It is really frustrating to spend 6-7 hours researching plays, making choices, and writing up plays and then not have them triggered. Fortunately that is better than having them triggered during a market crash.

Since the S&P never turned positive today the only plays that were entered were the IWM and SPY index ETFs in the long-term section. Everything else had the "positive S&P" qualification on the entry.

I went through the list again and changed some of the strikes and stops to account for the individual moves. Some of the strikes stayed the same and some of them changed. I did not remove any plays. They are all ready for another attempt on Tuesday.

Some of those plays would have been home runs given the strong gains in some stocks. For instance Amazon +5.57, FFIV +9.25, LVS +1.70. In the optional play category NFLX gained +15.

I think the market dip was a fluke with some fund taking advantage of the normally bullish holiday week to take profits. There was also the confusion over Ireland and their bailout. Everything else was just noise.

I am still expecting an up trending market later this week. The Nasdaq returned to last week's resistance high and tech stocks were the strongest section of the market. A couple ticks higher on the Nasdaq and I think we could trigger some short covering.

I did not get any emails on the aggressive put writing strategy I outlined on Sunday night. It would be a miracle if I explained it so well that everyone understood it so I am assuming everyone who is interested is taking a watch and see attitude for the first couple plays. I completely understand that because the concept is not normally taught in the public forum. If you do have any questions please don't hesitate to ask.

Jim Brown



Current Portfolio




Current Position Changes


None


New Recommendations


LVS - Las Vegas Sands $51.10

LVS rallied on news of the canceled Harrah's IPO. What is bad for one casino group must be good for another. Everybody knows the story of LVS and WYNN and their improved fortunes because of their Macau casinos.

Enter this trade only if the S&P and LVS are positive

Sell Short LVS Dec $48 Put (LVS10X4800) currently $1.60, stop $48.75

Chart of LVS


AMZN - Amazon.com $170.53

Amazon rallied last week after announcing that customers can now buy and gift ebooks for the kindle or other Kindle app devices. You can give a gift book and it will show up on the recipient's Kindle. Amazon is expecting a blowout holiday season with the new Kindle priced at $139. It is a heck of a bargain and next to the iPad it will probably be the most gifted electronic device this year.

Enter this trade only if the S&P and AMZN are positive

Sell Short AMZN Dec $165 Put (AMZN10X16500) currently $3.40, stop $167.50

Chart of AMZN


FFIV - F5 Networks $132.60

FFIV declined after Cisco's earnings on the idea that every networker was experiencing the same problems as Cisco. After Dell's earnings proved it was a Cisco problem and not an industry problem the networking sector began to recover. A move over $125 by FFIV should trigger some short covering.

Enter this trade only if the S&P and FFIV positive

Sell Short FFIV $125 Put (FFIV10X12500) currently $3.10, stop $127.25

Chart of FFIV


OIH - Oil Service Holders ETF $129.82

The OIH is an ETF containing the major oil service firms like SLB, HAL, NOV, WFT, etc. This sector has almost fully recovered from the recession and from the BP disaster. The OIH is right on the verge of breaking out to a new high. With the dollar dropping, oil prices rising and the economy recovering this group should continue to do well.

Enter this trade only if the S&P and OIH are positive

Sell Short OIH Dec $128.00 Put (OIH10X12800) currently $2.72, stop $128.25

Chart of OIH


FCX - Freeport McMoran $102.05

This is purely a play on the declining dollar and the corresponding rise in gold and copper. FCX investors took profits last week but they should come running back if the dollar drop overnight continues.

Enter this trade only if the S&P and FCX are positive

Sell Short FCX Dec $95.00 Put (FCX10X9500) currently $1.89, stop $98.50

Chart of FCX


RIMM - Research in Motion $59.31

I am expecting RIMM to have a great holiday season and I believe other investors will expect that as well. The Verizon "buy one Blackberry, get three free" promotion is going to really add up for new subscriptions at RIMM. The stock has decent support at $56 and rallied for the last two days.

Enter this trade only if the S&P and RIMM are positive

Sell Short RIMM Dec $55.00 Put (RIMM10X5500) currently $1.47, stop $57.75

Chart of RIMM


VMW - WMWare $82.18

VMW has had an amazing recovery since the Wednesday dip to $74. The stock has found new life on the better than expected guidance from Salesforce.com. I do not expect this to slow down. That was a game changer for the cloud sector.

Enter this trade only if the S&P and VMW are positive

Sell Short VMW Dec $80.00 Put (VMW10X8000) currently $2.50, stop $80.75

Chart of VMW


New Long Term Recommendations


None


Aggressive Recommendations


OIH - Oil Service Holders ETF $130.43

The OIH is an ETF containing the major oil service firms like SLB, HAL, NOV, WFT, etc. This sector has almost fully recovered from the recession and from the BP disaster. The OIH is right on the verge of breaking out to a new high. With the dollar dropping, oil prices rising and the economy recovering this group should continue to do well.

I had to choose the April strike on the OIH because the January strikes are non-standard. There was an adjustment for a merger, acquisition or dividend and the strikes are no longer even numbers. Sometimes they are for a non-standard number of shares as well.

We will not hold this put until April. We will only hold it until we have accumulated a decent profit or the sector appears to be in danger of a decline.

Enter this trade only if the S&P and OIH are positive

Premium $15.55 = $9.62 intrinsic, $6.03 time.

Sell Short OIH April $140.00 Put (OIH11P14000) currently $15.55, stop $127.50

Chart of OIH


VMW - WMWare $80.83

VMW has had an amazing recovery since the Wednesday dip to $74. The stock has found new life on the better than expected guidance from Salesforce.com. I do not expect this to slow down. That was a game changer for the cloud sector.

I chose this play because of the decline in October/November and the recent CRM earnings event. There is decent premium in the January strikes. I could see VMW making a new high before Christmas.

Enter this trade only if the S&P and VMW are positive

Premium $10.40 = $7.86 intrinsic, $2.34 time.

Sell Short VMW Jan $90.00 Put (VMW11M9000) currently $10.40, stop $80.50

Chart of VMW


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)