TESTIMONIALS . . .
Mike – There is not a day that goes by that we do not think of you and are thankful for the introduction to this world of non directional trading. I urge all traders to take your course and then begin to think and trade for themselves – and use the creative license you allowed us to receive. – Ron
Mike – You should be very proud of your performance, and I just wanted to thank you for teaching me your strategies. – Lee
Mike – I fully value and appreciate your candor, strategies and insight. You simplify what others try to complicate. I have gleaned a wealth (full pun intended) of information from both your newsletter and class. – Gene
January 13, 2011 – Weeklys Profitable – As Usual
WEEKLYS PROFITABLE – AS USUAL!
Hello Everyone,
Yesterday we closed the GLD Weekly Iron Condor for a total of .04. We originally took in $.44. That left us with a $.40 ($400) profit on a risk of $2,560 ($3,000 – $440). That represents a return of 15.6%.
We also closed our SPX Weekly Bull Put Spread for a dime. We originally took in $1.35. That left us with a profit of $1.25 ($125) on a risk of $2,365 ($2,500 – $135). That represents a return of 5.3%.
New Weekly Ideas
So, what should we do for this week? Even though Thursday was a slightly negative day in the market, on the S&P 500 is still comfortably above its 10-day EMA. So, until the market tells us otherwise, we’ll give the SPX another try. With the SPX at 1283.76, let’s:
SPX Weekly Bull Put Spread -
Sell one SPX January 1255 put (delta: .15) and buy one January 1230 put for a credit of about $1.35 ($135). Maintenance is $2,500 per contract. We will close the position if the delta of the short 1255 put hits .40.
We’ve been doing very well for a long time with the market on a sustained march upward. One of these days, the shit is going to hit the fan and we will have to be ready to act to manage our risk. Putting on a trade is not rocket science. Managing your risk is the challenge and following through with your trading plan is a must.
GLD Weekly Iron Condor
I looked at doing another GLD Iron Condor. There might be a larger move coming up. It’s been in a range for awhile. So, this week we’ll be a little more conservative and move our strikes out a little bit further. The price we’re paying for this extra bit of safety is that we’ll be taking in less premium. So, here goes. With GLD at 134.05, let’s:
Sell 10 GLD January 130 puts
Buy 10 GLD January 127 puts
Credit of about $.16 ($160)
Sell 10 GLD January 138 calls
Buy 10 GLD January 141 calls
Credit of about $.14 ($140)
Total net credit of about $.30 ($300). Maximum profit range is 130 to 138. Maintenance is $3,000. If the trade works out and we keep our $.30, we’ll still make over 10% on the trade. We’ll keep a close watch on this one.
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CORE PORTFOLIO POSITIONS
Core Portfolio January Position #1 – RUT Bull Put Spread – 800.65
On 11/23, with the RUT at about 770, we sold 10 January 680 puts and bought 10 January 670 puts for a credit of $.65 ($650). Maintenance is $10,000.
Core Portfolio February Position #1 – RUT Bull Put Spread – 800.65
On 1/4, with the RUT at about 781, we sold 10 February 675 puts and bought 10 February 665 puts for a credit of $.75 ($750). Maintenance is $10,000. We will look for an opportunity to complete the Iron Condor.
Core Portfolio February Position #2 – ISRG Bull Put Spread – 279.11
On 1/10, with ISRG at about 267, we sold 10 February 220 puts and bought 10 February ISRG 210 puts for a credit of $.65 ($650). Maintenance is $10,000. We’ll look for an opportunity to complete the Iron Condor.
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EDUCATIONAL POSITION PORTFOLIO
This portfolio highlights trades using alternative strategies – beyond our standard Iron Condor and basic credit spreads.
Educational Portfolio #1- IOC – SRS Ratio Spread – 76.65
On 1/5, with IOC at about $76, we bought a March 75/85 bull call spread and sold two March $65 puts. Net credit of $.20.
Educational Portfolio #2 – AMZN – SRS Spread – 185.53
On 12/29, with Amazon at about 183.50, we bought the April 180/190 bull call spread and sold the April 155 put to pay for it. Net debit of $.35.
Educational Portfolio #3 - FDX SRS Ratio Ladder – 95.63
On 12/13, with FDX at about $94.50, we bought one April $90 call and sold one April $100 call. We sold one $85 put and one $80 put for a net debit of $.25.
Educational Portfolio #4 – UUP SRS Ratio Strategy – 22.80
On 10/25, we sold two June UUP $21 puts, bought one $22 call and sold one $24 call for a debit of $.10. Maintenance is $670. This is a bet on the strengthening of the dollar in the next six months.
Educational Portfolio #5 – GOOG SRS Strategy – 616.69
On 10/25, with GOOG at about 616, we bought one March GOOG 610 call and sold one March GOOG 630 call for a debit of $10.20. We sold one March 510 put for a credit of $10.20. There is no credit or debit. Note we only sold one put. Maintenance is $6,120.
Educational Portfolio #6 – GS SRS Ratio Strategy – 171.57
On 11/15 we bought one GS April 165 call and sold one April 180 call. We sold two April 135 puts all for a net credit of $.20. Maintenance is $3,360
Educational Portfolio #7 – AAPL Ratio Put Spread – 345.68
On 10/1, with Apple at about 284, we bought a January $280 put, then sold one $260 put and one $250 put for a net credit of $.15. We are in a position to profit if Apple drops below $280 all the way down to $260. This was a longshot, but it didn’t cost us anything. .
Educational Portfolio #8 – CME Ratio Put Spread – 313.60
On 11/15, we bought one January CME 290 put and sold two January 270 puts for a small debit of $.70. This is a hedge with profit potential. Initial maintenance is $4,600.
Educational Portfolio #9 – FSLR Put Ladder Spread – 141.55
On 11/17, we bought one January FSLR 130 put and sold one January 120 put and sold one January 115 put for a net credit of $.10. This is a hedge with profit potential. Initial maintenance if $1,545.
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RECENTLY CLOSED EDUCATIONAL POSITIONS
Educational Portfolio – SPX Weekly Bull Put Spread
On 1/7, we sold one SPX Weekly (1/14) 1240 put and bought one SPX Weekly (1/14) 1215 put for a credit of $1.35. Maintenance is $2,500. Closed 1/12 for $.10 – a profit of 5.3% in 4 days.
Educational Portfolio – GLD Weekly Iron Condor
On 1/7, we sold 10 GLD Weekly (1/14) 130/127 bull put spread and 10 GLD Weekly (1/14) 138/141 bear call spread for a net credit of $.44 ($440). Maintenance is $3,000. Closed 1/12 for $.04 – a profit of 15.6% in 4 days.
Educational Portfolio – SINA SRS Ratio Spread
On 12/20, with SINA at about $69.95, we bought one March 67.50 call and sold one March 72.50 call. We sold two $55 puts, all for a net credit of $.25. Closed 1/12 for a net $325 profit of $3.25 ($3.00 + $.25).
Educational Portfolio SPX Weekly Bull Put Spread
On 12/30, with SPX at about 1254, we sold one Jan. week #1 1230 put and bought one Jan. week #1 1205 put for $1.70 ($170). Maintenance is $2,500. Closed 1/3 for a 3 day profit of 5.6%
Educational Portfolio GLD Weekly Iron Condor
On 12/30, with GLD at about 138, we sold a 10 contract 134/131 bull put spread and a 10 contract 141/144 bear call spread for $.42 ($420) Maintenance is $3,000. Closed 1/5 for loss of $.14 ($140).
Educational Portfolio – SPY SRS Ratio Strategy
On 12/6, with the SPX at about 122.89, we bought one December Quarterly 122 call, sold one Dec. Quarterly 125 call, and sold two Dec. Quarterly 117 puts for a net debit of $.10. Initial maintenance is $3,875. On 12/27, closed for a profit of $2.38 ($238 in three weeks).
Educational Portfolio – MA Put Ladder Spread
On 11/28, we bought one January $240 put, sold one Jan. $230 put and sold one Jan. $220 put for a credit of $.65. This is a hedge with profit potential. On 12/27, closed for even.
Educational Portfolio – SPX Weekly Bull Put Spread
With SPX at 1233, we sold one 1200 put and bought one 1175 put for a credit of $1.15 ($115). Closed 12/15 at $.25. Profit of $.90 ($90 in less than 4 trading days)
Educational Portfolio – XEO Siamese Condor
With XEO at 554, we sold one 555 put and one 555 call, then bought one 580 call and one 530 put for a net credit of $8.25 ($825). Closed 12/15 at $5.55. Profit of $270 in less than 4 trading days..
Educational Portfolio – GLD Iron Condor
With GLD at 135, we sold 10 132/129 bull put spreads and 10 139/142 bear call spreads for a credit of $.57 ($570). Closed 12/15 at $.15. Profit of $420 in less than 4 trading days.
Educational Portfolio – C – Covered Call
On 6/30, bought 1,000 shares of Citigroup at $3.81 and sold 10 January 2011 $4 calls bringing in $.53 ($530). Long term conservative play. Closed 12/13 with a profit of $700 on risk of $3,280 – a return of 21.3%.
Educational Portfolio (New) – FCX SRS Ratio Strategy
On 12/1, with FCX at about 103, we bought one Feb. $100 call, sold one Feb. $110 call, and sold two Feb. $85 puts for a credit of a dime. Initial maintenance is $2,200. On 12/8, we closed the position for Profit of $3.15 in about one week.
Educational Portfolio – AAPL Weekly Iron Condor
On 11/19, we sold 10 300/290 AAPL Weekly bull put spreads and 10 320/330 APPL Weekly bear call spreads for a net credit of $1.48 ($1,480). Expired. Profit: $1,480.
Educational Portfolio – GLD Weekly Iron Condor
On 11/19, we sold 10 Weekly 129/126 bull put spreads and 10 Weekly 135/138 bear call spreads for a net credit of $.53 ($530). Expired. Profit: $530
Educational Portfolio ESRX SRS Ratio Strategy
On 10/25, we sold two January ESRX $42.50 puts, bought one $47.50 call and sold one $52.50 call for a debit of $.30. Maintenance is $1,075. On 11/12, closed position for a – Profit of $2.60 ($260/contract) in about 3 weeks.
Educational Portfolio RIMM Ratio SRS Strategy
With RIMM at $59.11, we bought 5 December RIMM $57.50 calls and sold 5 December RIMM $67.50 calls for a cost of $4.40. To pay for this bull call spread we sold 10 December $42.50 puts for a credit of $4.10 ($2.05 x 2). Net debit for the entire position is $.30 = $150. Closed 11/12 for a – Profit of $2.82 ($282/contract).
Educational Portfolio – ALTR SRS Ratio Strategy
On 10/12, when ALTR broke through our trigger point ($30), we bought 1 Jan. ALTR $29 call and sold 1 Jan. ALTR $32 call for $1.40. We sold two Jan. ALTR $24 puts for a total of $1.30. Our net debit was only $.25. Closed 11/22 for Profit of $1.70 ($170/contract)
Educational Portfolio – BWLD SRS Ratio Strategy
On 9/12, with BWLD at about $47.9, we sold 2 BWLD Dec. $40 puts for a net credit of $2.00. We bought 1 BWLD Dec. $46 call and sold 1 BWLD $50 call for a debit of $1.95. Net is a credit of $.05. Closed 11/22 for a Profit of $1.85 ($185/contract)
Educational Portfolio – MS SRS Ratio Strategy
On 9/27, Morgan Stanley at 25.15, we bought one Nov. MS $25 call and sold one MS Nov. $28 call for a debit of $1.10. We sold two Nov. MS $22 puts at $.47 (x 2 = $.94). Net debit is $.16. On 11/8 we closed position for a – Profit of $1.82 ($182/contract).
Educational Portfolio – XEO Weekly Siamese Condor
On 10/29, we sold one XEO Weekly (11/5) put and sold one XEO Weekly (11/5) call for a credit of $11.25. We bought one XEO Weekly (11/5) 510 put and one XEO Weekly (11/5) 560 call for a debit of $1.20. Net credit of $10.05. Maintenance $2,500/contract. On 11/4, we locked in a – Profit of $2.20 – a return on risk of 15.2%.
Educational Portfolio – SPX Weekly Bull Put Spread
On 10/29, we sold one SPX Weekly (11/4) 1050 put and bought one SPX Weekly (11/4) put for a credit of $2.40. Maintenance is $2,500/contract. On 11/4 we locked in a healthy profit of $2.15 – a nice 9.5% return on risk in four trading days.
Educational Portfolio – XEO Weekly Siamese Condor
On 10/15, we sold one XEO October Weekly 535 put and sold one October Weekly 535 call. We also bought one XEO October Weekly 510 put and bought one XEO Weekly October Weekly 560 call. Net credit is $8.50. Closed 10/28. Profit: $3.90. 23.6% ROR in less than five trading days.
Educational Portfolio – SPX Weekly Bull Put Spread
On 10/22, we sold one SPX Weekly 1150 put and bought one October Weekly 1125 put for a credit of $1.65. Maintenance is $2,500. Closed 10/28. Profit: $1.50. 6.9% ROR in less than five trading days.
Educational Portfolio – Ford Ratio SRS Strategy
With Ford at $11.75, we bought 5 March 2011 $11 calls and sold 5 Ford March 2011 $14 calls for a cost of $1.30. We sold 10 March 2011 Ford $10 puts for a credit of $1.58 ($.79 x 2). Net credit is $.28 or $28 per contract. Closed 10/26. Profit $2.40 ($1,200 on five contracts).
Educational Portfolio – SOX SRS Ratio Strategy
On 9/27, with the SOX (Semiconductor Index) at 346, we bought one November SOX 340 call and sold one November 360 call for a debit of $10.20. Sold two November SOX 310 puts for $5.00 (x 2 = $10). Net debit for position is $.20 ($20 per contract). Closed 10/25. Profit $10.50 per contract in less than a month. 15.8% ROR.
Educational Portfolio MA (Mastercard) SRS Ratio Strategy
On 10/13, when MA broke through our trigger point ($233), we bought 1 Jan. MA 220 call and sold 1 Jan. MA $240 call for $9.50. We sold two Jan. MA $190 puts for a total of $9.10. Our net debit was $.40. Closed 10/25. Profit $870 per contract. 18.3% ROR in two weeks.
Educational Portfolio – XEO Weekly Siamese Condor
On 10/15, we sold one XEO October Weekly 530 put and sold one October Weekly 530 call. We also bought one XEO October Weekly 505 put and bought one XEO Weekly October Weekly 555 call. Net credit is $9.50. Closed 10/19. Profit $250 per contract
Educational Portfolio – SPX Weekly Bull Put Spread
On 10/15, we sold one SPX Weekly 1150 put and bought one October Weekly 1125 put for a credit of $2.00. Maintenance is $2,500. Closed 10/18. Profit: $125 per contract in 2 trading days.
Educational Portfolio YUM SRS Ratio (Stock Replacement Strategy)
On 9/12, with YUM at about 44.75, we sold 2 YUM Jan. 2011 $40 puts for a net credit of $2.74. We bought 1 YUM Jan. $43 call and sold 1 YUM Jan. $48 call for debit of $2.46. Net is a credit of $.28. On 10/15, closed for total net credit of $3.10 ($2.82 + $.28). Profit: $310 per contract – a 27% return on risk in one month.
Educational Portfolio – SPX (S&S) Weekly
On 9/3, with SPX at 1102, we sold 1 SPX Weekly 1075 put and bought 2 SPX Weekly 1050 puts for a net credit of $2.10. We placed an order to close the position for $.40. On 9/8 our order was filled at $.40 and we locked in a 7.3% return on our risk. PROFIT: $170 per contract (in three trading days)
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ONGOING LONG-TERM PORTFOLIO
This portfolio highlights long-term positions that we monitor for conservative traders.
A few years ago, I outlined a Zero-Plus 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’ve been 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 this month’s profit of $2,075, our new cash total is $81,180 ($79,105 + $2,075).
ZERO PLUS POSITION – We are currently scouting for a new Zero Plus position. ______________________________________________________________
Renewal Process
The renewal process is pretty simple. We’ve done quite well this past year. More than likely, you will want to continue to receive our thoughts, insights, ideas and trade suggestions. We had a successful 2010 and are doing well in 2011, particularly with the new strategies we have introduced last year. When your renewal date is hit, your subscription will automatically be renewed based on the information you provided when you originally subscribed. The rate has not changed. It’s still less than half the profit of a single trade. You will continue to receive all the subscriber benefits for the same low bargain price ($495) as last year. Thanks to all of you who make this job a labor of love.
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OPTION PROFITS: The Naked Truth
My book “Option Profits: The Naked Truth” are now available at Traders Press and Amazon.com. The link to Traders Press to order the book is:
http://www.traderspress.com/detail.php?PKey=628
View the table of contents, a preface and actual reviews of the book (I’ll give you a hint: – they like it – a lot). Check it out.
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Disclaimer
Opinions and information in this newsletter are provided for educational purposes only. No statement in the newsletter should be construed as a recommendation to buy or sell a security or to provide investment advice. It is possible at this or some subsequent time, the editors or staff of Mike Parnos’ Options Newsletter may own, buy or sell securities discussed. All investors should consult a qualified professional before trading in any security. Stock and option trading involves risk and are not suitable for all investors. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness.
