One of our positions declined on no news to trigger our stop. Fortunately the rest of them did really well.

FMC Technologies declined over $3 on no news to stop us out at $91.95. Even with the decline we escaped without a loss with the option hitting the high of the day at $1.85 on the stop.

I said yesterday I was going to reevaluate FCX and CRM and decide today whether to keep them in the portfolio. I elected to keep them both but I raised the stop on CRM to $134.50.

At the current stops I don't think there is too much risk for a material loss unless they gap down on Wednesday. Even if I told you to exit tonight we would have the same gap down risk so at least this way we have the potential for upside.

Futures are down about two points tonight but after two days of strong gains we are due for a bout of profit taking.

Jim Brown



Current Portfolio




Current Position Changes


None


New Recommendations


None


New Long Term Recommendations


None - Waiting for a "real" market dip, not a one day wonder


Current Aggressive Recommendations


None


January Recommendation History




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)


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.