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Call Updates

None
 

Put Updates

ITT Educational Servc - ESI - cls: 71.99 chg: -4.09 stop: 80.05

Target achieved. Gap downs were pretty common place today and ESI opened at $73.30. We had been suggesting an entry point to buy puts at $74.35 so we would have been triggered at the open today. ESI plunged to an intraday low of $65.05. Our first target was $67.50. While we didn't get the best entry point ESI still performed for us. Yet now we face what appears to be a very significant bounce back. Shares closed down 5% but formed a "hammer" style candlestick pattern. We are adjusting our stop loss to $80.05. More conservative traders may want to use a stop loss around $78.25 or $75.85 instead. We are not suggesting new positions at this time. Our secondary target is $61.00.

Picked on October 06 at $ 73.30 *triggered/gap down
Change since picked: - 1.31 /1st target hit 67.50
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 957 thousand

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Hasbro Inc. - HAS - close: 31.72 change: -1.12 stop: 34.15

Shares of toy maker HAS are not very volatile so the stock didn't move quite as much as the rest of the market. Yet HAS still broke down under support and hit our trigger to buy puts at $32.25. The play is now open. Our target is the $27.65 mark. Don't be surprised to see a temporary bounce near $30.00. More aggressive traders may want to aim lower but we don't want to hold over the late October earnings report. FYI: The P&F chart is bearish with a $24 target.

Picked on October 06 at $ 32.25 *triggered 10/06/08
Change since picked: - 0.53
Earnings Date 10/20/08 (unconfirmed)
Average Daily Volume = 2.1 million

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Sears Holding - SHLD - cls: 85.74 chg: -1.58 stop: 95.15

I am very surprised that shares of SHLD did not show more weakness today. The stock only lost 1.8% and failed to close under its 100-dma. At this point I half expect a bounce back toward the $90.00 level. Speaking of which a failed rally near $90.00 would be a new entry point for puts. We have two targets. Our first target is $81.00. Our second target is $76.00. The Point & Figure chart is bearish with a $77 target.

Picked on October 01 at $ 89.04
Change since picked: - 3.30
Earnings Date 11/28/08 (unconfirmed)
Average Daily Volume = 3.1 million

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Volatility Index - VIX - cls: 52.05 chg: + 6.91 stop: n/a

Wow! The volatility index just exploded higher today. This fear gauge hit 58.24 intraday. That was the highest level since October 1998 (high of 60.63). This is higher than the post-internet-bubble sell-offs where the VIX hit the 40s, higher than the post-9/11 sell-off (VIX hit 57.31). This is an extremely rare event and levels this high should be predicting some sort of bottom soon. If I had to make one bet today it would be a contraction in the VIX back to the 40-35 zone, which are still considered high. Aggressive traders could buy the October or November 40 puts. Our September 16th put position (suggested entry at 30.30) has a 25.50 target. The September 29th position (suggested entry at 46.72) has two targets at 36.00 and 31.00.

Picked on September 16 at = 30.30 first position
Change since picked: +21.75
Picked again Sept. 29 at = 46.72 second position
Changed since picked: + 5.33
Earnings Date 00/00/00
Average Daily Volume = --- million
 

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

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Financial Sector SPDR - XLF - cls: 17.80 chg: -0.98 stop: n/a

A meltdown in the foreign markets led to a steep sell-off here in the states. Financial stocks were some of the worst performers. The XLF opened at $18.02 and dipped to $17.23 before bouncing. The October $18 put hit a high of $1.74. We are not suggesting new positions at this time. This is a two-week bet that financials will see some big movement following the approval of the bailout bill. We suggested the October $22.00 call (XLF-JV) and the October $18.00 put (XLF-VR). Our estimated cost was $1.54. We want to sell if either option hits $2.25.

Picked on October 02 at $ 19.64
Change since picked: - 1.84
Earnings Date 00/00/00
Average Daily Volume = 222 million
 

Dropped Calls

Citigroup - C - close: 17.41 change: -0.94 stop: 17.45

Financial stocks were crushed again on Monday as investors ran in fear. Rising concerns about the depth of a global slowdown and a continuously frozen credit market, in spite of the recent bailout legislation, all played a part in the worldwide sell-off. Meanwhile the exploding merger triangle between C, WB, and WFC certainly casts more shadows and uncertainty over C. The stock vaulted right past our stop loss with a gap open lower at $17.23. We would have been stopped out at the open. Pressure from the Federal Reserve has pushed C, WB and WFC to temporarily halt all current litigation as regulators try and broker another deal, possibly carving up WB between its two suitors.

Picked on October 05 at $ 18.35 /stopped 17.23/gap down exit
Change since picked: - 0.94
Earnings Date 10/16/08 (confirmed)
Average Daily Volume = 109 million

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JPMorgan Chase - JPM - close: 44.00 change: -1.90 stop: 44.45

Massive one-day drops in Asian and European markets lead to a fearful open in the U.S. on Monday. Shares of JPM gapped open lower at $43.49, which was under our stop loss at $44.45. We would have been stopped out immediately. Traders decided to buy the dip near JPM's 200-dma but it looks like nothing more than an oversold bounce.

Picked on September 30 at $ 46.70 /stopped 43.49/gap down exit
Change since picked: - 2.70
Earnings Date 10/15/08 (unconfirmed)
Average Daily Volume = 50.6 million

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Wells Fargo - WFC - close: 33.64 change: -0.92 stop: 32.95

Shares of WFC followed the trend in banks this morning with a gap open lower. The stock rallied back toward $35.00 before sinking through the next five hours. Shares hit our stop loss at $32.95. Putting additional pressure on shares of WFC was uncertainty surrounding the Wachovia deal. A major legal battle was about to erupt between C, WB, and WFC but the Federal Reserve pushed all parties to temporarily halt their legal action until Wednesday while they try to work out a deal.

Picked on September 30 at $ 37.53 /stopped out 32.95
Change since picked: - 3.89
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume = 54.5 million
 

Dropped Puts

Whirlpool - WHR - close: 70.10 change: -1.03 stop: 80.01

WHR has exceeded our second target. The stock gapped open lower at $68.81 and fell to $66.15 before bouncing back. Our secondary target was $70.25. We would keep an eye on WHR for the coming oversold bounce to fail.

Picked on October 01 at $ 83.00 *triggered 10/01
Change since picked: -12.90 /1st target hit 10/03
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 1.6 million
 

Dropped Strangles

None
 

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