjustment alternatives.

In the last six months we've been exploring other non-directional strategies. Our hypothetical (but real time) examples of the Siamese Condor and Boston Strangle. If managed properly, these other strategies can generate some nice shorter-term profits. The various non-directional straddle and strangle positions are valuable weapons in your arsenal. We spend hours at my seminar going over all aspects of these other strategies.

I received emails from many wanting to know the location of my next seminar. Hopefully, I'll be able to announce the new date later this week. Stay tuned.

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The Market
The market has been pretty undecided recently. How long will it stay in the most recent trading range? The longer the better. It might be tough, though. There has to be more money moving to stocks from commodities to make the market go higher. The small caps and techs are moving higher, but we're getting into the traditionally slower summer months.

The bottom line is that we don?t know where the hell anything is going. That's why we trade non-directional strategies. And, as long as there are people out there who think they know more than the markets (it's a bottomless pit, so no worries), we'll continue to do just fine.

Our Positions
Also, no worries. So far so good. We have a huge cushion for our June positions. As I've said before, many traders who need to free up maintenance dollars have already closed the RUT position. The SPX position may soon be ripe to close as well, if you choose.

We've already pretty well established our July positions. There is a possibility that we'll put on a bear call spread on the July SPX bull put spread, but not right now. Even if we do, there would not be any additional maintenance requirement because we?d be completing an Iron Condor.

Customer Portfolio Margining
I've mentioned this frequently as a good way to take advantage of the new method of calculating maintenance. It's only offered by a few brokers. If used properly, it can give you a lot more flexibility in trading your account. If your broker doesn't offer customer portfolio margining, drop me a note. I'll send you the contact info for my broker, Mike Cavanaugh. IMHO, he's the best.

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Keep Those Brain Cells Working - Solve These
1. A murderer is condemned to death. He has to choose between three rooms. The first is full of raging fires, the second is full of assassins with loaded guns, and the third is full of lions that haven't eaten in 3 years. Which room is safest for him?

2. A woman shoots her husband. Then she holds him under water for over 5 minutes. Finally, she hangs him. But 5 minutes later they both go out together and enjoy a wonderful dinner together. How can this be?

3. What is black when you buy it, red when you use it, and gray when you throw it away?

4. Can you name three consecutive days without using the words Wednesday, Friday, or Sunday?

5. This is an unusual paragraph. I'm curious as to just how quickly you can find out what is so unusual about it. It looks so ordinary and plain that you would think nothing was wrong with it. In fact, nothing is wrong with it! It is highly unusual though. Study it and think about it, but you still may not find anything odd. But if you work at it a bit, you might find out. Try to do so without any coaching!

Answers to these riddles are at bottom of the column.

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CPTI JUNE POSITIONS

CPTI June Position #1 - SPX Bull Put Spread - 1400.38

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 - 748.28

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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CPTI JULY POSITIONS

CPTI July Position #1 - RUT Bull Put Spread - 748.28

On 5/23, with the RUT at about 735, we sold 20 RUT July 620 puts and bought 20 RUT July 610 puts for a credit of $.65 ($1,300). Maintenance is $20,000.

CPTI July Position #2 - RUT Bear Call Spread - 748.28

On 5/28, with the RUT at about 732, we sold 10 RUT July 810 calls and bought 10 RUT July 820 calls for a credit of $.50 ($500). This bear call spread completes an Iron Condor for 10 of the RUT bull put spreads previously put on 5/23.

CPTI July Position #3 - SPX Bull Put Spread - 1400.38

On 5/30, with the SPX at about 1399, we sold 20 SPX July 1250 puts and bought 20 SPX July 1240 puts for a credit of $.60 ($1,200). Maintenance is $20,000. I'll 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).

JULY ZERO PLUS POSITION - RUT - 745.55

On 5/20, with the RUT at about 721, we sold 30 RUT July 610 puts and bought 20 RUT July 600 puts for a credit of $.70 ($2,100). Maintenance is $30,000. We will look to put on a bear call spread in the future ? IF it makes sense.

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SHORT & SWEET - RUT - 745.55

On 5/18, we opened a new hypothetical Short & Sweet position, selling 4 December RUT 530 puts and selling 4 RUT 930 calls for a total credit of $10.30. Then, we purchased 4 of the July 550 puts and 4 of the July 890 calls to give us two months (June & July) of protection for $.60. Our net credit, thus far, is $9.70.

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JUNE BOSTON STRANGLE - SPX - 1400.38

On 5/30, we opened a new hypothetical Boston Strangle by selling 4 June 1365 calls and selling 4 June SPX 1435 puts for a credit of $17.50. This is an uncovered Boston Strangle. Some traders, who don't have customer portfolio margining or a large enough account to trade uncovered index options, would have had to buy far OTM options to be able to participate in such a trade.

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SEMINAR DATES -

LAS VEGAS - June 21st & 22nd


61 OUT OF 66 PROFITABLE MONTHS!!
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 ONE spot remains for the Las Vegas seminar.

I've also negotiated a great 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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Answers To Riddles:
1. The third room. Lions that haven't eaten in three years are dead.

2. The woman was a photographer. She shot a picture of her husband, developed it, and hung it up to dry (shot; held under water; and hung).

3. Charcoal, as it is used in barbecuing.

4. Sure you can name three consecutive days - yesterday, today, and tomorrow!

5. The letter e, which is the most common letter used in the English language, does not appear even once in the paragraph.

How did you do? Don't feel embarrassed. I didn't do well either.

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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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