Editor's Note:

After a huge bounce the market looks tired but so far the short-term trend is still up. We're at a pivotal spot for the market. I'm expecting a pull back but there is always a chance the rally defies the odds and keeps going. Tonight we're listing both a call play and a put play.

In addition to tonight's candidates, consider these symbols as well.

CGX - We were about to add CGX as a bullish trade tonight but the option spreads are too wide. If you trade stocks, check it out. $38.00 is short-term support.

COG - This oil stock is underperforming its peers and the market. COG is a volatile stock so keep positions small. You could target a drop to $60.00 or a drop toward the 200-dma.

- James


NEW DIRECTIONAL CALL PLAYS

Bed Bath & Beyond Inc. - BBBY - close: 59.68 change: +0.22

Stop Loss: 58.90
Target(s): 64.75
Current Option Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of this home furnishings retailer have rallied from technical support at its rising 200-dma to resistance near $60.00. After the big bounce there are probably a lot of traders expecting BBBY to roll over. Shares could see some short covering if it unexpectedly broke out above resistance.

I am suggesting we launch small bullish positions if BBBY can trade at $61.00. We'll exit at $64.75.

Trigger @ 61.00 *Small Positions*

- Suggested Positions -

buy the NOV $62.50 call (BBBY1119K62.5) current ask $1.22

Annotated Chart:

Entry on October xx at $ xx.xx
Earnings Date 12/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on October 12, 2011


NEW DIRECTIONAL PUT PLAYS

Edwards Lifesciences - EW - close: 70.89 change: -0.79

Stop Loss: 73.55
Target(s): 66.00
Current Option Gain/Loss: + 0.0%
Time Frame: exit prior to earnings on Oct. 19th
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of EW have stopped participating in the market's rally. It looks like EW has already begun correcting lower. This looks like a good spot to open bearish positions with a stop loss above the recent high.

I am suggesting we buy puts now. We will aim for $66.00.

NOTE: We do not want to hold over the October 19th earnings report.

- Suggested Positions -

buy the NOV $65 PUT (EW1119W65) current ask $2.05

Annotated Chart:

Entry on October 13 at $ xx.xx
Earnings Date 10/19/11 (confirmed)
Average Daily Volume = 1.3 million
Listed on October 12, 2011