The monster gap down open was enough to cause us pain in the portfolio.

First the good news. Goldman rallied again and was positive most of the day despite the market crash. Sellers appeared at the close and Goldman ended with a loss of a nickel. Overall a better performance than the other two positions.

Potash imploded at the open and hit our stop at 107.75 on the opening tick before proceeding to lose -4.68 for the day. That opening tick was enough to set us back a $1.57 on the stop loss.

Wynn Resorts declined at a slightly slower pace but still triggered the stop at $87.25. We lost 37-cents on that position.

With the Dow posting triple digit moves on five of the last six sessions I am going to refrain from initiating any new positions tonight. I believe the overall direction is down but with the payroll report on Friday expected to be the best in a couple years I think the bulls will try to buy the dips.

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)