Sharply lower open

Support levels have been broken. Asian markets plummeted overnight. If you haven't bought your protective index puts yet it's still not too late.

Let's keep a clear head. Acting in panic only results in serious losses. In a taxable account I wrote an ERX 35 put for 4.10. My cost basis is 30.90. I'm going to take it like a man and write the 30 call (possibly the 25) as soon as it's put to me. I'm not going to try to buy back the put because the spreads are not advantageous. Writing on it will lower my cost basis.

I wrote the 35 before I changed strategies to write puts way out of the money. We can now see why a strategy change was necessary. I still think the trade will end up profitable but now it will take some management.

Bottom line: conservative trades, protective puts and no panic are the mantra for today. For those who aren't already extended and who are calm there will probably be some very profitable way out of the money put selling opportunities while the herd panics. I would stick with the highest quality ETFs and stay away from financials.

For those daytraders out there this may be a day to play the ultra shorts. Please feel free to post comments for us all to ponder.