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Call Updates

Freeport McMoran - FCX - close: 38.41 chg: -4.19 stop: 36.85

If you were patient and waited for the dip into the $40-37 range to buy calls on FCX then the sell-off today doesn't sting quite so much. The stock came very close to breaking yesterday's low at $37.00 but investors stepped in to buy the dip. Volume continues to soar as buyers and sellers intensify the tug-of-war around $40. I would still consider new positions here but more conservative traders may want to wait for another rise past $40.00 before initiating positions. Our challenge is what happens Friday morning. Normally when a stock or a market closes at its lows for the session it's a bad omen for the next day's open. It would be extremely frustrating to see FCX dip under $37.00, hit our stop and reverse on us but we have to play with a stop. There is no guarantee that FCX or the market won't drop another 5% or 10% tomorrow. We have two targets. Our first target is $49.90. Our second target is $59.00.

Picked on October 08 at $ 42.60
Change since picked: - 4.19
Earnings Date 10/22/08 (unconfirmed)
Average Daily Volume = 16.5 million

Put Updates

ITT Educational Servc - ESI - cls: 66.00 chg: -6.35 stop: 74.15*new*

ESI under performed the broader market with an 8.7% drop. The move today created a bearish engulfing candlestick. Shares ended with a six-month closing low. We're dropping our stop loss to $74.15, about 25 cents over today's high. Stocks are extremely oversold and sooner, rather than later, the market will see a snap back rally. More conservative traders will want to consider a complete exit right here or tighten your stop toward $73.00. ESI has already hit our target at $67.50. Our secondary target is $61.00 but that might be overly aggressive on a short-term time frame.

Picked on October 06 at $ 73.30 *triggered/gap down
Change since picked: - 7.30 /1st target hit 67.50
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 957 thousand


Hasbro Inc. - HAS - close: 28.74 change: -3.06 stop: 32.05 *new*

It's time to take some profits! The market sell-off hit HAS pretty hard. Shares collapsed under round-number support at $30.00 and closed with a 9.6% loss on big volume. The intraday low was $28.33. We had been aiming for $27.65 and we'll keep that target but we STRONGLY suggest that readers take some profits off the table right here. We are adjusting the stop loss to $32.05. 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: - 3.51
Earnings Date 10/20/08 (unconfirmed)
Average Daily Volume = 2.1 million


Volatility Index - VIX - cls: 63.92 chg: + 6.39 stop: n/a

It's another day in the stock market so that must mean we have another record high in the VIX. I am telling you that this can't keep up for much longer. Remember this is not a "stock". The higher the VIX goes the thinner the air and it will eventually fall. It doesn't have to revert back to 30 or less anytime soon but it will correct sharply. There is the possibility that we see a very volatile and rocky trading range above 40 or above 30, which is historically still very high levels of volatility. I don't see any changes to our previous comments on the VIX.

Unfortunately, we do have sort of a catch 22 with options on the VIX. As the VIX moves higher option premiums expand. Right now options on the VIX are very inflated. When the VIX reverses the option premiums will see some deflation as the air in the fear balloon escapes.

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. Our October 8th position (entry 57.53) has two targets at 40.00 and 35.00.

Picked on September 16 at = 30.30 first position
Change since picked: +33.62
Picked again Sept. 29 at = 46.72 second position
Changed since picked: +17.20
Picked again Octo. 08 at = 57.53 third position
Changed since picked: - 6.39
Earnings Date 00/00/00
Average Daily Volume = --- million

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