Option Investor
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LET'S GET AUGUST SETTLED

HAVING TROUBLE PRINTING?
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I?m glad we didn't put on a bear call spread to complete an August RUT Iron Condor. If I did, I would likely have put on the August 760/770 - and I would have bailed on it a long time ago.

As of Thursday's close, the RUT is hovering at 754.38. Those still holding the 760/770 position are not likely to sleep very well tonight. As Couch Potato traders know well, we are at the mercy of the Friday morning settlement number on these European style index options. When trading ends on Thursday, that's it! We also know that the RUT has been known to settle up to 15 points above or below Thursday's closing price.

That dramatic of a settlement move doesn?t happen often, but it does happen. All it takes is some positive news out tonight or before tomorrow's open. A seemingly safe position that is almost six bucks out of the money can end up costing you many thousands of dollars. And what did you do? Nothing. Well, that's the problem. You did nothing and "doing nothing" can be a costly decision.

The best thing that could happen is that there is no major news and the RUT settles below 760 and you can breathe a sigh of relief. However, that is also the worst thing that can happen to you. Why? Because, after escaping with your family jewels intact, you will have false confidence be less likely to make the appropriate adjustment to your position in the future in a similar situation.

Just keep in mind that your money is your inventory. What you might think is a safe position can turn into a big loss in a heartbeat. Enough of those expensive heartbeats and the trading doctor will be soon doing a post-mortem on your trading account.

August Positions
It appears that we will have another 100% profitable month. Both of our positions are in no jeopardy. The Friday morning settlement is just a technicality this month. It's nice to have an easy month after July.

One More Time
Does your broker release your maintenance dollars for use on Expiration Friday? Traders who work with progressive brokers have a distinct advantage over those who don't. Expiration Friday is often quite volatile - the VIX moves up. That means there is often additional premium to be had on Friday that disappears on Monday.

Most of you have the two August Couch Potato portfolio credit spread positions that will expire worthless tomorrow morning. That's about $40,000 tied up in maintenance requirements. Wouldn't it be nice if you had that $40,000 available to use tomorrow? You bet it would.

There's no guarantee that a good trade will become available tomorrow, but, with the right broker, you have the flexibility to take advantage of opportunities if they present themselves. Plus, you're likely take in more premium than you would if you had to wait to trade until Monday.

If you're serious about your trading, you are operating a "trading business." You have to treat it as such. Sometimes you have to make difficult decisions. If your broker isn't on board, it's time for you to jump ship and find one who is. Let me know if you need a suggestion.

Per Your Requests
Over the years I've had many readers ask if there is one place they can go to learn all of our non-directional strategies. The very best way to learn is to attend one of my seminars during which we go over, in depth, everything you need to know to trade our strategies successfully. Over 500 students have graduated from my seminar, many of whom have been making consistent money for years.

I've been honored to have students from Australia, Argentina, Canada, England, Germany, Mexico, Switzerland, Thailand and the Philippines attend my seminars. However, I've received emails from those who live abroad and are not able to make the trip to personally experience my seminar. There are also folks who live in the US who are unable to travel for a variety of reasons.

I'm trying to come up with a solution. Nothing can ever replace the seminar experience. Just ask any of my seminar grads. It's special. That said, I recently started working on putting together a comprehensive handbook of our favorite strategies. It's going to be almost 300 pages of trading wisdom, wit, and a wealth of step-by-step information. It's a tremendous project and challenge. I?ll keep you posted as to the progress.

If there is a particular topic you'd like covered in my new book, let me know (mparnos@optioninvestor.com). I'll do my best to include it. I want it to be the bible of our conservative non-directional strategies. I'm also open to suggestions for a title. There are a ton of option books on the market. I guarantee this will be like no option book you've ever read. Those of you who know me, know I'm not kidding.

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CPTI AUGUST POSITION

CPTI July Position #1 - SPX Bull Put Spread - 1292.93

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.

CPTI AUGUST Position #2 - RUT Bull Put Spread - 754.38

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 - 754.38

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 - 1292.93

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 - 754.38

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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SHORT & SWEET - RUT - 754.38

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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