Option Investor
Updates

QUICKIE TIME AGAIN

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This morning I suggested a September bull put spread position on the SPX (1120/1110) for $.55. Shortly after I sent out the trade idea, the market started moving up and the premium disappeared. For a long time I monitored the volume and it appeared that only about 75 spreads were traded at the $.55 level.

It looked like many subscribers were not going to get filled on the trade. However, Couch Potatoes who were patient were rewarded when the market turned around and tanked towards the end of the day. Ultimately, over 1.2K contracts of the 1110 were traded and it appears that traders were able to get filled at up to $.80.

The market is nuts and will bounce around. It won't always come back like it did today. Sometimes, you may not get that second opportunity to get filled. The volatility is still there - at least for the moment.

One thing to note is that the VIX is considerably lower than it has been in recent months. It has been 23-28 previously when we've been looking for positions. It's about 21 right now. What does that mean? It means that we either have to accept a bit less premium on our spread positions or we have to bring our credit spreads a little closer to where the underlying is trading.

Being a little closer (and notice I said a "little") should be relatively safe simply because the reduced volatility means a reduced probability that the underlying will move as violently as it might have before.

August Positions
With a week to go, we?re in pretty good shape on our two August positions. I know some subscribers who have already closed out both the RUT and SPX bull put spreads for a nickel or a dime, locking in some nice profit and freeing up maintenance dollars for upcoming opportunities.

We currently have a 96-point cushion on the SPX and a 93-point cushion on the RUT. Barring some ridiculous events, we should be just fine.

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It's

August Quickie #1 - RUT Iron Condor - 713.41
Sell 20 RUT August 680 puts - RUYTP
Buy 20 RUT August 670 puts - RUYTN
Credit of about $.60 ($1,200)

Sell 20 RUT August 740 calls - RUTHH
Buy 20 RUT August 750 calls - RUTHJ
Credit of about $1.00 ($2,000)

Total net credit of about $1.60 ($3,200). Maximum profit range is 680 to 740. The maintenance is $20,000.

August Quickie #2 - NDX Iron Condor - 1880.09
Sell 10 NDX August 1775 puts - NDYTO
Buy 10 NDX August 1750 puts - NDYTO
Credit of about $1.00 ($1,000)

Sell 10 NDX August 1975 calls - NDYHT
Buy 10 NDX August 2000 calls - NDXHT
Credit of about $.85 ($850)

Total net credit of about $1.85 ($1,850). Maximum profit range is 1775 to 1975. The maintenance is $25,000. Note that the NDX has 25-point spreads. That adds another element of risk. 25-point spreads are more difficult to deal with if/when a trade goes bad.

Supplemental Quickie Idea - SPX Short Strangle - 1266.07
Sell 10 SPX August 1190 puts for appx. $1.00 ($1,000) - SPTTR
Sell 10 SPX August 1310 calls for appx. $1.05 ($1,050) - SXYHB

Total net credit of appx. $2.05 ($2,050). Maximum profit range is 1190 to 1310. The maintenance? That's the tricky part. This particular strategy is for those with either a very large brokerage account or those who have the customer portfolio margining feature on their account. Also, you have to monitor this uncovered position and be prepared to act if the short option prices are threatened.

Remember that these quickie positions are risky and should only be traded by experienced traders with decent size accounts. Plus, they need more monitoring than our normal Couch Potato portfolio positions. The quickies are not official portfolio positions and I, personally, do not trade the quickies. The quickies have been quite profitable most of the time, but don?t give in to the temptation if you don't really know what you?re doing.

Before you place the trade, always double check the option symbols, adjust the number of contracts for your risk tolerance and make sure you know, in advance, what you will do if the position is threatened.

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Before I Die . . .
Ralph returns from the doctor and tells his wife that the doctor has told him he has only 24 hours to live.

Given this prognosis, Ralph asks his wife for sex. Naturally, she agrees, and they make love.

About six hours later, the husband goes to his wife and says, "Honey, you know I now have only 18 hours to live. Could we please do it one more time?" Of course, the wife agrees and they do it again.

Later, as the man gets into bed, he looks at his watch and realizes he now has only eight hours left. He touches his wife's shoulder and asks, "Honey, please... just one more time before I die?? She says, ?Of course, dear." They make love for the third time.

After this session, the wife rolls over & falls asleep. Ralph, however, worried about his impending death, tosses and turns until he's down to 4 more hours. He taps his wife, who rouses. "Honey, I have only 4 more hours. Do you think we could...."'

At this point the wife rolls over and says, "Listen Ralph, I have to get up in the morning... you don't!"

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CPTI AUGUST POSITION

CPTI July Position #1 - SPX Bull Put Spread - 1266.07

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 - 713.41

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 - 713.41

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.

CPTI SEPTEMBER Position #2 - SPX Bull Put Spread - 1266.07

On 8/7, with the SPX at about 1275, we sold 20 RUT September 1120 puts and bought 20 SPX September 1110 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 - 713.41

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 - 713.41

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 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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