The market is struggling despite its gains today. While I would love to see a continued move higher we have to protect ourselves from the possibility of a decline.

I am not adding new plays with the Nasdaq still battling resistance at 2800 and the S&P still struggling with 1333 although it did close slightly higher today. I did raise the stop losses on several plays just in case disaster strikes.

The Russell and Dow are at new highs but the Nasdaq continues to lag and suggests there may be some lingering selling pressure. I do believe if the Nasdaq moves over 2800 (closed at 2799.82) with any volume we will get a major spring higher.

Check the portfolio graphic for new stops.

First Solar was stopped out on Monday for an expensive loss when the solar sector suddenly reversed its prior trend.

Molycorp plunged -3.43 today but that was only half of the gains it made on Friday so we are still ok there.

CF lost -3.23 based on Monsanto earnings but it was also up strongly the prior two days so we are still ok there as well.

Citrix came very close to being stopped with a -2.50 plunge but missed our stop by 27 cents before rebounding.

Keep your fingers crossed the Nasdaq breaks through that 2800 level because that will do a lot for market sentiment.

Jim Brown



Current Portfolio


Current positions


Current Position Changes


None


New Recommendations


None


New Long Term Recommendations


None


New Aggressive Recommendations


None


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.