Normally the month of September is remembered for its high volatility and large market declines. Hopefully this September will be remembered for moving in the opposite direction.
I am hesitant to add too many plays this month because of the potential for a market decline. However, there are always a couple stocks that are moving higher even when the market is stuck in a range. I am going to add a couple of those today and put a couple more on the watch list for breakouts.
I plan on keeping the portfolio small this month just in case disaster strikes the market. We had a good August where nearly everything went according to plan. We did have some losses but we stopped out quickly to keep them minimal. That will be the plan again in September. If we do get some plays on the board I will try to keep the stops tight to minimize our risk. If September does surprise us to the upside we will be ready.
I waited until Monday night to write this update so I could see what Asia did and how the futures were reacting. Currently the S&P futures are up +6, off about 3 points from their overnight highs, but still positive. Crude prices are positive at 68.25 with an OPEC meeting on the 9th.
GLBL - Global Industries $9.48
Global Industries, Ltd. provides worldwide construction and subsea services, including pipeline construction, platform installation and removal, project management, construction support, diving services, diverless intervention and marine support services to the offshore oil and gas industry primarily in selected international areas and the United States Gulf of Mexico. The Company provides services from shallow water to water depths of up to 10,000 feet.
Global has resistance at $10 but is showing a steady upward trend and I believe we could see a breakout on the next test.
Sell to open September $12.50 Put GQ-OUV currently $2.90, stop GLBL @ $8.85
Chart of GLBL
HIG - Hartford Financial $22.19
The Hartford Financial Services Group, Inc. (The Hartford) is an insurance and financial services company. It provides investment products, individual life, group life and group disability insurance products, and property and casualty insurance products in the United States.
We were stopped out for a nice gain on HIG in August and I want to get back on this horse again.
Sell to open September $25 Put HIG-UE currently $3.10, stop HIG @ $20.75
Chart of HIG
SM - Saint Mary Land $26.13
St. Mary Land & Exploration Company (St. Mary) is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition, and production of natural gas and crude oil in North America.
We saw a pretty steep sell off in SM in late August and hopefully Friday's uptick signals the end of the decline. I am looking for another move higher to enter the position.
Entry trigger: SM @ $26.50
Sell to open September $30 Put SM-UF, currently $3.80, stop SM @ $25.20
Chart of SM
BHI - Baker Hughes $35.60
Baker Hughes Incorporated (Baker Hughes) is engaged in the oilfield services industry. The Company is a supplier of wellbore related products and technology services, including products and services for drilling, formation evaluation, completion and production and reservoir technology and consulting to the worldwide oil and natural gas industry.
BHI announced it was acquiring its prior spin off BJ Services (BJS) and was hammered for a loss on the news. I believe this is positive for BHI and will enable them to compete better against SLB and HAL. The dip took them to support and a clear stop if they dip lower.
Entry trigger: BHI @ $36.00
Sell to open September $39 Put BHI-UP, currently $3.40, stop BHI @ $34.90
Chart of BHI
STP - Suntech Power Holdings $14.79
Suntech Power Holdings Co., Ltd. (Suntech) is a solar energy company that designs, develops, manufactures and markets a variety of photovoltaic (PV) cells and modules. It also provides PV system integration services in China.
Knocked back to support by the gloom in the solar sector but appears to have found some new buyers.
Entry trigger: STP @ $15.50
Sell to open September $17.50 Put STP-UW, currently $2.70, Stop loss STP @ $14.25
Chart of STP
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)