Our solar play flamed out on the opening dip this morning but the other two positions are basking in the glow of some decent gains.

First Solar bit the dust this morning with the opening gap down to $125 and we were stopped out for a 40-cent loss.

CMG and CLF both dropped at the open as well but avoided our posted stop loss. CMG ended the day with a +1.99 gain and CLF added +2.16. The volatility inflated the option premiums so even though they finished higher there was no material decline in the option prices. If they hover at this level for a couple days those premiums will deflate again.

I am worried about the market despite today's close just over support. I believe the end of day spike was manufactured to close just over support for month end picture taking.

Fortunately China's PMI report on Wednesday showed the first gain in four months and the S&P futures are up +9 points overnight. Hopefully some of that momentum will hold until morning.

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)