Despite the negative trend for most of the month we ended with a nice profit once again.

The month of November started out with a bang but unfortunately almost all the market gains came from a single short squeeze. In anticipation of a rebound from the initial dip we instituted six new plays on the Nov 8th decline. That rebound failed and all six plays were stopped out for minor losses.

We waited until the 15th to reenter a new set of plays but the crash on the 16th knocked us out again. Not to be denied we entered a new set on the 18th and added to them on the 22nd and 24th and we were very successful in not only recovering the money lost early in the month but in posting some decent gains for the entire month. It was a little frustrating early on but became very rewarding as the rebound finally occurred.

S&P-500 Chart - November

In November I began recommending some aggressive plays where we sold deep in the money puts on some momentum stocks. The first one was the OIH with a $3.40 profit when stopped and the second one is VMW. We are currently up more than $5 in that position.

I will be recommending some more of these positions in the future along with the normal Option Writer OTM plays.

Option Writer has now been profitable for 12 of the last 16 months and that period had some extreme volatility including the February sell off, flash crash and European debt crisis volatility.

Jim Brown

Current Portfolio

November Recommendation History

Option Writer has been profitable for 12 of the last 16 months

Click here for October Results

Click here for September Results

Click here for August Results

Click here for July Results

Click here for June Results

Click here for May Results

Click here for April Results

Click here for March Results

Click here for February Results

Click here for January Results

Click here for December Results

Click here for November Results

Click here for October Results

Click here for September Results

Click here for August Results

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.