There was a small rebound off the intraday lows but it lacked conviction.
We got a minor dip today with the Dow hitting 10845 and -125 at the low before a +43 point rebound at the close. This was seriously lacking conviction in the bounce and the futures are down again overnight.
I have been expecting a pullback to give us an opportunity for some new entries but today's drop was not enough to have me rushing back into long positions.
Initial support on the Dow is 10825 followed by 10700. I would like to see at least the 10825 level penetrated intraday with a decent rebound. The support on the S&P is 1170 and we did not even come close today with a close at 1082. Corresponding support on the Nasdaq is 2400.
We are flat in the portfolio and I am still not recommending any new positions today. I want to continue to watch the market for an indication the dip is over and profit taking has ended. When in doubt I would rather remain in the safety of cash than be flipping a coin on market direction.
I believe we will get another rebound into earnings and then the market will roll over after the FOMC meeting on April 21st.
No Open Positions
March Recommendation History
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)
Prices Quoted in Newsletter
At Option Investor we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.
The prices quoted in the newsletter are the end of day prices in most cases.
When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.
For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time the readers are able to get a better fill than the opening print because of market maker bias at the open.
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All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted just send us an email and we will use your price.