Oil prices were blamed for the market decline today but oil stocks did not rally on high prices. That suggests another reason for the selling.

The strong market decline today had all the earmarks of a large fund or funds rotating out of the market. Selling in the futures was constant and all sectors were sold not just the ones that would have been hurt by high oil prices.

Regardless of the reason the market declined and knocked three plays off the list. I thought our SPY and IWM plays were safe yesterday but the strength of the decline today succeeded in hitting our stops.

The CMI play also hit the stop and produced out biggest loss at 85-cents.

I am not buying this dip until we see what happens if support is tested at Dow 12,000, S&P 1,300 and Nasdaq 2,700.

Jim Brown



Current Portfolio




Current Position Changes


None


New Recommendations


None


New Long Term Recommendations


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New Aggressive Recommendations


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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)


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.