Stops were hit on our two remaining plays as the market weakens after the peak in earnings.
We lost VMWare on Wednesday when it hit our stop at $77.25 and that cost us 50-cents on the exit.
When Las Vegas Sands nearly doubled analyst expectations on Wednesday with 17-cents in profit compared to estimates for 9-cents I decided to leave the WYNN position open for their earnings today. LVS rallied on their strong earnings and I was expecting WYNN to do the same.
Fortunately we were stopped out intraday at $86.75 because WYNN dropped $3 in after hours despite posting profits that doubled the comparison quarter. Revenue in Macau soared +74% but the stock declined after WYNN said they only had "cautious optimism" about a recovery in Vegas.
We are back in cash and will end July with only a fractional gain thanks to Goldman's dip earlier this month and a loss on the Carbo Ceramics position.
The market is at a pivotal point in the summer. Odds are good it will continue lower but fund managers appear to be making bullish bets and buying the dips so the future is far from certain.
July Recommendation History
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Click here for August Results
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.
For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.
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.