The Dow erased a -189 point morning decline but the indexes stalled at resistance on the rebound.

The S&P stalled at the morning resistance high at 1137, Dow at 10625 and Nasdaq 2355. While the rebound was encouraging the stall at resistance does not inspire confidence. The dollar is spiking again overnight and the S&P futures are falling sharply.

I continue to believe we are better off waiting for this weakness to ease before attempting new entries.

I will be traveling on Tuesday and Wednesday and unable to monitor the markets. I would rather be flat in a high volatility situation than blindly entering positions that could be stopped out within hours of the entry. Triple digit reversal ranges are not the kind of markets you want to be selling options short.

I will email again on Thursday. Hopefully there will be something to trade.

Jim Brown

Current Portfolio


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)