The S&P futures rose +7 points on Sunday night as a result of the good guy winning the Ukraine election. The S&P closed at a record high on Friday on the lowest volume day of the year. If the futures hold until Tuesday's open that spike in the S&P could cause significant short covering. If traders watching the futures on Monday night get the idea there is going to be a blowout at the open they could add to that spike by purchasing futures to protect their short positions.

Obviously there can be a lot of things affecting the market before Tuesday's open so we don't know today if we are going to explode higher or face a bout of climax selling after Friday's high.

Over the last four years the week after Memorial Day has been down an average of -2%. With history on the side of the bears and the futures on the side of the bulls Tuesday could be a pivotal day for the markets.

I would rather not recommend new positions to be filled at Tuesday's open. I publish Option Writer on Monday evenings to avoid the typical Monday morning volatility. This week that volatility has moved to Tuesday and I think we should avoid it. We are having enough trouble with the recent market volatility so we don't need to jump right into the middle of Tuesday's volatility.

I will publish a regular newsletter with recommendations on Wednesday evening. We should have a better idea about market direction by then.

Jim Brown

Send Jim an email



Current Portfolio


Current positions

Covered Calls

Long Term Positions


Past performance

Click for 2014 Statistics through February

Click for 2013 Statistics


Current Position Changes


New stop Losses

Please check the portfolio graphics above for new stop losses in bright yellow.


GWPH - GW Pharma (Stopped)

GWPH imploded on Thursday to knock us out of the position with our stop loss at $66.25.

Closed June $65 put, entry $6.59, exit $4.63, +1.96 gain.



GWPH - GW Pharma - Long Term (Stopped)

GWPH imploded on Thursday to knock us out of the position with our stop loss at $66.25.

Closed Aug $80 Put, entry $19.80, exit $22.10, -2.30 loss



NLNK - Newlink Genetics (Stopped)

Newlink broke below our stop loss at $19.75 on no news to knock us out of the position on Wednesday.

Closed June $24 Put, entry 2.00, exit $5.10, -3.10 loss.



CLVS - Clovis Oncology (Close Call)

Clovis has rebounded more than $10 from the recent dip. The current position is a July $75 covered call. The call has declined in value to only $2.15 and Clovis has a big event next week at the ASCO conference. We could see a major spike in Clovis shares.

I am recommending we close the short call to capture the $14 in profit and be prepared to write another call if we get a spike in the shares.

Close July $75 Call, entry $16.20, currently $2.15, +14.05 gain



New Short Put Recommendations


None


New Covered Call Recommendations


None


New Aggressive Recommendations


None


New Long Term Recommendations


None


Existing Play Recommendations


Links to original play recommendation

CLVS - Clovis Oncology (Aggressive Covered Call)

FB - Facebook (Long Term Short Put)

MOBI - Sky-Mobi Ltd (Covered Call)

KNDI - Kandi Technology (Covered Call)

NUS - NuSkin (Aggressive Short Put)

PRAN - Prana Biotech (Short Put - Update)

APC - Anadarko (Long Term Short Put)

GWPH - GW Pharmaceutical (Long Term Short Put)

GWPH - GW Pharmaceutical (Short Term Short Put)

INSM - Insmed Inc (Long Term Short Put)

NLNK - Newlink Genetics (Short Put)

ARWR - Arrowhead Research (Covered Call)

EXAS - Exact Sciences (Short Put)

GTAT - GT Advanced (Covered Call)

YNDX - Yandex (Covered Call)

P - Pandora (Long Term Short Put)


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.