Market Summary
Most of the major indexes have stabilized in a relatively narrow trading range as volatility has remained low. Now appears to be a good time to take advantage of the opportunity to set up November trades as October options expire next week.

SPY ETF Trade Setup ---------------------------------------------------------
We are opening a November expiration month SPY bull put spread

We want the SPY put spread to generate a minimum .50 net credit AND we prefer an 80% probability that the short put contracts will expire worthless and we get to keep most of the sold premium. The spread in the table below complies with our trading rules for initiating the November expiration month option series SPY bull put spread (based on Thursday's closing prices). The suggestion is to submit an order to purchase/sell the option strikes prices below. Please confirm the correct option symbols with your broker.

Premium Credit $.61
Total Option Premium Received $1,210 (Excludes commissions and fees)
Maximum Risk $8,790
Margin Requirement $10,000
20 contracts traded on each leg (number of contracts can be increased or decreased based on risk tolerance and/or funds available to trade; this will impact Total Premium Received, Maximum Risk amount, and Margin Required)

If prices gap up tomorrow the put spread may not be available as published and unless the gap is filled we will hold off on the trade. Conversely if prices drop sharply then we will probably initiate the put spread at a lower strike prices with a similar risk profile as described above.

TLT Position Update ---------------------------------------------------------
TLT closed at $123.66 on Thursday – the October put spread is approx. $1,000 in the black

The September 20th Couch Potato published an October expiration TLT put spread
Unless Treasury bonds gap lower tomorrow we plan on closing out this spread for an approx. $1,000 gain as soon as the trade is available. Just buy back the $117 short put contracts to close the position if you have difficulty selling the long $112 puts as part of a spread trade (see tables below)

TLT ETF Trade Setup
We are opening a November option expiration month TLT iron condor. The iron condor should generate a minimum .50 net credit on each leg AND we prefer that the short strikes fit our statistical probability profile (80% chance all the options will expire worthless and we get to keep most of the sold premium). The spread in tables below comply with our trading rules for initiating the November expiration month option series TLT iron condor (based on Thursday's closing prices). The suggestion is to submit an order to purchase/sell the option strikes prices below. Please confirm the correct option symbols with your broker.

Premium Credit $1.12
Total Option Premium Received $2,240 (Excludes commissions and fees)
Maximum Risk $7,760
Margin Requirement $10,000
20 contracts traded on each leg (number of contracts can be increased or decreased based on risk tolerance and/or funds available to trade; this will impact Total Premium Received, Maximum Risk amount, and Margin Required)

If prices gap down tomorrow the call spread may not be available as published and we will hold off on this trade. Conversely if prices rise sharply then we will probably initiate the call spread at a higher strike price with a similar risk profile as described above.

If prices gap up tomorrow the put spread may not be available as published and unless the gap is filled we will hold off on the trade. Conversely if prices drop sharply then we will probably initiate the put spread at a lower strike prices with a similar risk profile as described above.

GLD ETF Trade Setup ---------------------------------------------------------
We are opening a November option expiration month GLD iron condor

The GLD iron condor should generate a minimum .50 net credit on each leg AND we prefer that the short strikes fit our statistical probability profile (80% chance all the options will expire worthless and we get to keep most of the sold premium). The spread in tables below comply with our trading rules for initiating the November expiration month option series GLD iron condor (based on Thursday's closing prices). The suggestion is to submit an order to purchase/sell the option strikes prices below. Please confirm the correct option symbols with your broker.

Premium Credit $1.12
Total Option Premium Received $2,230 (Excludes commissions and fees)
Maximum Risk $7,770
Margin Requirement $10,000
20 contracts traded on each leg (number of contracts can be increased or decreased based on risk tolerance and/or funds available to trade; this will impact Total Premium Received, Maximum Risk amount, and Margin Required)

If prices gap down tomorrow the call spread may not be available as published and we will hold off on this trade. Conversely if prices rise sharply then we will probably initiate the call spread at a higher strike price with a similar risk profile as described above.

If prices gap up tomorrow the put spread may not be available as published and unless the gap is filled we will hold off on the trade. Conversely if prices drop sharply then we will probably initiate the put spread at a lower strike prices with a similar risk profile as described above.

Exit Plan
As discussed above, the exit rule for the TLT bull put spread is triggered. Unless treasury prices gap lower tomorrow we plan on closing out this position in the morning.

As with initiating the trade, the decision process for exiting our credit spreads will be simple:

Anytime the market maker is willing to accept a limit price of less than .11 on one of our short strikes, buy back all the short contracts and sell the long positions on the same spread. However, if it is a few days prior to the expiration date, we may be able to hold out for a .05 bid.

If one of our short strikes is penetrated (closing price above a short call or below the short put) AND the delta rises to .65 we will look to close out this spread (buy the short contracts, sell the long) and roll it out to another short strike price. Unless this is option expiration week, do not panic and rush to close the trade, many times the market will reverse itself and remove the sense of urgency. If one of our short strikes has been violated and there is no price reversal, we cut our losses and live to fight another day.

Gregory Clay

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.