I can't believe it is a Sunday night and the futures are actually up for a change. That does not mean Monday won't see a decline but at least we are not negative 20 points.

I am neutral for Monday. Even though the futures are up for the first time in four weeks on a Sunday night I am not betting on those gains holding. Last week was very damaging to market sentiment and it may not be over.

The weekend news is full of Europe comments and Asian markets are down 1-2%. Nothing has been settled in Europe. (surprise!) This week is full of economic reports in the U.S. and there is risk of further volatility.

I am not adding any new plays today because of the volatility risk. Volume was 14 billion on Thursday and 4 billion on Friday. That suggests almost no bargain hunting and a lack of conviction by either side. With the weekend event risk fading the bulls have an opportunity to buy the dip but there could easily be sellers waiting. The margin change by the CME after the close on Friday could pressure gold, silver and copper and those declines could rub off on other commodities and the market in general.

I think Monday is a day to watch rather than participate. I will do an update on Monday night and maybe some new plays then.

Jim Brown

Send Jim an email



Current Portfolio


Current positions


Current Position Changes


None


New Short Put Recommendations


None


New Covered Call Recommendations


None


New Long Term Recommendations


None


New Aggressive Recommendations


None


Existing Play Recommendations


Links to original play recommendation

COG - Cabot Oil & Gas (Short Put)

BAC - Bank of America (Long Term)

BAC - Bank of America (Update 8/31)

DRC - Dresser Rand (Long Term)

BZH - Beazer Homes (Long Term)

MDR - McDermott International (Long Term)

BK - Bank of New York Mellon (Long Term)

NVDA - Nvidia (Long Term)

TSCO - Tractor Supply (Short Put)

IWM - Russell ETF (Aggressive Combo)

SD - Sandridge Energy (CC + Long Term Combo)

YHOO - Yahoo (Long Term Combo)

HPQ - Hewlett Packard (Aggressive Short Put)

PHM - Pulte Homes (LT Leveraged Combo)


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)