Editor's Note:

Stocks have seen a huge rebound off their October lows. Now the market is overbought and due for some profit taking. I am suggesting we take some money off the table with some of our 2012 January call positions (see details below).

-James


Closed Plays


IWM was closed.


Play Updates


Allergan Inc. - AGN - close: 86.21

update 10/15: The stock market's very impressive rebound has lifted AGN from $78 to past resistance at $86.00. Our plan is to buy calls on a close over $86.00. That occurred on Friday with AGN closing at $86.21. Thus we'll open positions on Monday morning at the open. However, I want to caution readers. The stock market and AGN are short-term overbought. You might want to consider waiting. The next couple of weeks could be challenging (see tonight's wrap).

Our stop loss is at $79.45. Our long-term target is $99.00. Investors should be aware that AGN is due to report earnings on October 26th.

Earlier Comments:
Option spreads are wide for these LEAPS. We want to keep our position size pretty small to limit our risk.

- Suggested Positions -
OCT 17, 2011 - entry price on AGN @ -.--, option @ -.--
symbol: AGN1319A100 2013 JAN $100 call - current bid/ask $ 4.80/ 5.60

Chart of AGN:

Current Target: $99.00
Current Stop loss: 79.45
Play Entered on: 10/17/11
Originally listed on the Watch List: 09/24/11


Bank of America - BAC - close: 6.19

update 10/15: The big bounce in financials hit a snag when traders decided to sell the earnings news out of JPM this past week. BAC saw its rally fail near technical resistance at the 30-dma. Unfortunately this stock is stuck under a bearish trend of lower highs.

BAC is due to report earnings on Tuesday morning (Oct. 18th) before the opening bell. Analysts are expecting a profit of 22 cents a share. Reaction to earnings and the company's guidance could play a huge role in reversing the downtrend or accelerating the sell-off. At this point I would either wait for a new dip or bounce near the October lows ($5.13) or a close above the 50-dma ($6.90) before considering new long-term positions.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - current bid/ask $ 0.07/ 0.08
(no stop loss on this position)

- or -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.74/ 0.76
(No stop loss on this position)

10/03/11 Sept. 26th position stopped out at $5.75.
2012 Jan. $7.50 call @ 0.48 (-27.2%)
2013 Jan. $10 call @ 0.74 (-26%)
10/01 raising our stop loss on the Sep. 26th position to $5.75
09/24 adding 2nd position, stop loss at $5.40
09/03 no stop loss on this trade at this time.

Current Target: $12.00-to-$15.00
Current Stop loss: see details above
Play Entered on: 08/29/11
Originally listed in the New Plays 08/27/11


Bristol Meyers Squibb - BMY - close: 32.44

update 10/15: BMY almost posted a loss for the week. Shares have been struggling with the $33.00 level. The stock is also trading inside a narrow, rising channel. On a short-term basis we can expect a dip toward $32.00. Bigger picture I still think there is a chance that BMY corrects back toward $30.00 or its 50-dma before moving significantly higher.

I am not suggesting new positions at this time. We have two exit targets. One at $33.50 and a longer-term target at $35.75.

Earlier Comments:
NOTE: BMY is not a very fast moving stock. We will need to be patient.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.93/ 1.99

10/08/11 new stop loss @ 29.40
09/16 Friday's close at $30.53 is our trigger to buy calls. Our entry will be Monday morning.

Chart of BMY:

Current Target: $33.50 and 35.75
Current Stop loss: 29.40
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


EMC Corp. - EMC - close: 23.09

update 10/15: Take some money off the table!

EMC posted another gain for the week but it was a bit of a bumpy ride. Traders bought the dip on Thursday near $22.50. I would not expect a lot of movement out of EMC on Monday. The stock will likely drift sideways as investors wait for the earnings report out on Tuesday morning (Oct. 18th) before the opening bell. Wall Street is looking for a profit of 36 cents a share. EMC's results and guidance could produce some big moves on Tuesday.

NOTE: I am suggest we sell at least half of our 2012 January calls immediately. They are currently up +65.9%. We will not sell the 2013 calls but you can certainly take profits early if you are inclined to.

Earlier Comments:
The plan was to use small positions to limit our risk. Our first long-term target is $25.75. Our second target is $28.50. Aggressive traders could aim higher.

- Suggested (SMALL) Positions -
Aug 18, 2011 - entry price on EMC @ 20.25, option @ 2.20
symbol: EMC1221A20 2012 JAN $20 call - current bid/ask $ 3.65/ 3.75

- or -

Aug 18, 2011 - entry price on EMC @ 20.25, option @ 1.80
symbol: EMC1319A25 2013 JAN $25 call - current bid/ask $ 2.66/ 2.76

10/15/11 Sell Half of our 2012 calls ASAP, current bid $3.65 (+65.9%)
10/08/11 new stop loss @ 19.85
09/24 new stop loss @ 19.49
09/17 new stop loss @ 19.80

Current Target: $25.75 and 28.50
Current Stop loss: 19.85
Play Entered on: 08/18/11
Originally listed on the Watch List: 07/23/11


Hewlett-Packard - HPQ - close: 26.11

update 10/15: Take profits here on 2012 calls.

HPQ posted another strong weekly gain but the stock has been unable to rally past resistance in the $26.00-26.50 zone. After a huge two-week rally in the market this looks like a good spot to do some profit taking on our 2012 calls. I am suggesting we sell at least half of this position. The bid on the 2012 $22.50 calls is at $4.65 (+72.8%). We'll post the exit on Monday morning. I'm not selling the 2013 calls yet. We still have a lot of time. However please note that we are adjusting the stop loss on our 2012 position to $22.85.

- Suggested (SMALL) Positions -
Short(er)-Term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 2.69
symbol: HPQ1221A22.5 2012 JAN $22.50 call - current bid/ask $ 4.65/ 4.70
Stop Loss @ 22.85

- or -

Longer-term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 3.75
symbol: HPQ1319A25 2013 JAN $25 call - current bid/ask $ 5.30/ 5.40
Stop Loss @ 21.40

10/15/11 new stop loss for the 2012 position @ 22.85
10/15/11 Plan to sell 1/2 of 2012 calls on Monday (currently +72.8%)
10/08/11 new stop loss (both positions) at $21.40

Current Target: $29.50
Play Entered on: 09/26/11
Originally listed in New Plays: 09/24/11


Kraft Foods Inc. - KFT - close: 35.23

update 10/15: KFT continues to surge higher. The stock has rallied to resistance in the $35.00-35.50 zone. This stock, like most of the market, is short-term overbought. I would expect shares to correct lower. A pull back toward the $34-33 zone would be normal. I'm not suggesting new positions at this time.

NOTE: KFT is a very slow moving stock. It will take months to make any progress. Once a position is open readers may want to turn these into calendar spreads (a.k.a. vertical spreads).

- Suggested (SMALL) Positions -
Sep 22, 2011 - entry price on KFT @ 32.71, option @ 2.35
symbol: KFT1319A35 2013 JAN $35 call - current bid/ask $ 3.10/ 3.20

Current Target: $38.00
Current Stop loss: 31.75
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


Ross Stores Inc. - ROST - close: 85.00

update 10/15: ROST has made the jump from our watch list to our play list. The plan was to buy calls when ROST closed over $83.00. Shares closed above $83 on Oct. 10th. Our entry point was the open on October 11th at $84.36. The 2013 January $100 call opened at $5.30.

If you're looking for a new entry point I would wait. The market is overbought. Broken resistance near $82.50 should be support so wait for a new dip into the $83-82 zone.

I am adjusting the stop loss to $77.00. Our long-term target is $99.00.

- Suggested Positions -
Oct 11, 2011 - entry price on ROST @ 84.36, option @ 5.30
symbol: ROST1319A100 2013 JAN $100 call - current bid/ask $ 5.40/ 5.70

10/15/11 adjusted stop loss to $77.00
10/11/11 ROST opened at $84.36
10/10/11 ROST closed above $83, our requirement to open the trade
10/08/11 adjusted option strike to 2013 Jan. $100 call
10/01/11 new strategy: buy a close over $83.00
09/24/11 new trigger at $73.00, stop 69.50
09/17/11 new trigger at $76.50, stop @ 71.40, new strikes.

Chart of ROST:

Current Target: $99.00
Current Stop loss: 77.00
Play Entered on: 10/11/11
Originally listed on the Watch List: 09/10/11


CLOSED Plays


iShares Russell 2000 ETF - IWM - close: 71.14

update 10/15: The reversal in stocks has been HUGE! Normal markets do not move this fast. The IWM is up +18.3% from its October low near $60.00 in less than two weeks. That's just not a normal, healthy market. Naturally I wouldn't be complaining if we had bought calls at $60. I just want to alert you that these sorts of moves are dangerous.

Our plan was to close positions the day after IWM closed above $68.00. Shares closed above $68.00 on Oct. 11th. Our trade was closed at the open on Oct. 12th.

- Suggested Positions -
Oct 04, 2011 - entry price on IWM @ 60.32, option @ 6.36
symbol: IWM1221M60 2012 JAN $60 PUT - Exit $2.53 (- 60.2%)

10/13/11 exit at the opening bell
10/12/11 IWM closed above $68.00 (requirement to exit/stop loss)
10/04/11 Trade begins at the open. IWM @ 60.32
10/03/11 meet our entry point requirement (close under $63.00)

Chart of IWM:

Current Target: $52.50
Current Stop loss: close over 68.00
Play Entered on: 10/04/11
Originally listed on the Watch List: 10/01/11