We got rid of the stragglers and have a nice portfolio of great plays for the September cycle. Now all we need is for the market to go sideways or higher for the next four weeks.

The portfolio has been whittled down to seven plays to start the September option cycle. All are already profitable and hopefully they will stay that way.

The plan now is to wish for a short pullback to try and snag a couple more entries but at the same time we don't want a dip steep enough to take us out of our existing positions. With the market up strongly from last Monday's dip to support there is always the potential for profit taking. I am going to try and avoid setting the stops too tight for a few more days until we see if the current rally is going to stick.

I am not going to add any positions tonight. The Nasdaq just barely broke over resistance and still appears weaker than the rest of the market. Rather than add positions on a weak breakout I want to wait for another dip.

I waited to send this on Sunday night so I could see what the futures were doing and the price of crude. Futures are up +5 on the S&P and crude prices are up +33-cents at $74.22. If this holds overnight we have a good chance of another positive open on Monday. Remember, Monday is expiration cleanup day. This is the day option sellers wake up to find stock in their account if they held puts or call sellers find out they no longer have stock and it has been called away. This always generates some extra volume and volatility on Monday.

I am removing Capital One and Bank America from the watch list. I kept hoping for a dip in the banks but they just keep going higher. They would have been a couple of good positions if we could have gotten a fill. That will make the watch list empty until we see what the market is going to do.

I would rather guard our current profits than make rash entries that could turn into losers and erase those profits from the winners. Patience is a virtue and one I have a very hard time practicing but I am going to keep trying.

Jim Brown



Current Portfolio




Watch List


Conservative

   None

Speculative

   None


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)