Despite the negative market every position we had moved higher.
We exited two more plays today when the option price hit our exit targets. Amazon gained another $2 and the option traded as low as 11-cents to easily clear our exit target at 25-cents for a $1.75 profit on the position.
VMWare only gained 30-cents for the day but it was enough to let the option trade at our target price of 20-cents for a $1.15 profit.
NOV should be the next exit with the option trading today at 13 cents and our target is 10-cents.
F5 Networks continues to move higher but the option appears to be stuck in the 30-40 cent range. That stock has too much volatility and the premium is eroding slowly. We have a $120 put and the stock is at $139 so it is only a matter of time.
The OIH option traded down to 21-cents with our exit target at 20-cents. You can't get much closer than that.
The option on RIMM traded as low as 35-cents and we are targeting 20-cents so we need a couple more days of a positive market.
The two aggressive positions are doing very well with a combined profit as of today's close of early $10 per share. We could exit now and do very well but I want to let them ride for a while longer. I am not objectionable to taking profits soon and looking for an opportunity to buy back in on a dip.
We will continue to let our current positions deteriorate and look for a market decline to add some new plays. I don't want to "buy the top" of this current rally.
Current Position Changes
New Long Term Recommendations
New Aggressive Recommendations
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 please let us know.