The market has moved into a very tight trading range that is going to break any day now.

The holding pattern from the weekend started to break this morning but the IBM $10 billion stock buyback announcement rescued it from disaster with the Dow down -70 points.

I believe the fund managers want to keep the indexes pinned to the current levels for their year-end profits and statements. That fiscal year-end closes on Friday. Unfortunately I am not sure they can pull it off.

I would feel a lot better tonight if we had seen a decent gain for the week with some daylight between our strikes and the stock prices. FSLR and CRM helped us out in that regard but VMW and WLT are struggling to hold their gains. We need a positive event to move the market and I don't see it in the near future.

I raised some stops and actually tightened them pretty tight because futures are down $4.50 tonight.

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)