Thursday, October 25, 2018  11:40:53 PM

Towel Thrown In

by Jim Brown

Click here to email Jim Brown
Review prior updates here: 2014  2015  2016  2017  2018 
After three weeks of extreme volatility today's 400 point Dow rebound offered a glimmer of hope. Unfortunately, Amazon and Google disappointed after the close and the S&P futures are down -30 with the Nasdaq futures down -90. The major indexes are already in correction territory and another major blow to trading sentiment with a big loss on Friday could be the last straw.

Earnings have peaked, the Fed has emphasized again that rate hikes will continue well into 2019, global markets are either in correction or a bear market in some cases, Brexit is not going well and Italy's finances are roiling Europe. The US markets have finally been pulled into the quicksand.

The US markets have been fighting to remain disconnected to the global markets but we know from experience that this is a losing battle. It is a global economy and eventually the US markets always catch up with overseas declines.

The S&P rebounded back over prior support at 2,691 but it may only be temporary if the futures hold overnight. The 2,600 level is the next major support level. Sentiment has turned bearish and there is no telling where the market will be a week from now.


The small cap Russell 2000 was down 16% at Wednesday's close. The 2% rebound today stands to be wiped out at the open on Friday with the Russell futures down -17 tonight.


Given the turmoil in the global markets and the continued flow of negative geopolitical headlines, the weekend event risk will be high. There is no reason to recommend new positions tonight. Any option premium I could quote tonight from Thursday's close, will not even be close to the premiums at Friday's open. I recommend everyone stand aside until some semblance of order returns to the market. You do NOT want to be selling premium in this market because the risk you assume would be extreme.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email



Current Portfolio


The fourth column in the portfolio graphic is the earnings date. We will always exit a position before that date unless specifically mentioned otherwise in the play description.

Lines in blue were previously closed.

Current positions


October Position Recap


October was a fight with as many losers as winners but the winners were bigger. We ended the month with a nice gain thanks to FFIV, SHOP and FB.



Current Position Changes


LRCX - Lam Research (Nov Short Put)

We were hit both ways on Lam last week. The stock gapped higher at the open on Friday and the premium dropped from $2 to 53 cents. Observant traders should have not entered the position. They we were stopped on the Nasdaq gap lower on the 23rd and the premium spiked back to $1.30. We were hit in both directions.

Closed 10/23: Short Nov $125 put @ $.53. exit $1.30, -.77 loss.



New Recommendations


No New Positions

With the S&P futures down -30 points tonight and eventual market unknown it would be foolish to even suggest a position. Any premiums at the close on Thursday will not even be close to whatever is quoted at the open on Friday. This is not a market where you want to sell premium. We need the volatility to fade before we venture back into the market.


New Covered Call Recommendations


No New Covered Calls

The Russell 2000 was down -16% at Wednesday's close and 95% of all stocks having bearish charts, it should not be a surprise that there are no covered calls this week.


Other Potential Plays (Spreads, Covered Calls, Naked Puts)


No Optional Positions This Week.

November expiration is on the 16th.

Earnings dates are never guaranteed. Sometimes the dates change 2-3 times depending on various factors. In most cases the dates are provided by a third party like Zacks and they are using predictions based on the prior earnings. If a company reports on Wednesday Jan 24th then they expect them to report on a Wednesday around the 24th in April. The majority of the time they are close and once we move nearer to April, the company will announce when they are going to report and the calendar is updated. If you are in a position, you should always check at least weekly to see if an earnings date has been posted. You should always exit a short position the day before earnings.




Existing Option Writer Positions (Alpha by Symbol)

THESE ARE NOT CURRENT RECOMMENDATIONS. These are prior recommendations that are still active in the portfolio. Do NOT act on the plays described in this section. This is the archive of prior recommendations in the current portfolio.


AAP - Advance Auto Parts (Nov Put Spread 9/27)

Shares dipped on the 18th to touch $160 but were immediately bought. Prices have rebounded to $169 and are holding at recent highs.

Earnings November 21st.

Sell short Nov $155 put, currently $2.55, stop loss $165.50.
Buy long Nov $145 put, currently $1.15, no stop loss.
Net credit $1.30.

Update 10/4: No specific news. Shares rolled over with the market to stop us out on the short put.

Closed Nov $155 short put, entry $2.70, exit $3.40, -.70 loss.
Retain Nov $145 long put, entry $.80, currently $1.60.


AAP - Advance Auto Parts (Nov Put Spread 10/18)

AAP took a dive on Wednesday after Walmart said ti was partnering with AAP to create a specialty qutoparts store on Walmart.com. I don't see the reason for the decline since this will help AAP compete with O'Reilly and Autozone. AAP only does $9 billion in annual revenue and the sector generates more than $100 billion in sales. It sounds like a win-win to me. Shares dipped to $154 on the announcement but have rebounded $8 since Wednesday's low.

Earnings Nov 21st.

Sell short Nov $145 put, currently $2.10, stop loss $155.85.
Buy long Nov $135 put, currently $1.00, no stop loss.
Net credit $1.10.


AAPL - Apple Inc (Nov Put Spread 10/4)

Apple broke out over $230 to a new high on Wednesday. Thursday's $4 decline was only a partiao retracement of their $13 gain over the last week or so.

There is very strong support at $217 and Apple should post killer earnings on Nov 1st on strong iPhone sales. We will exit the day before earnings.

Earnings Nov 1st.

Sell short Nov $210 put, currently $2.73, stop loss $223.50.
Buy long Nov $200 put, currently $1.46, no stop loss.
Net credit $1.27.

Update 10/11: The Nasdaq crash stopped us out of the short side on the Apple position. I am recommending we close the long side because Apple is going to rebound in any positive market.

Closed 10/5: Nov $210 put, entry $2.67, exit $4.10, -1.43 loss.
Close Nov $200 long put, entry $1.47, currently $4.70, potential gain $3.23.


ADBE - Adobe Systems (Oct Put Spread 9/6)

Adobe made a new high last week then declined slightly with the Nasdaq weakness. The stock had been respecting the 60-day for almost the last year until it had those two dips in July/Aug. I believe those were buying opportunities. Despite the 3% Nasdaq crash over the last week, Adobe has not declined that much and was positive on Thursday.

Earnings 9/28 so we will be out quick. Close at the open the day before earnings.

Sell short Oct $235 put, currently $2.91, stop loss $253.85.
Buy long Oct 225 put, currently $1.78, no stop loss.
Net credit $1.13.

Update 9/13: There was a mixup on the earnings date on Adobe when I recommended the position. The source I was using for dates was showing Sept 28th. The actual date was the 13th. I reported the mixup in the Option Investor commentary and Adobe was listed in all the market wraps as 9/13. We always close the morning before an earnings event. If you did see the notices and closed on the 12th, your exit would have been $1.54. If you held over the earnings on Thursday the put was $1.46 at the close and Adobe shares were volatile after the report but ended the afterhours session with only a $2 decline. You should be able to exit at the open for a reasonable amount as long as ADBE does not gap down significantly. We still have a long put in that spread so a decline now would be appreciated.

Closed Oct $235 short put, entry $3.10, exit $1.54, +1.56 gain.
Retain Oct $225 long put, entry 1.88, currently .91, stop loss $270.65.

Update 9/20: We were stopped on the long put when ADBE gapped open after earnings. We were up at the close but the gap higher killed it

Closed Oct $225 long put, entry $1.88, exit .44, -1.44 loss.
Previously closed Oct $235 short put, entry $3.10, exit $1.54, +$1.56 gain.


ADBE - Adobe Systems (Nov Short Put 10/18)

Adobe raised guidance this week and helped to kick start the Tuesday rally. Shares retraced some gains but assuming the market does not make new lows, Adobe should be an out performer.

Earnings Dec 13th.

Sell short Nov $225 put, currently $2.02. Stop loss $236.85.


ANET - Arista Networks (Oct Short Put 8/23)

Arista has caught fire and after a series of higher lows has finally broken out to a higher high. This stock appears poised for take off.

Earnings Nov 6th.

Sell short Oct $250 put, currently $3.00, stop loss $269.25.

Update 9/6: We entered this short $250 put when ANET was at $300. That was not far enough away to avoid a loss when the stock crashed $18 on Wednesday. What goes up, sometimes comes down in a hurry.

Part of our problem was the entry. The stock gapped open $14 on the day we entered the position and we had a terrible fill at 95 cents when it was $3.00 when the play was recommended the night before. That removed our margin of error on the premium.

Closed Oct $250 short put, entry .95, exit $2.40, -1.45 loss.


CLVS - Clovis Oncology Inc (Covered Call 8/23)

I finally found a stock I am willing to use for a covered call. The high premium will give us a significant amount of protection if the stock suddenly declines. Support at $35 has been rock solid and shares are trying to rally.

Earnings Nov 6th.

Buy Clovis shares, currently $35.95, stop loss $33.50.
Sell short Oct $35 call, currently $4.20, stop loss $33.50.
Net debit $31.75.

Update 9/13: Clovis declined on Tuesday on no specific news. Shares broke support to stop us out of the call position.

Closed CLVS shares, entry $35.91, exit $33.50, -2.41 loss.
Closed Oct $35 short call, entry $4.55, exit $2.10, +2.45 gain.
Net gain 4 cents. That is miniscule but far better than a loss.


COST - Costco (Oct Put Spread 8/30)

Costco is holding at recent highs and the strong consumer is pouring money into Costco coffers. With monthly sales growth at double digits there is no fear of Amazon in these isles. Every time I have been recently there is a line to get in, a line to get out and lines at all the sample carts.If the market is going to continue higher, Costco should go along for the ride.

Earnings October 4th.

Sell short Oct $220 put, currently $2.21, stop loss $227.85
Buy long Oct $210 put, currently $1.00, no stop loss.

Update 9/20: We were stopped on the October put spread. I am recommending we close the long put because I seriously doubt COST is moving much lower.

Closed Oct $220 short put, entry $2.29, exit $1.00, +1.29 gain.
Close Oct $210 put, entry .99, currently .55, -.35 loss.

Update 9/27: We were stopped on the October put spread the prior week. I recommended we close the long put because I seriously doubt COST is moving much lower.

Closed Oct $220 short put, entry $2.29, exit $1.00, +1.29 gain.
Closed Oct $210 put, entry .99, exit .49, -.50 loss.


FB - Facebook (Oct Put Spread 8/30)

Facebook erased months of gains with their earnings guidance to fall to $170. Since then they have tried to rebound twice, so far unsuccessfully. However that $170 support level is holding. With the S&P 3,000 tractor beam pulling the markets higher we should see FB begin to rally again soon.

Earnings October 16th.

Sell short Oct $165 put, currently $1.85, stop loss $171.85.
Buy long Oct $155 put, currently $.72, no stop loss.

Update 9/6: Facebook has crashed $16 over the last three days on worries about decelerating growth and increasing regulatory oversight. The testimony in Washington on Wednesday was almost pleading for help in controlling fake accounts. There is also a probe into the suppression of conservative content. We lost a little bit on the short put but the long put is up nicely. I added a stop loss to the long put.

Closed Oct $165 short put, entry $1.95, exit $2.50, -.55 loss.
Retain Oct $155 long put, entry .83, currently $3.35, stop loss $163.50.

Update 9/13: We had a put spread on Facebook and the short side was stopped out the prior week on the big decline. The long put was inflated and I added a profit stop at $163.50. That was hit on Friday morning when the FANG stocks rallied.

Closed Oct $155 long put, entry .82, exit $3.25, +$2.43 gain.


FB - Facebook (Nov Put Spread 9/20)

Facebook shares have been depressed for two weeks but the last two days the stock has begun to rebound. Even if it does not move up from here, it has held support for the last two weeks.

Earnings Oct 16th.

Sell short Nov $160 put, currently $2.62, stop loss $159.00.
Buy long Nov $150 put, currently $1.17, no stop loss.
Net credit $1.45.

Update 10/4: The report of a new hack into 50 million Facebook accounts caused the shares to collapsed again and make a new five-month low. We were stopped on the short put and the long put is still active and profitable.

Closed Nov $160 short put, entry $5.50, exit $6.45, -.95 loss.
Retain Nov $150 long put, entry $2.41, currently $4.55, stop loss $160.50.


FB - Facebook (Nov Put Spread 10/4)

Facebook shares fell hard again on news of the new cyberattack. However, Facebook always seems to bounce back from these types of revelations. We are going to sell a put spread nearly $20 OTM and the stock is trying to cling to the $160 level.

Sell short Nov $140 put, currently $1.94, stop loss $154.50.
Buy long Nov $130 put, currently .83, no stop loss.
Net credit $1.11.

Update 10/11: We were stopped out of the short side the prior week on the news of a new hack of 50 million accounts. We retained the long put and we were rewarded when shares fell in the Nasdaq crash.

Closed 10/5: Nov $150 long put, entry $2.41, exit $5.40, +2.99 gain.
Previously closed Nov $140 short put, entry $5.50, exit $6.45, -.95 loss.
Net gain $2.04.

We were also stopped on the lower put spread.

Closed 10/8: Nov $140 short put, entry $1.83, exit $2.48, -.65 loss.
Close Nov $130 long put, entry $.79, currently $1.43, +.64 potential gain.


FFIV - F5 Networks (Oct Put Spread 9/13)

Shares of F5 are making new highs and the recent Nasdaq volatility barely shows on this chart. This is great relative strength and should continue higher.

Earnings Oct 25th.

>b>Sell short Oct $180 put, currently $1.44, stop loss $188.85.
Buy long Oct $170 put, currently .69, no stop loss.
Net credit 75 cents.

Update: 10/4: F5 shares collapsed with the Nasdaq over the last four days after making a new high on Friday. There has been absolutely no news. We were stopped out of the short put and the long put is still active.

Closed Oct $180 short put, entry 1.36, exit 1.05, +.31 gain.
Retain Oct $170 long put, entry .54, currently .77.


LRCX - Lam Research (Nov Short Put 10/18)

Lam posted decent earnings and guidance and spiked to $154 on the news. The week market has seen some of those points bleed away but there is strong support around $143.

Earnings Jan 15th.

Sell short Nov $125 put, currently $2.00. Stop loss $139.85.


LULU - Lululemon (Nov Call Spread 10/4)

Shares peaked at $164 the prior week and have declined to $157 on the market weakness. LULU has a nice base built and could go higher but the strong gains since last December suggests there may be more sellers than buyers in the weeks ahead.

Earnings Nov 20th.

Sell short Nov $170 call, currently $2.00. Stop loss $163.25.
Buy long Nov $180 call, currently .79, no stop loss.


MED - Medifast (Nov Short Put 9/27)

Medifast was knocked for huge loss from $260 to $181 last week on no specific news. Shares had simply gotten ahead of themselved and profit taking appeared. After the instant rebound they have held over $210 and are faithfully following the 50-day average higher. We are going to sell a put $40 out of the money.

Earnings November 1st.

Sell short Nov $180 put, currently $4.80, stop loss $207.25.

Update 5/11: We were killed on MED and the stock barely moved. It opened down $1 on the 8th then dipped lower as the day progressed. We were stopped in the opening minutes before there was any major decline but the short put opened at $13 and twice the premium we sold. This was a $180 put with the price at $212. The market makers were taking advantage of the week market to jack up the premium. We were caught in the trap.

Closed 10/8: Nov $180 short put, entry $4.70, exit $13.90, - 9.20 loss.


NVDA - Nvidia (Oct Short Put 8/23)

Nvidia disappointed some analysts with their earnings but announced a new video chip that is 600% faster than current chips. This will more than power earnings in Q3/Q4. The dip was immediately bought and we are not likely to retest that $240 level in the near future.

Earnings Nov-6th.

Sell short Oct $240 put, currently $2.82, stop loss $254.85.

Update 9/13: Nvidia crashed with the 50-point Nasdaq drop at the open on Friday to stop us out on the short put for a minor loss. The entire chip sector was crushed.

Closed Oct $240 short put, entry $2.65, exit $3.20, -.55 loss.


NVDA - Nvidia (Nov Short Put 10/4)

Shares got a bump this week after Evercore ISI upgraded their target price to $400. Shares spiked to a new high before fading slightly in the Nasdaq decline. I firmly believe we will see $400 next year but that does not mean there is no risk at $250. This strike is $30 OTM but Nvidia can move quickly. I am counting on the Nasdaq coming back to life soon.

Earnings Nov 15th.

Sell short Nov $250 Put, currently $4.40, stop loss $264.85.

Update 10/11: Nvidia imploded in the chip wreck that was helping to drive the Nasdaq lower. We were stopped for a big loss on the short put when the Nasdaq gapped down on Monday.

Closed 10/8: Nov $250 short put, entry $3.67, exit $9.00, -5.33 loss.


PAYC - Paycom Software (Oct Put Spread 9/13)

Paycom is on fire. Shares have gained $61 since the beginning of August. The rally is highly suspect at this point and the doubt is keeoing the put premiums high.

Earnings Oct 25th.

Sell short Oct $145 put, currently $1.65, stop loss $154.
Buy long Oct $135 put, currently .80, no stop loss.
Net credit 85 cents.

Update 9/20: Paycom self destructed after a two month rise. Shares declined from $164 to $151 in 4 days. We were stopped at $154 and in hindsight the stop was not tight enough.

Closed Oct $45 short put, entry $1.63, exit $2.60, -.97 loss.
Retain Oct $135 long put, entry .70, currently .75.

Update 9/27: We were stopped on the short put the prior week and the rebound stopped us out of the long put last week.

Closed Oct $135 long put, entry .70, exit .15, -.55 loss.
Previously closed Oct $145 short put, entry $1.63, exit $2.60, -.97 loss.


PVH - PVH Corp (Nov Put Spread 9/27)

PVH shares were hammered after earnings to bottom at$131.60. Shares are rebounding after two weeks of consolidation.

Earnings Nov 23rd.

Sell short Nov $135 put, currently $1.70, stop loss $139.85.
Buy long Nov $125 put, currently .60, no stop loss.
Net credit $1.10.

Update 10/4: No specific news. Shares rolled over with the market to stop us out on the short put. Two weeks of gains evaporated in three days.

Closed Nov $155 short put, entry $2.70, exit $3.40, -.70 loss.
Retain Nov $145 long put, entry $.80, currently $1.60.


RH - RH Inc (Oct Short Put 9/13)

Formerly Restoration Hardware, RH shares fell nearly $40 after earnings. Over the last two days they have rebounded sharply after the CEO bought $1 million in shares in the open market. Last week the company opened its largest store, a 95,000 sqft giant in New York City. It cost the company $50 million but the CEO believes it will produce $100 million a year in revenue.

Earnings Dec 4th.

Sell short Oct $120 put, currently $2.30, stop loss $127.65.

Update 9/27: RH dipped just enough on the market decline on Monday to stop us out of the short put position.

Closed Oct $120 short put, entry $2.33, exit $1.95, +.38 gain.


ROKU - (Nov Short Put 9/20)

Roku closed at a new high on Thursday and after the week of consolidation it may be ready to run again.

Sell short Nov $60 put, currently $2.20, stop loss $68.50.

Update 10/4: Roku declined $11 in three days after making a new high on Monday. There was no news. We were stopped on Wednesday for a breakeven.

Closed Nov $60 short put, entry $2.17, exit $2.11, +0.06 gain.


SHOP - Shopify (Oct Short Put 8/30)

Shopify disappointed on earnings and crashed back to $132 twice and both times that held. The last rebound faded slightly the last two days because SHOP is market sensitive. However, the Nasdaq decline on Thursday barely made a dent in Shopify gains.

Earnings October 25th.

Sell short Oct $125 put, currently $2.10, stop loss $137.00.

Update 9/6: The decline in the Nasdaq and the drop in the Chinese retail stocks knocked $12 off SHOP in just the last two days. When shares are falling hard, premiums rocket higher and we barely got out with just a minor loss.

Closed Oct $125 short put, entry $2.25, exit $3.20, -.95 loss.


SHOP - Shopify (Oct Call Spread 9/6)

Shopify failed with a lower high and is in danger of breaking through support at $134. With the commentary negative the odds are better that support breaks rather than produces a rebound.

Earnings Nov 6th.

Sell short Oct $150 call, currently $2.70, stop loss $140.85.
Buy long Oct $160 call, currently $1.35, no stop loss.
Net credit $1.35.

Update 9/13: Shopify gapped lower at the open on Friday and then rocketed $25 higher over the next week. The rebound stopped us out on the short call for a loss but the long call has become very profitable. I added a stop loss to the long call.

Closed Oct $150 short call, entry $2.10, exit $4.60, -2.50 loss.
Retain Oct $160 long call, entry $1.70, currently $6.40, stop loss $153.25.

Update 9/27: We were stopped on the short call the prior week and the long call was highly profitable. I put a stop loss on that call and that was hit last Friday.

Closed Oct $160 long call, entry $1.70, exit $9.10, +$7.40 gain.
Previously closed Oct $150 short call, entry $2.10, exit $4.60, -2.50 loss.


STZ - Constellation Brands (Oct Short Put 8/23)

Constellation crashed on the announcement they bought a major stake in Canopy Growth, a marijuana grow company. Shares briefly fell to just below $200 before starting to rebound. That should be strong support.

Earnings Sept 28th.

Sell short Oct $190 put, currently $2.20, stop loss $198.25.

Update 9/20: Marijuana stocks have been trading like bitcoin over the last week. Constellation saw huge swings as stocks like Tilray (TLRY) surged more than 100% intraday on extreme volatility. This caused us to be stopped out when Constellation was caught in the downdraft.

Closed Oct $190 short put, entry $2.25, exit .76, +$1.49 gain.


TSLA - Tesla Inc (Nov Short Put 9/27)

If you feel like living dangerously and taking a walk on the wild side, short puts on Tesla on Friday morning. The SEC sued Elon Musk about his going private tweet. Shares fell $37 in afterhours to close at $270. The Nov $200 put is quoted at $3.90 at the close. After the post close news you can bet the stock will crash at the open however, now that the bad news is in the market, it may not decline the entire $37. Either way the put is going to spike in value because investors do not know where the decline will stop. I suggest if it declines to $250 that would be a hard floor. Any opening print put premium is likely to be enormously high and eill evaporate quickly once the stock finds a bottom.

HIGH RISK

Sell short Nov $200 put, currently $3.90, stop loss $247.50.

Update 10/11: Thank you Elon Musk for being an idiot. This would have been a great put position if Musk had kept his mouth shut. (tweet) He launched an attack on the SEC and shares gave back all their rebound gains. We escaped with a gain ourselves but it would have been much nicer had Musk lost his phone.

Closed 10/5: Short Nov $200 put, entry $7.43 exit $5.90, +1.53 gain.


TTD - The Trade Desk (Oct Call Spread 9/6)

The Trade Desk has been on fire for most of 2018 and has risen from $40 back in February. This is an advertising company competing with Facebook, Google and Amazon among others. The easy revenue gains have already been made. Shares have stalled at $140 for more than a week. With other momentum stocks rapidly losing ground, it may keep TTD from advancing. Adding another $20 at this point would be amazing relative strength.

Earnings November 8th.

Sell short Oct $160 call, currently $2.20, stop loss $145.
Buy long Oct $170 call, currently $1.20, no stop loss.
Net credit $1.00.

Update 9/13: The Trade Desk gapped down on Friday then rebounded $10 on no news. This was part of the market rebound on Friday. We were stopped out on the rebound and our long call is up sharply. I am recommending we close the October $170 call because I do not see the stock moving that much higher and today's decline in a positive market is not a good sign.

Closed Oct $160 short call, entry $2.65, exit $3.70, -1.05 loss.
Close Oct $170 long call, entry $1.60, currently $2.50, potential +.90 gain.

Update 9/20: We were stopped the prior week on the short call and we exited the long call at the open on Friday.

Closed Oct $170 long call, entry $1.60, exit $1.65, +.05 gain.
Previously closed Oct $160 short call, entry $2.65, exit $3.70, -1.05 loss.


TWLO - Twilio Inc (Oct Put Spread 8/23)

TWLO closed at a new high on Thrusday after spiking more than $10 after earnings two weeks earlier. The post earnings depression was minimal and TWLO could ne off to the races.

Earnings Nov 6th.

Sell short Oct $70 put, currently $2.19, stop loss $74.65.
Buy long Oct $60 put, currently .70, no stop loss.
Net credit $1.49

Update 9/20: Twilio shares rolled over after closing at a ne whigh last Friday. The $6 drop stopped us out of the short put.

Closed Oct $70 short put, entry $1.67, exit .76, +.91 gain.
Retain Oct $60 long put, entry .77, currently .10.


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.