Editor's Note:
We had solid movement today in our positions. RIG was closed for a healthy +86% gain. Short positions were opened in DIA and PNC. Our portfolio is leaning more bearish than bullish so we are looking to take advantage of a healthy market correction.

Current Portfolio:


CALL Play Updates

Petroleo Brasileiro - PBR - close 36.27 change +0.55 stop 33.70

Target(s): 37.40, 38.65
Key Support/Resistance Areas: 39.00, 37.50, 36.60, 34.00
Current Gain/Loss: +8%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
9/30: PBR gapped higher, sold off, and surged higher into the close as the broader market headed lower. The stock has now broken and closed above its primary downtrend line from its December highs and is above all of its moving averages. Today's rally off of the stock's lows is encouraging but I am concerned of a broader market correction. The remainder of my comments below remain the same.

9/29: PBR is hanging tough but I am concerned of a broader market pullback, which readers may want to consider as a buying opportunity. I believe our stop is in the right place but we may have to exhibit some patience if there is a pullback. Tighter stops could be considered in the $34.35 to $34.65 area.

9/28: PBR consolidated yesterday's gains, closing marginally lower. We are looking for the short interest to unwind which should cause the stock to spike higher. Be prepared to take profits or tighten stops to protect them as our target approach.

9/25: PBR gapped lower on Friday which improved our entry price into the position. All reports indicate the secondary offering was a success and was priced near the market. We are looking for the short interest to unwind which should cause a quick pop in the stock. Our stop is in place if we are wrong.

Suggested Position: Long November $37.00 CALL, entry was at $1.25

Entry on September 25, 2010
Earnings 11/11/2010 (unconfirmed)
Average Daily Volume: 13 million
Listed on September 23, 2010


STEC, Inc. - STEC - close 12.45 change -0.27 stop 12.05

Target(s): 14.15, 14.65
Key Support/Resistance Areas: 14.80, 14.15, 13.45, 12.15
Current Gain/Loss: -34%
Time Frame: 1 to 2 weeks
New Positions: Neutral (only with a tight stop)

Comments:
9/30: STEC bounced on an upward trend line that started on 8/31 and closed near its rising 20-day SMA. However, there is no doubt our position is in trouble, especially if the broader market corrects. STEC has to deal with resistance at $13.40 and its declining 50-day SMA. Readers should use caution and consider exiting the trade on strength if our stop is not hit first.

9/28 & 9/29: STEC has pulled back from big gains late last week. We may need to exhibit patience as the broader market determines its next direction. I like new positions at current levels.

9/25: The storage sector has been beaten down and is due for a comeback if the broader market cooperates. STEC bounced hard off of its 20-day SMA on Thursday and is forming an ascending triangle on its daily chart. I suggest readers initiate long positions if STEC pulls back to $13.10 or breaks higher to $13.50, whichever occurs first. We are targeting a move up to its congestion areas from April and June. If triggered at $13.10, our profit target on option positions is +50% to +75%.

Current Position: Long November $14.00 CALL, entry was at $0.96

Entry on September XX
Earnings 11/03/2010 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on September 25, 2010


iPath S&P 500 VIX ST Futures - VXX - close 17.29 change +0.36 stop 16.23

Target(s): 17.55, 18.45, 19.25
Key Support/Resistance Areas: 17.50, 19.75, 20.60
Current Gain/Loss: +8%
Time Frame: 1 to 2 weeks
New positions: Yes

Comments:
NOTE: I view this as an aggressive trade so small position size is recommended. Long VXX is a bearish play on equities, however, it is listed as long play because we are long the underlying instrument.

9/30: As the market spiked higher this morning volatility never really budged which was a signal the spike could fail, and it did. The question now is whether or not there will be follow through lower in the coming days. I believe there will be but I also think trading could be choppy which may fake traders out of positions. If we are patient our targets should be reached as the market is need of healthy correction. I suggest readers use further spikes in VXX as opportunities to take profits or tighten stops to protect them. My primary targets are $18.45 and $19.25. Our stop is in place.

9/29: Volatility broke an intraday downtrend line but still need to get above Wednesday's highs, which will come if there is broader market weakness. My comments below remain the same.

9/28: Volatility carried into this morning but reversed lower as the bulls stepped in pushing stocks back toward their highs. I want to add a target of $17.55 which should be considered as a place to take profits or tighten stops to protect them. We have a tight stop which will most likely get hit if the broader market continues higher in the coming days.

Current Position: Long November $18.00 CALL, entry was at $1.25

Entry on September 22, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 21 million
Listed on September 21, 2010


PUT Play Updates

Archer Daniels Midland - ADM - close 31.92 change -0.65 stop 33.20

Target(s): 32.20 (hit), 31.50, 31.00
Key Support/Resistance Areas: 33.50, 31.00, 29.80
Current Gain/Loss: -0.00%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
9/30: ADM collapsed -2% today and has now made a lower high, which was confirmed with a lower low today. The stock lost -2% and I believe there could be more downside to come, especially if the market corrects. ADM often moves without the broader market so it could correct anyway. Our position is back to breakeven but I'm looking for a small gain. Our remaining targets are $31.50 and $31.00 (raised 15 cents to account for the rising 50-day SMA). I think we will see these levels in the coming days. Readers should continue to look for an exit as time decay is starting to affect our option premium.

9/29: ADM turned lower right where it should have today. I am looking for more downside especially if the broader market pulls back which will likely determine how far this goes. I suggest exiting on weakness in the stock as time decay is going to start to eat away at our premium. $33.20 is our stop. Readers should use caution. My comments below remain the same.

9/28: ADM is testing the backside of a broken intraday upward trend line and a downward trend line (which remains in tact). This is the logical spot for the stock to head lower and make another lower low. $32.20 is still a valid target, although $31.50 (raised 20 cents) looks very doable if the broader market pulls back.

Current Position: Long October $32.00 PUT, entry was at $0.82

Entry on September 20, 2010
Earnings: 11/2/2010 (unconfirmed)
Average Daily Volume: 6 million
Listed on September 18, 2010


SPDR DJIA ETF - DIA - close 107.91 change -0.40 stop 110.55

Target(s): 106.55, 105.40
Key Support/Resistance Areas: 112.00, 110.00, 107.30, 106.40, 105.00
Current Gain/Loss: +20%

Time Frame: 1 to 3 weeks
New Positions: Yes

Comments:
9/30: Well, I guess sticking with the higher entry was the right call, but nonetheless, I still like our entry as we have already gained +20% on our position. My comments from the play release on 9/28 remain the same.

9/29: Let's lower the trigger to $108.80 in DIA. My comments below have not changed.

9/28: Stocks have been flowing into large caps and I believe they are due for a decline after the quarter ends which is Thursday. I also think the broader markets may see a false breakout tomorrow which will head fake late comers to the party into long positions. I suggest readers enter long positions if DIA trades to $108.85 (updated), which is near the highs DIA printed after the flash crash before the DJIA plunged more than -1,000 points. If triggered, our profit targets on options positions are +50% to +75%.

Current Position: Long November $105.00 PUT, entry was at $1.75 $1.70

Entry on September 30, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 6.5 million
Listed on September 25, 2010


PNC Financial - PNC - close 51.91 change +0.10 stop 54.62

Target(s): 49.50, 48.75, 47.25
Key Support/Resistance Areas: 54.50, 53.50, 50.50, 49.50, 48.75, 47.00
Current Gain/Loss: +4%
Time Frame: 1 to 2 weeks
new Positions: Yes

Comments:
9/30: We are long November $48 PUTS as of today's open. We are looking for a $2 to $3 move lower in the stock. Our stop is above resistance in the $53 to $54 level. My comments below have not changed.

9/29: Financials continue to trade terrible and PNC looks ready for quick spike lower as the broader market pulls back. The stock has formed a bear flag over the past 5 days and is trading below its 20-day SMA. I suggest readers initiate short positions at current levels. The primary target is $48.75 which is a $3 move lower. If reached, the profit target on our option position is approximately +65%. I suggest keeping a loose initial stop on the position to account for volatility as the quarter winds down.

Current Position: Long November $48.00 PUT, entry was at $1.26

Entry on September 30, 2010
Earnings: 10/20/2010 (unconfirmed)
Average Daily Volume: 5 million
Listed on September 29, 2010


Charles Schwab - SCHW - close 13.90 change -0.05 stop 14.42

Target(s): 13.45, 13.10, 12.85
Key Support/Resistance Areas: 14.10, 13.35, 13.05, 12.65
Current Gain: -40%
Time Frame: 1 to 3 weeks
New Positions: Yes

Comments:
9/30: SCHW held up relatively well today and closed down only 5 cents. The good news is that our stop is in the right place as SCHW traded up to $14.40 and collapsed -50 cents (-3.4%), closing near its lows of the day. This could be the start of a multi-day decline which should get our position back in positive territory.

9/29: SCHW backed off of its 50-day SMA and closed down -1.70% on the day. The stock now needs break down through its 20-day SMA which should catapult the stock towards our first target. If the broader market corrects it should easily happen. There were also more than 5,000 March 2011 puts purchased at the $13 strike today so it appears someone with deep pockets thinks the stock is due for a decline. We just need it to happen sooner rather than later.

9/28: SCHW traded up to its 50-day SMA today and closed just below it. We are very close to being stopped out which will probably happen if there is broader market strength. I've adjusted the targets and suggest readers begin to exit positions on weakness if the stock turns lower from here.

Current Position: Long November $13.00 PUT, entry was at $0.50

Entry on September 23, 2010
Earnings: 10/14/2010 (unconfirmed)
Average Daily Volume: 11 million
Listed on September 22, 2010


CLOSED BULLISH PLAYS

Transocean Ltd - RIG - close 64.29 change -0.84 stop 63.90

Target(s): 62.95 (hit), 64.40 (hit), 65.65 (hit), 66.50
Key Support/Resistance Areas: 55.50, 58.25, 63.90, 64.90
Final Gain/Loss: +86.67%
Time Frame: 2 to 4 weeks
New Positions: Closed

Comments:
9/30: Per last night's updates RIG traded to $65.65 which is where we took profits for a healthy +86% gain. The stock has had an incredible +18% run since it broke higher on 9/10. The candle pattern printed today is called a dark cloud cover which indicates a decline is imminent so I urge readers who still have positions to protect profits. RIG is probably another buy in the $60 to $62 area.

9/29: RIG surged another +3% today and it is time to fiercely protect profits as we currently have a +70% gain. Let's move the stop all the way up $63.90. I've also added a target of $65.65 which is where I highly suggest taking profits or tightening stops to protect them.

Current Position: Long November $65.00 CALL $4.20, entry was at $2.25

Annotated chart:

Entry on September 13, 2010
Earnings 11/3/10 (unconfirmed)
Average Daily Volume: 8 million
Listed on September 11, 2010