The indexes struggled ahead of the Q1 earnings cycle and initial support levels were tested again.

The Nasdaq big caps are dragging the rest of the market lower. Apple lost $4 after Amazon said it was releasing a Kindle with a $114 price point. The Nasdaq 100 came very close to testing critical support at 2300 and the S&P at 1320.

Alcoa started off the earnings cycle by beating street estimates by a penny but the stock fell sharply in after hours suggesting the Dow will be under pressure on Tuesday.

We were stopped out of another play today when CF dipped to the stop at $135.75. We were still able to exit for a gain of nearly 50%.

Because of the weakening market I adjusted the stop losses on the remaining positions. See the graphic for the new stops.

The SINA play from Sunday never traded positive so there was no entry. That recommendation is cancelled.

Jim Brown



Current Portfolio


Current positions


Current Position Changes


CF - CF Industries (Stopped)

CF was stopped at $135.75 with the option trading at $1.55 giving us a gain of +1.45.


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.