Option Investor
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MARKET MOVES HIGHER

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ON LOW VOLUME

A Breakout On The Horizon?

Could be. The SPX is poking its nose above 1300. Looks like the market wants to - even though the volume was low. All the sellers are planning for their Labor Day weekend. The buyers are still around. Our indexes finished at their highs for the day. We'll see if the market follows through. At this point, I'm glad we have bull put spreads and no bear call spreads.

I received emails from a few Couch Potatoes who have already closed out their RUT 610/600 September bull put spread, mostly for $.10. I've had orders out there for the last two trading days to close out that same spread for a nickel in my client's accounts. But, the orders haven't been filled as yet.

Remember, it never hurts to throw an order out there. It doesn't cost anything and you just might get filled. One thing is for sure - if you don't have an order out, nothing is going to bet filled.

New October Position

On Monday, the market took a dip. We took advantage of it and put on our second October portfolio position. The October SPX 1110/1100 bull put spread looked good. With the market tanking, the volatility was up and we were able to bring in $.60 of premium on 20 contracts - and create a position with a huge cushion. If we have to wait for eight weeks, we better have a huge cushion.

Short & Sweet Update

As of Thursday's closing prices, we could close our Short & Sweet position for a debit of about $9.50. We originally took in $11.60 on a four contract position. That represents an $840 profit. That's not bad for less than a month. If you want to lock in your profit, it?s perfectly understandable.

As I said in Sunday's column, I'm going to wait until Tuesday to make a decision. We'll have four extra days of premium decay. However, note that, since these are December options, the decay is not going to be all that dramatic. There are still four months left in the option.

When the time comes, how do you exit the strangle? The best way is to put in a spread order. Essentially is will be a long strangle with the same strike prices. You'll be putting it in as a debit order instead of a credit order.

Calculate the net debit and hit the button. Remember, that you'll be able to negotiate a better price than the posted prices. The negotiation process isn't just for establishing the credit spread. It's for closing out existing spreads as well.

Where do you learn the negotiation process? At my two-day seminar. It's just one of the many skills you will learn and develop at a seminar like none you've ever experienced. The price is right. And, if you're an options trader serious about learning our Couch Potato strategies, this should be a no-brainer. I hope to see you in Dallas or Orlando. (See below for dates, etc.) I'm only an email away. Contact Support

Book Update

This weekend, while most of you will be enjoying your Labor Day holiday, I'm going to start work on the position adjustment chapters of my book. I figure it will take at least four chapters to cover them properly. We literally spend hours on the adjustments at the seminar.

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CPTI SEPTEMBER Position #1 - RUT Bull Put Spread - 747.79

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 - 1292.20

On 8/7, with the SPX at about 1275, we sold 20 SPX 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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CPTI OCTOBER Position #1 - RUT Bull Put Spread - 747.79

On 8/18, with the RUT at about 732, we sold 20 RUT October 600 puts and bought 20 RUT October 590 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 OCTOBER Position #2 - SPX Bull Put Spread - 1300.68

On 8/25, with the SPX at about 1267, we sold 20 SPX October 1110 puts and bought 20 SPX October 1100 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 July profits, our new cash total is $64,220 ($62,110 + $2,100).

SEPTEMBER ZERO PLUS POSITION - 747.79

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 - 747.79

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

63 OUT OF 69 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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