Trade Plan: March 09 Puts

Looks like we may get that pick up in NASDAQ 100 Volatility (VXN) to allow for higher premiums in the puts I am looking to sell. The VXN is up about 7% today to 50.00 and the mid fifties looks entirely reachable. The Sep 08 high was 86.52 (intraday).

The MNX has support around the 113 level - a blow out lower could lead to the next support level at around 110 - 109 and a break below that could lead to a test of the Nov 08 lows of 101-103 (but lets call it about 100). I am betting on a re-test. I'm looking to sell the Mar 82.5 puts (or lower) - currently these are 27% out of the money. The 82.5's would bring in a .32 credit on about 8,265.00 in margin with 23 days remaining until expiry. Return would be 3.8% or a yield of 61.40% (59.00% including commissions on a 10 lot) - not bad!

I don’t think the market is in such good shape - the stimulus plan is out and we should know the details as they pertain to the financials this week some time - hopefully Geitner doesn't mess it up this time. That 3 letter insurance firm is probably going to need more money from the Fed - I worry that there is no way to stop the snowballing effect of unemployment - mortgages - consumer spending - layoffs - etc....etc….etc…. Is there another blow up out there coming our way?

Marks as of 4:00 pm (MNX = 112.80)
82.50 _.32
81.00 _.29
80.00 _.25
77.50 _.20
75.00 _.16