Goldman broke support on Wednesday to trade down to $157.
That drop below $158 stopped us out of the Goldman position but after two days of volatility the premium on the option had declined to the point where we escaped the stop loss with a $1.30 profit.
Goldman was our only position and with the market losing its early gains today it is setting up exactly as I expected for a decline into the weekend ahead of the FOMC meeting. Therefore I am recommending we remain flat until we see what the FOMC meeting brings.
Current Position Changes
GS - Goldman Sachs - Stopped at $157.75
Short May $150 Put @ $4.50, closed at $3.20, +1.30 profit.
April Recommendation History
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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 just send us an email and we will use your price.