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
June 30, 2011 – Locking in Quick AMZN Profits
LOCKING IN QUICK AMZN PROFITS & MORE!
Good Evening Team –
The market continued up big again today. That’s four days in a row. Hmmm. I wonder when it will run out of gas.
Profit Locked In – In Only Three Days!
On Wednesday, AMZN continued up in the morning. I raised my GTFO trigger to $2.50 and was filled almost instantly, locking in a net profit of $2.40 in just 2 ½ trading days. We closed our AMZN August $195/$205 bull call spread and bought back our two August $170 puts for a credit of $2.50. It cost us a dime to put on the position on Monday. Our net profit was $2.40 – in less than three days! Sometimes you get the bear. Sometimes the bear gets you. This time, we got the bear.
AAPL Weekly – Looking Very Good
The market has been trending up, but as I expected, Apple has stayed comfortably within its range. We have about a 10-point cushion on the call side. If Apple closes below 345 tomorrow, which seems quite likely, we will have a very nice 11.1% profit in a week. If you’re concerned and want to close the trade early, it would probably cost about 2-cents on each side.
New Weekly Trade Idea – SPX
With the market trucking on upward, it is currently safely above its 10-day EMA. There I sufficient premium left to justify one of our Weekly spread positions. So, what the hell? Let’s give it a shot. This week is a shortened week. That’s one less trading day for the market to mess with us. With the SPX at about 1320.64, let’s:
Sell one SPX Weekly (7/8) 1285 puts (delta: .14)
Buy one SPX Weekly (7/8) 1265 puts
Credit of about $1.50 ($150/contract)
Our maximum profit is $150/contract, but we will try to lock in profits early. We don’t want to be heroes. We just want to make money. Our GTFO trigger point is when the delta of the short SPX 1285 reaches .40.
Be careful and be flexible. Watch the futures tomorrow to get an indication where the market wants to go. You might want to adjust the strikes. If the trade feels right to you, go with it. If not, sit it out. There are no rules that say you have to be in the market at all times.
New Educational Position Idea
Apple has not moved up with the market. It bounced off the recent low, but has stalled and does not look like it has the legs to break through resistance. The market is apt to roll over soon and Apple may lead the way. Apple is trading at 335.67. If it moves down, and holds, 333.50, let’s put on a SRS Put Spread.
Buy one AAPL September 335 put
Sell one AAPL September 325 put
Debit of about $4.20.
Sell one AAPL September 300 put
Credit of about $4.70
Net credit of about $.50.
Initial margin requirements for the short Sept. 300 put is about $3,620 per contract. The above trade is not a ratio spread. We’re only selling one put (Sept. 300) to pay for our bear put spread. If you prefer, you can create a ratio spread by selling two of the Sept. 280 puts to generate the premium to pay for the 335/325 bear put spread.
If we’re wrong and Apple moves up, we either never get into the trade or we make about $.50 credit when we initiate the trade.
Adjust the number of contracts you trade based on your account size and risk tolerance. Be careful. Be conservative and, as always, be flexible.
BIDU Update – BIDU continued up. We will buy back our July $140 call and try to sell the August $145 call for a credit of about $2.60 – if the market continues up. This diagonal spread keeps moving around and we have to keep adjusting. Not all adjustments are etched in stone. There are a variety of alternatives. Some will choose to liquidate the position for a healthy profit instead of continually adjusting. Those who continue adjusting should have the belief that BIDU will continue moving up or, at least, remain neutral.
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Re: Myrtle Beach
Apparently, I made an error on the web address for my Myrtle Beach condo. Many of you tried to click through to take a look and got an error message. I have corrected it. So, stop by and let me know what you think.
www.mymyrtlebeachcondo.webs.com. Check out the photos and description. It’s peaceful. It’s relaxing and it’s right on the ocean. Give me a call if you’re interested or have any questions. (248-435-4188). It has free internet, so, yes, you can trade there.
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OPEN CORE PORTFOLIO POSITIONS
Core Portfolio July Position #1 – RUT Sweet-Spot Condor – 827.43
On 5/27, we bought 2 RUT July 740 puts, sold 10 RUT July 730 puts, bought 8 RUT July 710 puts. We also bought 2 RUT July 900 calls, sold 10 RUT July 910 calls and bought 8 RUT July 930 calls for a net credit of $1,290. Maintenance is $16,000.
Core Portfolio July Position #2 – RUT Iron Condor – 827.43
On 6/6, we sold 10 RUT July 710/700 bull put spreads for $.65 ($650). We also sold 10 RUT July 870/880 bear call spreads for a credit of $.65 ($650). Net credit of $1.30 ($1300). Maximum profit range is 710 to 870. The maintenance is $10,000.
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EDUCATIONAL POSITION PORTFOLIO
This portfolio highlights trades using alternative strategies – beyond our standard Iron Condor and basic credit spreads.
WEEKLYS
AAPL Weekly Iron Condor – 335.67
On 6/24 we sold 5 AAPL Weekly 345/350 bear call spreads for $.25 and sold 5 AAPL Weekly 310/305 bull puts for $.25. Total net credit is $.50 ($250). Max profit range is 310 – 345. Maintenance is $2,500.
UPSIDE
Educational Portfolio #1 – JOYG SRS Ratio Ladder Spread – 95.24
On 4/29, with JOYG at about $99.85, we bought one JOYG July $97.50 call and sold one JOYG July $105 call for a debit of $3.60. Then, we sold one July $87.50 and one July $85 put for a total credit of $3.60. Initial maintenance is about $2,086.
Educational Portfolio #2 – NKE SRS Ratio Ladder Spread – 89.98
On 2/16, with NKE at about 86.15, we bought one NKE July $85 call and sold one NKE July $90 call for a debit of $2.30. Then, we sold one NKE July $75 put and one NKE July $70 put for a credit of $2.30 – a wash. Initial maintenance is about $1,690.
Educational Portfolio #3 – FFIV SRS Ratio Spread – 110.25
On 2/11, with FFIV at about $126.50, we bought one April FFIV 125 call and sold one April FFIV 135 call for a debit of $4.50. We now own 200 shares of FFIV at an average cost per share of $107.50. Sold 2 July $100 calls for $7.80.
Educational Portfolio #4 – AAPL Beat-the-Bank (Long Term) – 335.67
On 4/27, with Apple about $348, we sold 10 January 2012 235/225 bull put spreads for $.83 ($830). Maintenance is $10,000. Get comfortable. We’ll be in this one for a long time.
Educational Portfolio #5 – BIDU Diagonal Calendar – 140.13
On 5/18, with BIDU near 132, we bought two Jan. 2012 110 calls for $31.55 ($6310), sold one June $140 call and one June $145 call for a total of $4.75 ($475). This is similar to a covered call position, using the Jan. 2012 call instead of owning the stock
.
We sold the July 135 & 140 calls for $2.51 and $1.46 respectively, for a total of $3.96. It cost us a total of $.10 to buy back the short June 140 & 145 calls. Our net premium credit was $3.86 ($3.96 – $.10). We’ve taken in $4.75 in June plus the $3.86 for July for a total of $8.61. We paid $31.55 for the Jan. 2012 110 call. Our new cost basis for the 110 call is $22.84.
We bought back our five July $135 calls and rolled them to the August $140 calls for a credit of $2.70. We are still short the July $140 calls. Total premium taken in so far is now $11.31 ($8.61 + $2.70).
DOWNSIDE
Educational Portfolio #6 – SPY Put Butterfly – 131.97
On 6/15, we bought five June Quarterly 128 puts, sold ten June Quarterly 126 puts, and bought five June Quarterly 124 puts for a net debit of $.32 ($160). Position expired. All options expired worthless. Small loss on trade of $.32 ($160).
Educational Portfolio #7 – SPX “Sure Thing” Spread – 1320.64
On 6/17, we sold two July SPX 1310 calls and bought two July 1330 calls for a net credit of $7.20. Maintenance is $5,000 ($2,500 per contract).
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ZERO PLUS POSITION – Stay Tuned . . . Exploring Potential Positions
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ONGOING LONG-TERM PORTFOLIO (Background & Results)
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. After June’s 100% profitable trade, our new cash total is $82,330 ($81,180 + $1,150). ______________________________________________________________
RECENTLY CLOSED EDUCATIONAL POSITIONS
Educational Portfolio – AMZN SRS Ratio Spread
On 6/27 we bought the AMZN August $195/$205 bull call spread and sold two $170 puts to pay for it. Net debit of only $.10. Closed 6/29 for a Net Profit of $2.40 ($240)
SPX Weekly – Bull Put Spread
On 6/17, we sold one Weekly SPX 1315/1335 bull put spread for a net credit of $1.90. Maintenance is $2,000 per contract. Closed 6/23 for $.05. Net Profit of $1.85 ($185)
Educational Portfolio – UUP SRS Ratio Strategy
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. All options expired worthless. Cost was only a dime.
Educational Portfolio – SPY Butterfly
On 6/8 with the SPY at 129, we put on a 5/10/5 128/126/124 put butterfly for a debit of $.28 ($280). Closed 6/15 for $.62, a net Profit of $.34 – a double.
Educational Portfolio – V Put Ratio Ladder Spread
On 3/14, with V at about $71.50, we bought one V June $75 put and sold one V June $70 put. Then, we sold one June $65 put and sold one June $60 put for a net credit of $.71. Initial maintenance is about $1,600. Closed 6/15 for a total net Profit of $1.31.
AAPL Weekly Iron Condor
We sold 10 Apple 330/325 bull put spreads and 10 Apple 360/365 bear call spreads for a credit of $.68. Maintenance is $5,000. On 6/10, closed at $1.39. Net loss of $.71 ($710).
QQQ Weekly – Boston Strangle
On 5/27, with the QQQ at about $57.35, we bought 10 QQQ Weekly $58 puts and bought 10 Weekly $57 calls for a debit of $1.47. Risk is only $.47 ($470). Closed 6/1 for $1.49, just over breakeven.
SPX Weekly – SPX Weekly Bull Put Spread
On 5/20 we sold 10 SPX Weekly 1300 puts and bought 10 SPX 1290 puts for a credit of $.50 ($500). The maintenance $10,000. Profit of $500 = 5.26%
Educational Portfolio – OIH SRS Spread
On 5/23, with OIH about 145, we bought the July 144/150 bull call spread and sold the July 135 put for a net credit of $.10. Closed 5/27 for net Profit of $2.95.
QQQ Weekly – QQQ Weekly Boston Strangle
On 5/20, we bought 10 Weekly QQQ 59 puts and bought 10 QQQ 58 calls for a debit of $1.57. Risk is $.57 ($570). Closed 5/23 for a Profit of $1.36 = 238% over the weekend.
SPX Weekly – Bull Put Spread
On 5/5, with the SPX at about 1351, we sold a 1375/1400 bear call spread for a credit of $1.35. Maintenance is $2,500 per contract. Closed 5/11 for $.10. Net Profit of $1.25
Educational Portfolio – AMZN SRS Ratio Spread
On 5/9, we bought one July 195/205 bull call spread and sold two July 175 puts for a net debit of $.10. On 5/12, we closed the position for a net Profit of $2.35 in only four days!
Educational Portfolio – OIH Put Spread
On 4/11, we bought one May OIH 164 put and sold one May 159 put. Then, we sold one May OIH 148 put for a net debit of $.40. Closed 5/11 for credit of $2.55. Net Profit of $2.15.
Weekly – SPY Boston Strangle
On 4/29, anticipating a large move, we bought 5 SPY Weekly (5/6) 137 puts and bought 5 SPY Weekly (5/6) 135 calls for a debit of $2.95. On 5/5, closed position for $3.40, a Profit of 47% in less than a week.
Educational Portfolio – IBM SRS Ratio Spread
On 4/21, with IBM at about 166.50, we bought one IBM July 165 call, sold one IBM July 170 call and sold two IBM July 145 puts for a credit of $.10. Initial maintenance is $3,160. Closed 4/29 for a net Profit of $2.23 in only 6 trading days!
Educational Portfolio – SPY SRS Ratio Spread
On 4/21, with SPY at about 131.50, we bought one SPY June $130 call, sold one SPY June $135 call and sold two June $124 puts for a credit of $.02. Initial margin requirement is $4,000. Closed 4/27 for a Profit of $2.18 in less than a week!
Educational Portfolio – SPY Put Ratio Spread
On 3/21, with the SPY at 129.80, we bought one April SPY 131 put and sold one April SPY 127 put. Then, we sold two April SPY 121 puts for a net debit of $.04. Closed 4/15 for credit of $.20. Net Profit of $.16 ($.20 – .04).
Educational Portfolio – DIA Put Ratio
On 1/27, with the DIA at 119.50, we bought 5 DIA April 120 puts and sold 5 DIA April 116 puts. We also sold 10 DIA April 109 puts. Net credit is $.05. All options expired worthless. Profit: $.05 (initial credit)
Educational Portfolio – Weekly Trade – Apple Iron Condor
On 4/8 we sold 10 April Apple 325 puts, bought 12 315 puts. Sold 10 April Apple 350 calls and bought 12 360 calls for a net credit of $1,160. Maintenance is $10,000. Closed 4/13. Net was a Profit of $974.
Educational Portfolio – Weekly Trade – SPY Butterfly
On 4/8 we bought 5 April SPY 132 puts, sold 10 April SPY 130 puts and bought 5 Alpril SPY 128 puts for a debit of $.21 ($105). Closed on 4/13. Net was a profit of $240 ($.48 x 500).
Educational Portfolio #6 – IWM Put Ratio Spread
On 3/29, with the IWM at 84, we bought one May IWM 85 put and sold one May 82 put. Then, we sold two May IWM 75 puts for a net credit of $.06. Initial maintenance is about $1,600. Closed 4/14 for a net Profit of $2.44 ($2.38 + $.06)
Educational Portfolio – CRM SRS Ratio Ladder Spread
On 3/28, with CRM at $128, we bought one May CRM $125 call and sold one June $135 call. We sold one CRM $110 put and one CRM $105 put. Net credit = $.25. Initial maintenance is $2,520. Closed 4/8 for net Profit of $3.75.
Educational Portfolio – SPX Weekly Bull Put Spread
On 4/1, with the SPX at 1336, we sold one Weekly 1300 put and bought one 1275 put for a credit of $1.35. Maintenance is $2,500 per contract. Closed 4/6 for $.20 and a net Profit of $1.15.
Educational Portfolio – SOHU SRS Ratio Spread
On 3/10, with SOHU at about 82, we bought one SOHU June $80 call and sold one SOHU June $90 call for a debit of $4.25. Then we sold 2 SOHU June $65 puts for $4.10. Net debit of $.15. Closed 3/29 for net profit of $3.80.
Educational Portfolio – BIDU SRS Ratio Ladder
On 3/23, with BIDU at 127.25, we bought 1 June BIDU 125 call and sold 1 BIDU 135 call. We also sold 1 BIDU June 105 put and one BIDU June 100 put for net credit of $.30 ($30). Initial maintenance was $2,540. Closed 3/25 for net profit of $2.93.
Educational Portfolio – Weekly SPX Bear Call Spread
On 3/18, with SPX at about 1315, we sold one SPX Weekly (3/24) 1325 call and bought one SPX Weekly (3/24) 1350 call for a credit of $1.30 ($130). Maintenance is $2,500 per contract. Closed 3/22 for $.30 and a net Profit of $1.00 – in three days..
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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.
