After two days of buying the dip with no success I wonder if the third time is the charm.

I am going to wait until the weekend to launch any new plays. We were stopped out on the first SPY entry on the afternoon dip and with Friday a tossup for market direction I think we should watch from the sidelines.

Buyers will be wary about holding longs over the weekend and bears will also be worried that a change in leadership in Libya could produce a major gap higher on Monday. I would rather not play the market lottery in conditions like that. We need a trend to play.

I am going to keep the second part of the SPY play. If the market does move over Wednesday's afternoon high I want to take a chance on the move. We still have the Russell ETF play as well.

Jim Brown

Current Portfolio

Current Position Changes

SPY - S&P SPDR (Stopped @ $129.95)

The SPY declined to $129.70 to knock us out of the first half of the SPY trade for a loss of 40-cents at $2.35.

SPY - S&P SPDR (Short Put Trigger Change)

Change the entry trigger on the second part of the SPY recommendation from Wednesday night to $131.50.

Enter this position only with an SPY trade at 131.50.

Sell short SPY March $134 Put, currently $4.33, stop $130.50

New Recommendations


New Long Term Recommendations


New Aggressive Recommendations


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.