Editor's Note:

It was a great day if you're a stock market bear, or long some puts. The morning rebound attempt failed and the stock market accelerated to new lows for the year.

CAT and FLS hit our final targets. RBC hit our first target.

-James

Current Portfolio:


CALL Play Updates

Check Point Software - CHKP - close: 51.70 change: -1.06

Stop Loss: 50.80
Target(s): 55.75 , 57.75
Current Option Gain/Loss: -47.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/03 update: CHKP held support near $51.00 and its exponential 200-dma this afternoon. While this is encouraging there is no guarantee it will hold if the market accelerates lower tomorrow. Readers will want to seriously consider an early exit immediately. I am not suggesting new positions at this time.

- Suggested Positions -

Long OCT $55 call (CHKP1122J55) Entry $1.80

10/03 testing support near $51.00, consider an early exit
10/01 readers may want to consider an early exit now.
09/26 trade opened.

Entry on September 26 at $53.00
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on September 20, 2011


Hewlett Packard - HPQ - close: 22.20 change: -0.25

Stop Loss: 21.45
Target(s): 29.50
Current Option Gain/Loss: - 5.1%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/03 update: The morning bounce in HPQ failed and shares closed on their lows. Yet HPQ only lost -1.1% versus -2.8% in the S&P500. HPQ is now testing support near $22.00. More conservative traders might want to raise their stop loss closer to the $22.00 mark. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2012 Jan. $24 call (HPQ1221A24) Entry $2.14

09/27 new stop loss @ 21.45

Entry on September 23 at $22.52
Earnings Date 11/21/11 (unconfirmed)
Average Daily Volume = 26.6 million
Listed on September 22, 2011


PUT Play Updates

iShares Russell 2000 ETF - IWM - close: 60.99 change: -3.31

Stop Loss: 65.25
Target(s): 60.50, 57.00
Current Option Gain/Loss: Oct$60: +55.9% & Nov$60: +36.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/03 update: Our new IWM put play is off to a fast start. Shares gapped open lower at $63.81, bounced back to almost hit $65.00, and then plunged to $61.00 and a new 52-week low. This ETF ended the session down -5.1%. I am not suggesting new positions at this time. We will lower our stop loss to $65.25.

Our first target to take profits is at $60.50. Our final target is $57.00.

- Suggested Positions - (Small Positions)

Long OCT $60 PUT (IWM1122V60) Entry $1.84

- or -

Long NOV $60 put (IWM1119W60) Entry $3.19

10/03 new stop loss @ 65.25

Entry on October 03 at $63.81
Earnings Date --/--/--
Average Daily Volume = 83.2 million
Listed on October 01, 2011


Panera Bread Co. - PNRA - close: 101.17 change: -2.77

Stop Loss: 108.55
Target(s): 98.00, 92.50
Current Option Gain/Loss: Oct$100: +22.8% & NOV$95: +13.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/03 update: PNRA gapped open lower at $103.01 but traders were in a buy the dip mood. The stock rallied back to $106.76 before reversing again as the market rolled over. PNRA ended the day off -2.6% and poised to test the $100 level. More conservative traders may want to adjust their stop loss toward today's high.

Earlier Comments:
The Point & Figure chart for PNRA is bearish with am $88 target. FYI: I do need to caution readers that the most recent data listed short interest at about 10% of PNRA's small float of approximately 28 million shares. That's above average short interest and a widespread market bounce could spark some short covering.

- Suggested Positions -

Long OCT $100 PUT (PNRA1122V100) Entry $3.50

- or -

Long NOV $95 PUT (PNRA1119W95) Entry $4.60

Entry on October 03 at $103.01
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 574 thousand
Listed on October 01, 2011


Pioneer Natural Res. - PXD - close: 61.82 change: -3.95

Stop Loss: 68.05
Target(s): 60.50, 56.00
Current Option Gain/Loss: Oct$60: +24.0% & Nov$60: +15.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/03 update: Our PXD put play is off to a strong start. Shares gapped open lower at $64.87. Nimble traders got a chance to buy puts on the bounce when PXD rebounded to $65.64 but then the market accelerated lower and PXD plunged to a -6.0% drop.

Please note our new stop loss at $68.05. Our first target to take profits is at $60.50. Our final target is $56.00.

- Suggested Positions - (Small Positions)

Long OCT $60 PUT (PXD1122V60) Entry $2.50*

- or -

Long NOV $60 PUT (PXD1119W60) Entry $4.40

10/03 new stop loss @ 68.05
*Oct. $60 put entry price is an estimate. Option did not trade at the open that morning.

Entry on October 03 at $64.87
Earnings Date 11/01/11 (confirmed)
Average Daily Volume = 1.8 million
Listed on October 01, 2011


Regal-Beloit - RBC - close: 42.97 change: -2.41

Stop Loss: 48.25
Target(s): 43.50, 40.50
Option Gain/Loss: (wide spreads) Oct$45: +190.0% & Nov$45: +86.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/03 update: Target achieved. RBC underperformed the market again. Shares lost -5.3% and closed on its lows for the session. I want to warn readers that RBC is really starting to look short-term oversold here. I'm not suggesting new positions.

The stock hit our first target at $43.50 this afternoon. Our final target is $40.50. Please note I am lowering our stop loss down to $48.25.

Warning! The option spreads are a little wide. We want to keep our position size small to limit our capital at risk.

- Suggested Positions - (small positions)

Long OCT $45 PUT (RBC1122V45) Entry $1.00

- or -

Long NOV $45 PUT (RBC1119W45) Entry $2.30

10/03 new stop loss @ 48.25
10/03 1st target hit @ 43.50
bid Oct $45 put @ $2.50 (+150%)
bid Nov $45 put @ $3.90 (+69.5%)
10/01 new stop loss @ 49.25

chart:

Entry on September 29 at $49.01
Earnings Date 11/02/11 (unconfirmed)
Average Daily Volume = 456 thousand
Listed on September 28, 2011


CLOSED BEARISH PLAYS

Caterpillar Inc. - CAT - close: 70.55 change: -3.29

Stop Loss: 77.25
Target(s): 73.50, 70.50
Current Option Gain/Loss: +135.4%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
10/03 update: Target achieved. CAT broke down to new lows and hit $70.50 late this afternoon. Our second and final target was $70.50. I suggested that more aggressive traders could aim for the $66-64 zone instead.

- Suggested Positions -

OCT $75 PUT (CAT1122V75) Entry $2.93, exit $6.90 (+135.4%)

10/03 final target hit at $70.50
10/01 new stop loss @ 77.25
09/29 1st target hit at $73.50. option bid $5.00 (+70.6%)

chart:

Entry on September 28 at $78.13
Earnings Date 10/24/11 (unconfirmed)
Average Daily Volume = 11.2 million
Listed on September 27, 2011


Flowserve Corp. - FLS - close: 70.00 change: -4.00

Stop Loss: 78.25
Target(s): take profits now, and exit at $70.25
Current Option Gain/Loss: Oct$75: +180% & Nov$70: +135.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/03 update: Target achieved. FLS underperformed the market today with a -5.4% plunge to the $70.00 level. Our final target to exit was hit at $70.25 this afternoon. I suggested that more aggressive traders could aim for a drop toward the $65 area.

- Suggested Positions -

Long OCT $75 PUT (FLS1122V75) Entry $2.50, exit $7.00 (+180%)

- or -

Long NOV $70 PUT (FLS1119W70) Entry $2.80, exit $6.60 (+135.7%)

10/03 Final target hit @ 70.25
option bids at $7.00 and $6.60.
10/03 sell half at the open
bid Oct $75 put @ $4.90 (+96.0%)
bid Nov $70 put @ $5.40 (+92.8%)
10/01 Prepare to take profits ASAP, at the open on Monday
10/01 new stop loss @ 78.25

chart:

Entry on September 29 at $80.23
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 721 thousand
Listed on September 28, 2011