The European debt crisis continues to torture our equity markets with another decline in the Euro pushing our dollar higher and equities lower. Fortunately it did not affect our positions.

The three remaining positions in MHS, WTW and LO are still well above their stop losses and all had a decent day. No problems there.

Since the S&P opened negative and stayed there all day we did not take any entries on the three new positions. However, I believe the market gave us a better buying opportunity and I am leaving all three positions as active entries for Tuesday morning. I did change the stop on APC. Nothing changed on the outlook for those three stocks.

The market rebounded off its lows and the dollar is declining overnight. Maybe we will get a successful opportunity to buy the dip.

Jim Brown



Current Portfolio


Current positions


Current Position Changes


None


New Recommendations


See the Sunday newsletter for the play descriptions.

HUM - Humana $79.22 (Short Put)

Do not enter this position unless HUM and the S&P are both positive.

Sell short HUM June $75.00 Put, currently $0.85, stop loss $77.75


APC - Anadarko Petroleum $74.31 (Short Put)

Do not enter this position unless APC and the S&P are both positive.

Sell short APC June $70.00 Put, currently $1.18, stop loss $71.50


RRC - Range Resources $53.35 (Short Put)

Do not enter this position unless RRC and the S&P are both positive.

Sell short RRC June $50.00 Put, currently $0.85, stop loss $51.25


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)