NEW DIRECTIONAL CALL PLAYS

Gold ETF - GLD - close: 160.96 change: +2.90

Stop Loss: 155.90
Target(s): 169.00
Current Option Gain/Loss: + 0.0%
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Gold seems have finished its recent correction. Now after a week of consolidating sideways in very volatile trading, gold is on the rebound. The GLD's breakout back above the $160 level and its 100-dma looks like a short-term bullish entry point.

There are two main issues we need to focus on with this trade and that is the problems in Europe and the U.S. dollar. Normally when the dollar rises, gold goes down. That did not happen today because investors are so worried about Europe. When Greece eventually defaults there is going to be a huge surge into the perceived safety of gold. Every negative headline from Europe should help buoy the precious metal. On the other hand if Europe somehow solves their debt issue then the U.S. dollar should drop and normally that would be bullish for gold. It seems like a win/win for gold. However, all we have to do is look at the sell-off two weeks ago to see that this factors don't always apply. Gold can see corrections in spite of the bullish environment for this commodity.

I am suggesting small bullish positions on the GLD now. We'll use a stop loss at $155.90. Our first target is $169.00.

*Small Positions*

- Suggested Positions -

buy the OCT $165 call (GLD1122J165) current ask $3.25

Annotated Chart:

Entry on October 4 at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 24.3 million
Listed on October 03, 2011


Ultra S&P500 ETF - SSO - close: 35.82 change: -2.15

Stop Loss: 30.95
Target(s): 36.75, 39.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The stock market appears to be breaking down. While the trend is down, stocks don't always fall in a straight line. We are going to try and catch a bounce in the S&P 500 but we'll use the SSO to try and maximize any returns.

This is a very speculative, higher-risk trade. I am suggesting small bullish call positions on the SSO if the ETF hits $34.00. We'll start the trade with a stop loss at $30.95 but more conservative traders may want to consider a stop loss closer to $32.50 instead.

buy-the-dip Trigger @ $34.00

- Suggested Positions -

buy the OCT $37 call (SSO1122J37) current ask $2.22

Annotated Chart:

Entry on October xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 25.1 million
Listed on October 03, 2011


NEW DIRECTIONAL PUT PLAYS

Walter Energy Inc. - WLT - close: 56.90 change: -3.11

Stop Loss: 62.05
Target(s): 50.50
Current Option Gain/Loss: +0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
WLT is a major coal producer. You could certainly argue that the stock is oversold but shares continue to break down. Today's drop leaves the stock under its 2010 low of $57.62. The next level of potential support looks like $50.00.

I am suggesting small bearish positions now, and I do mean small. WLT can be a very, very volatile stock. Aggressive traders may want to put their stop loss above the 10-dma near $64.50. I am suggesting a stop loss at $62.05, just above today's high. Our first target is $50.50.

*Small Positions*

- Suggested Positions -

buy the OCT $50 PUT (WLT1122V50) current ask $2.67

Annotated Chart:

Entry on October 04 at $ xx.xx
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 4.2 million
Listed on October 03, 2011