The market gapped down at the open and triggered an exit on Juniper.

Juniper gapped down at the open to $25.16 and triggered our stop loss on the position at $25.25. The option opened at .50. Since the gap down drop only lasted a couple minutes I doubt anyone jumped in to close the position but because it printed there I am going to close it on the opening print. The rebound did not last and Juniper eventually slipped lower to close at $25. The option closed at .65x.70 so that opening gap took us out at the low of the day for a 15-cent loss. No harm, no foul and as I discussed last weekend I would rather have a few exits for a dime loss than ride a losing position into the ground for a couple bucks or worse.

The plan for this week was to take an exit on MXB and LDK for 10-cents or less if the opportunity presented itself. That happened on MXB today with the option trading as low as a nickel. I will log the exit at 10-cents but I bet a few readers got out cheaper.

Mosaic gapped down -$1.50 at the open and the stock did not hit our stop but the option did at $1.25. That takes us out of that position for a breakeven. Better safe than sorry.

With one more week on the August expiration cycle I am hoping we really get a decline on Tue/Wed so we can jump into some September positions this weekend or sooner if the market gives us an opening.

I will send an email if I see a new play but since I am hoping for market weakness I am going to try and avoid buying (selling) the dip too early.

Jim Brown



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Margin Requirements:

There are several different formulas for determining margin requirements for naked put writing. These are normally broker specific and some can require larger margin requirements than others.

Here is the most common margin calculation for naked puts.

100% of the option premium + ((20% of the Underlying Market Value) - (OTM Value))

For simplicity of calculation simply use 20% of the underlying stock price and you will always be safe. ($25 stock * 20% = $5 margin)