Option Investor
Updates

CHRISTMAS PROFITS

HAVING TROUBLE PRINTING?
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Profit! The word has a nice ring to it. With our December position being 100% profitable, it’s a nice way to close out a difficult year. We have now recorded 66 out of 73 profitable months. It’s an impressive track record, but it can get better. That’s my goal.

Our economy is in bad shape. Next year is certain to be full of challenges. My main goal is to further develop my trading skills. We all have weaknesses. I certainly do. The challenge is to be able to recognize a weakness and then work toward making it a strength.

It’s not like Minute Rice. It won’t happen over night. However, like anything else, if we’re willing to make the effort to learn, anything is possible – even probable.

THE MARKET
There hasn’t been a lot of volume, and probably won’t be for awhile. That doesn’t mean the market won’t react violently to certain news events. Actually, the lower the volume, the more dramatic the swings.

Historically, there is a bias to the upside going into the Xmas/New Year’s season. Some call it the Santa Claus rally. This may be countered by traders taking tax losses as the end of the year draws near. Then, there are always those never-ending hedge fund and mutual fund redemptions. The bottom line is that we don’t know what the hell is going to happen. Hopefully, this mixture of signals will result in a range bound kind of activity – which we like.

The VIX has been steadily going down over the past few weeks. At 44.93, it’s about half of the high point of 89.53 recorded last October 24th. There is still plenty of volatility left for our purposes. We will be on the outlook for additional positions - for January and, perhaps, for February.

QUICKIE UPDATE
If you had the cajones to put on the December Quickie trades, you still have your cajones plus about $6,000 of new cash in your pocket. Both of our Iron Condor Quickies expired 100% profitable. It’s good news and the green stuff is nice to have, particularly around the holidays. But it doesn’t make the trades any less risky. As always, “caution” is the operative word.

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TRACKING PORTFOLIO RESULTS
Welcome to our tracking of our portfolio's year number seven! We've just completed the second month (December) of tracking year number seven. We had a profitable month. Our profit for the second month of our seventh year was $1,100. In our seventh tracking year, we have posted a profit of $2,900. It’s a beginning.

RECAP OF DECEMBER POSITIONS
RUT Bull Put Spread – Profit: $1,100
DECEMBER PROFIT: $1,800.

November Settlement Numbers
S&P 500: $SET – 889.74
SPY: 88.19
S&P 100: OEX – 424.18
Russell 2000: $RLS – 492.20
IWM: 48.70
MID 400: $MIV – 524.04

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S&P 500 Support & Resistance - Closed at 887.88
Resistance:
889 is an interim 2002 peak
896 is the late November 2008 peak
899 is the early October closing low
919 is the early December peak
The 50 day EMA at 928
965 is the 2003 consolidation low
995 from June 2003 consolidation peak
1008 is the November 2008 peak
1065 is the Q4 2003 level that SP500 started the run to 2007 after the first run in the recovery.

Support:
The 10 day EMA at 886
The 18 day EMA at 883
866 is the second October 2008 low
853 is the July 2002 low
848 is the October 2008 closing low
839 is the early October 2008 low
815 is the early December 2008 low
818 is the November 2008 low
800 is the March 2003 post bottom low
768 is the 2002 bear market low
741 is the November 2008 low
650 on the top and 625 on the bottom of a 7 month range in 1996
475 from 1994 where the market moved laterally for the entire year.

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CHANGE
Years ago, there was an old tale in the Marine Corps about a lieutenant who inspected his marines and told the 'gunny' that they smelled bad. The lieutenant suggested that they change their underwear.

The Gunny responded, 'Yes, sir, I'll see to it immediately'.

He went into the tent and said, 'The lieutenant thinks you guys smell bad, and wants you to change your underwear. Smith, you change with Jones, McCarthy, you change with Witkowskie, Brown, you change with Schultz. Get to it'.

The moral: A candidate may promise change in Washington, but don't count on things smelling any better.

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NEW SEMINAR DATES ANNOUNCED
It’s time to start planning how you’re going to improve your trading in 2009. To start off 2009, I will be presenting the following two seminars:

CHICAGO – March 7 & 8
LAS VEGAS – June 6 & 7

In addition to our low seminar price, and our early-bird special rates, all seminar attendees will receive a FREE COPY of my new book that’s scheduled to be published in January. Contact me as soon as possible to reserve your spot in Chicago or Las Vegas. (mparnos@optioninvestor.com)

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SUMMARY OF DECEMBER PORTFOLIO POSITION

CPTI DECEMBER Position #1 - RUT Bull Put Spread – 479.17
On 11/6, with the RUT at about 510, we sold 20 RUT December 330 puts and bought 20 RUT December 320 puts for a credit of $.55 ($1,100). Maintenance is $20,000. PROFIT: $1,100.

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JANUARY PORTFOLIO POSITIONS

CPTI JANUARY Position #1 - RUT Bull Put Spread – 479.17
On 12/1, with the RUT at about 455, we sold 20 RUT January 290 puts and bought 20 RUT January 280 puts for a credit of $.75 ($1,500). Maintenance is $20,000.

CPTI JANUARY Position #2 - SPX Iron Condor – 885.28
On 12/8, with the SPX at about 877, we sold 15 RUT January 680 puts and bought 15 SPX January 670 puts for a credit of $.80 ($1,600). Then, when the market moved up, we sold 15 January SPX 1090 calls and bought 15 January SPX 1100 calls for a credit of $.70 ($1,050). The total net credit is $1.50 ($2,250). Maintenance is $15,000.

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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 November profits, our new cash total is $68,840 ($66,440 + $2,400).

ZERO PLUS POSITION – RUT Bull Put Spread – 479.17

On Monday, 12/1, we sold 30 January 280/270 RUT bull put spreads for a credit of $.80 ($2,400). We will look for a possible bear call spread to complete the Iron Condor if an attractive situation presents itself.

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SEMINAR DATES -

CHICAGO, IL – March 7 & 8
LAS VEGAS, NV – June 6 & 7

65 OUT OF 72 PROFITABLE MONTHS!!
WANT TO ACHIEVE SUCCESS WITHOUT STRESS? OF COURSE YOU DO!!
LEARN OUR CPTI WEALTH-BUILDING TECHNIQUES!

I’ve negotiated an excellent low room rate. Check your calendar and contact me as soon as possible. Send me your phone number at - mparnos@optioninvestor.com. I will personally call you to go over the details and to answer any questions you may have.

Also attending (and speaking) 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.

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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