Wynn declined from more than $139 on Wednesday to $119.60 on Thursday to stop us out by 15-cents.
The Wynn drop to exactly our stop was frustrating but I am sure you remember many times in the last when we saw similar declines in positions that missed the stop by only a few cents. These things happen and we need to ignore them and go on.
The positive side of the story is the minimal 21-cent loss on the position. That position was ten days old and premium decay worked in our favor.
Depending on what happens to WYNN and the market on Friday I am planning on launching another play on WYNN on Monday. The premiums are too juicy and until this week the outlook was good. I still believe it is good and the economic softpatch in July/Aug was the reason for the drop in business in Vegas. Recent reports claim business has rebounded but I want to see a rebound in WYNN before starting a new position.
Unfortunately we were also stopped out on the QQQ position on the morning market drop. Apple failed to recover from its earnings miss and continued dragging the Nasdaq lower. When there was no bounce on Thursday I add a tight stop and that stop took us out this morning. We lost more on the QQQ position than the WYNN position.
With the event filled weekend calendar likely to produce a major market move I see no reason to enter any new positions on Friday. I would rather wait until the market direction is clearer and I think we will get that next week. However, October is the fiscal year end for most mutual funds so they have to make their final trades before next Friday. That could also produce additional volatility.
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Current Position Changes
QQQ - Nasdaq 100 ETF (Stopped)
The Nasdaq dipped at the open thanks to losses in WYNN, EBAY, PCLN and others and we were stopped at $56.45 on the QQQ short put.
QQQ Short Nov $56 Put @ $1.31, stopped at $1.87, -0.56 cents.
WYNN - Wynn Resorts (Stopped)
Wynn dropped -$20 over the last two days on an earnings miss and pre earnings concerns. We were stopped when WYNN dipped to $119.75 this morning.
WYNN Short Nov $105 Put @ $3.55, stopped at $3.76, -0.21 cents.
New Short Put Recommendations
New Covered Call Recommendations
New Long Term Recommendations
New Aggressive Recommendations
Existing Play Recommendations
Links to original play recommendation
BAC - Bank of America (Long Term)
BAC - Bank of America (Update 8/31)
BZH - Beazer Homes (Long Term)
MDR - McDermott International (Long Term)
BK - Bank of New York Mellon (Long Term)
NVDA - Nvidia (Long Term)
SD - Sandridge Energy (CC + Long Term Combo)
YHOO - Yahoo (Long Term Combo)
HPQ - Hewlett Packard (Aggressive Short Put)
PHM - Pulte Homes (LT Leveraged Combo)
XOP - Oil Exploration SPDR (Short Put)
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.