All our new positions are in the green and they have moved away from the stops.

All we need now is for the market to continue to cooperate. I don't care if the market continues to add only 10-12 points per day just as long as we don't get a volatility event that gives us a triple digit gap down to stop us out.

With expiration on Friday we should see some significant declines in premium values next week. The portfolio is already up +2.49 and there is $5.50 left in premiums to deflate.

I hate to add any plays this weekend with the Dow & Nasdaq up 11 of the last 13 days. That may be pressing out luck a little too much. However, there are some signs in the internals that the market is getting stronger.

Our biggest worry for next week is President Obama's CNBC appearance at noon on Monday and the FOMC meeting on Tuesday. If the market can survive those two events the bulls are definitely in charge.

I picked three additional stocks for a Monday entry but we are not going to take the entry unless the S&P is positive 30 min after the open. This will be a single point of entry not a "when the S&P turns positive" entry. I am trying to avoid a gap and crap or an unsure market.

I left the stops low on the existing plays in hopes of avoiding a volatility event.

Jim Brown



Current Portfolio




New Recommendations


MOS - Mosaic - $59.96

Mosaic rallied on the Potash news and is being held aloft by the interest in the sector. They are also being mentioned as a possible partner with Sinochem to outbid BHP for Potash. Hopefully the confusion will keep them in the $60 range for a couple more weeks.

Enter trade only if S&P-500 is positive at 10:AM.

SELL October $55 PUT (MOS-10V5500) currently $1.30 stop MOS @ $56.95

Chart of MOS


FCX - Freeport McMoran Copper - $81.72

Freeport has been in rally mode because of the new highs in gold. However, copper is also in rally mode and is at a new four month high. Gold should remain volatile but copper should be the steadying factor.

Enter trade only if S&P-500 is positive at 10:AM.

SELL October $75 PUT (FCX-10V7500) currently $1.24 stop FCX @ $78.75

Chart of FCX


WLT - Walter Energy - $80.00

Walter is breaking out of a four month base and the break to $80 could be the start of a larger run next week. Walter has several divisions and is not limited by its energy component. I chose a strike $10 out of the money because of the volatility.

Enter trade only if S&P-500 is positive at 10:AM.

SELL October $70 PUT (WLT-10V7000) currently $1.05 stop WLT @ $76.95

Chart of WLT


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)