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HALF WAY TO EXPIRATION

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HALF WAY THERE

Friday was just another market day. The volume indicates that the sellers were not particularly aggressive. The buyers and sellers seem evenly matched at this point. That's encouraging. Actually, it could be part of a bottoming process. But who knows?

With two weeks left, and a lot of earnings and other news to come, we can still look for a few big swings in the market. I'll be looking for other September positions on the next downdraft. I'm still focused on September SPX spreads below 1100.

I'm glad we have a 90-point cushion to carry us through the next two weeks on the SPX. We have a 96-point cushion on the RUT. After last month, we can use an uneventful month to catch our breath.

New Short & Sweet
By looking at Friday's volume figures, it appears a number of Couch Potato subscribers liked the hypothetical Short & Sweet strangle strategy position I suggested in Thursday's column. This is not a strategy for everyone. You need to have a large account, risk tolerance, and ideally the customer portfolio margining feature.

August RUT Bull Put Spread
For traders who are short on funds, you may be able to free up some maintenance dollars. It appears that you might have a fighting chance to close the 620/610 bull put spread for a debit of a nickel. With the time decay from this weekend, you might get filled.

Quickie Trip North
Lydia and I spent four days this week in Toronto. It's a five hour drive. That's a lot of $4/gallon gas, but still a lot cheaper than flying. PFYI, the gas is even more expensive in Canada than in the states. Good trip. Nice city. We did all the tourist things because Lydia had never been to Toronto before.

Saw a very unusual, but entertaining, Off-Broadway kind of musical. It's called "Evil Dead: The Musical." It was campy, funny and fun. It's a bit edgy and raw, but definitely worth the experience.

Stupid Is As Stupid Does
Those of you who have seen Forrest Gump will recognize that phrase. Every day I see it in action. Most recently I learned that one of Lydia's friends leased a car for $500/month. This guy makes $12/hour. How the hell can he justify that? Even if he could work 35 hours a day, he would still be an idiot. As I've said before, there's no patch for stupid.

After the monthly payment, I doubt he can afford to fill up the tank. That's likely one of the last leases the automotive companies will sell ? and I doubt this will be a profitable one either. The judgment of the auto company isn't any better than the judgment of the guy who is leasing the car.

Remember, the difference between stupidity and genius is that genius has its limits.

Case in point, this same guy and his wife are now looking to buy a house and go further into debt. Can they afford it? Hell no. They don't have a pot to piss in. Some commission starved realtor manipulated the numbers and told them they would be approved for $145,000. This couple is a foreclosure waiting to happen. But they're young. They hear only what they want to hear. They have all the answers. The tough questions start to come when the money runs out and payments are still due.

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S&P 500 Support & Resistance - Closed at 1260.31
Resistance:
1270 is the January low
1285 is the recent July peak
The 50 day EMA at 1297
1317 from the February low
1320 is a 50% retracement of the May to July sell-off
1324 is the April low
1331 is the June low
1345 is an ancient trendline
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 200 day SMA at 1381
1387 is the April 2008 intraday high
1396 is the February 2008 peak
1406 is the August and November 2007 closing low

Support:
1257 is the March low
1244 is an August 2005 peak
1240 to 1221 are September 2005 peaks1234 is the July 2006 low
1224 is the June 2006 low
1176 from the Q4 2005 lows
1167 is the January 2005 low
1154 from the May 2005 lows
1142 is the 2005 closing low

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I THINK YOU'RE THE FATHER OF ONE OF MY KIDS...
A guy goes to the supermarket and notices an attractive woman waving at him. She says hello. He's rather taken back because he can't place where he knows her from. So he says, "Do you know me?" To which she replies, "I think you're the father of one of my kids."

Now his mind travels back to the only time he has ever been unfaithful to his wife and says, "Are you the stripper from the bachelor party that I made love to on the pool table with all my buddies watching while your partner whipped my butt with wet celery???'

She looks into his eyes and says calmly, "No, I'm your son's teacher."

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CPTI AUGUST POSITION

CPTI July Position #1 - SPX Bull Put Spread - 1260.31

On 6/19, with the SPX at about 1342, we sold 20 SPX August 1170 puts and bought 20 SPX August 1160 puts for a credit of $.65 ($1,300). Maintenance is $20,000. I'll look to put on a bear call spread in the future - IF it makes sense.

CPTI AUGUST Position #2 - RUT Bull Put Spread - 716.16

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

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CPTI SEPTEMBER Position #1 - RUT Bull Put Spread - 716.16

On 7/31, with the RUT at about 720, we sold 20 RUT September 610 puts and bought 20 RUT September 600 puts for a credit of $.55 ($1,100). 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 July profits, our new cash total is $64,220 ($62,110 $2,100).

SEPTEMBER ZERO PLUS POSITION - 716.16

On Friday 7/25, I put out an order to sell 30 September 1080/1070 bull put spreads for $.70. It was filled when the SPX dipped to 1251. That's $2,100 of premium. It's going to be a long wait, but I'm in no hurry.

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NEW SHORT & SWEET - RUT - 716.16

On 8/1, we opened a new hypothetical "Short & Sweet" position, selling 4 December RUT 560 puts and selling 4 RUT 850 calls for a total credit of $11.60.

Traders with less experience, smaller trading accounts or those without customer portfolio margining, might want to buy 4 of the September 570 puts and 4 of the September 850 calls to give you two months (August & September) where the short positions are covered for about $1.10. Their net credit would then be $10.50.

Our objective is to do exactly what we did with the previous Short & Sweet Strangle. We want to let time decay and reducing implied volatility do their thing, so we can close the position early and lock in some nice profits.

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SEMINAR DATES -


DALLAS, TEXAS - October 3, 4 & 5

ORLANDO, FLORIDA - December 6, 7 & 8


62 OUT OF 68 PROFITABLE MONTHS!!
WANT TO ACHIEVE SUCCESS WITHOUT STRESS?
OF COURSE YOU DO!!
LEARN OUR CPTI WEALTH-BUILDING TECHNIQUES!

I?ve negotiated excellent low room rates for both seminars. 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) in Dallas and Orlando 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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