When I logged into my charts Sunday night to see the S&P futures down -10 points I was not a happy camper.

For a bull market this last few weeks has been very difficult to trade. The futures have improved to only down -6.50 as of 4:AM but still ugly. I held off sending this email in hopes the futures would improve. If this negativity holds this will be the third major opening gap to the downside in the last three weeks. Plus there were several smaller opening dips.

Hard to believe the markets are setting new highs nearly every day and we are getting stopped out at least once a week. I guess if it was easy everybody would be a millionaire and Wal-Mart would be out of business.

I had plans this weekend to add some new plays for October to take advantage of the decent premiums a week ahead of the September expiration. After seeing the negative futures I am going to pass on new plays tonight and try again on Monday night.

Japan's Hang Seng is down hard and the Nikkei is off -2.3% on currency problems but China, which started out weak, ended up with a decent gain. I believe that is what is helping improve our futures.

There is also some worry in the U.S. markets about President Obama's speech at the NYSE on Monday. He is going to talk about plans to end the government bail out programs and announce some new regulatory measures. The stock market is worried that the administration will announce so many new rules and regulations that it will be hard to conduct business as usual and more expensive. Hopefully after his speech the markets will find some traction. If the speech does have a dose of bad news then maybe we can get some better entries on any material decline.

Either way I think it is best to remain liquid and nurse our small portfolio until we see what Monday brings.

Jim Brown



Current Portfolio




New Recommendations


        NONE


Watch List


New Recommendations

        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)