The big market spike on Wednesday did not inspire confidence after the closing decline but it was still a gain.

At this point I am about to throw in the towel on waiting for a dip to sell some more puts. In normal times giving up and going long is a sure sign of capitulation and a prelude to a market drop. In this market we may have a larger margin of error.

The dollar is dropping like rock and that is pushing commodities higher along with equities. Every day brings another event in the global currency war and the Fed is still poised to go nuclear in November.

After the close on Wednesday Singapore unexpectedly tightened its currency policy to let its currency rise. This is pushing futures higher tonight and the dollar literally imploded another .7% in a couple hours to a level well under prior support at 77.

Dollar Index

In light of the dramatic drop in the dollar I am going to add some plays in the commodity sector. With the dollar in a death spiral the chance of a sell off in commodities is slim.

Jim Brown

Current Portfolio

No Open Positions

New Recommendations

FCX - Freeport McMoran - $99.14

Freeport mines copper and gold and both are rocketing higher. There is little downside potential for FCX until the global currencies find a floor.

Enter trade only if S&P-500 is positive.

SELL November $90 PUT (FCX-10W9000) currently $3.65 stop FCX @ $93.75

Chart of FCX

RIO - Rio Tinto - $64.06

Rio Tinto is another copper producer as well as gold, diamonds, uranium, etc. All things that require more dollars to purchase in the current environment. RIO split 4:1 a couple months back and it just now picking up speed towards those prior highs.

Enter trade only if S&P-500 is positive.

SELL November $60 PUT (RIO-10W6000) currently $1.40 stop RIO @ $63.50

Chart of RIO

WLT - Walter Energy - $87.75

Walter is breaking out of a four-month base and hit a new high on Wednesday. Coal is not quite as impacted by the cheaper dollars but the concept is the same. With Walter we can sell well out of the money for a decent premium.

Enter trade only if S&P-500 is positive.

SELL November $80 PUT (WLT-10W8000) currently $2.41 stop WLT @ $85.00

Chart of WLT

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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)