Editor's Note:

Stocks continued to rebound higher on Wednesday. After yesterday's turnaround, technicians have to ask, "is this confirmation of the bullish reversal?"

RBC, a put play, hit our new stop loss this morning, closing the trade.

-James

Current Portfolio:


CALL Play Updates

Alexion Pharmaceuticals - ALXN - close: 64.71 change: +2.03

Stop Loss: 59.90
Target(s): 67.90
Current Option Gain/Loss: +25.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/05 update: ALXN gapped open higher at $63.16 this morning. Nimble traders had an opportunity to buy a dip near $61.00 early this morning on an initial pull back. After churning sideways most of the morning ALXN resumed its rebound and surged to a +3.2% gain on above average volume.

I'm setting our target at $67.90, just under the recent highs. More aggressive traders could aim for the $70.00 area.

- Suggested Positions -

Long OCT $65 call (ALXN1122J65) Entry $2.00

Entry on October 05 at $63.16
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on October 04, 2011


Check Point Software - CHKP - close: 54.06 change: +0.99

Stop Loss: 50.80
Target(s): 55.75 , 57.75
Current Option Gain/Loss: -13.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/05 update: The rebound in CHKP continues but shares stalled near last week's high and potential resistance at its 100-dma. 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: 23.86 change: +0.84

Stop Loss: 21.45
Target(s): 29.50
Current Option Gain/Loss: +27.5%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/05 update: It was a big day for HPQ with a follow up to yesterday's bounce. The stock surged +3.6% today but seemed to run into trouble near the $24.00 level. If HPQ can rally past $24 it would break through the short-term bearish trend of lower highs.

- 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


United Technologies - UTX - close: 69.61 change: +0.07

Stop Loss: 66.80
Target(s): 74.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/05 update: Uh-oh! The lack of action in UTX is a HUGE warning signal. The S&P 500 rose +1.7% and the DJIA rallied +1.2%. Yet UTX barely budged and volume was above average at 9.7 million shares (versus the normal 6.3 million). Today's performance is very disappointing. I am NOT suggesting new positions in UTX at this time.

NOTE: We do not want to hold over UTX's earnings report on Oct. 19th.

- Suggested Positions -

Long OCT $70 call (UTX1122J70) Entry $2.24

Entry on October 05 at $69.61
Earnings Date 10/19/11 (confirmed)
Average Daily Volume = 6.3 million
Listed on October 04, 2011


PUT Play Updates

Panera Bread Co. - PNRA - close: 106.07 change: +0.37

Stop Loss: 107.25
Target(s): 98.00, 92.50
Current Option Gain/Loss: Oct$100: -45.7% & NOV$95: -30.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/05 update: PNRA underperformed the major indices today with a +0.3% gain. The stock hit $107.09 this afternoon before pulling back into the closing bell. Volume was pretty light too suggesting indecision by traders. I am encouraged that PNRA displayed a little relative weakness. Yet the intraday chart shows the stock bouncing twice near $104 today.

We have a stop loss at $107.25. I am not suggesting new positions at this time.

Earlier Comments:
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

10/04 new stop loss @ 107.25.

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


Walter Energy Inc. - WLT - close: 61.30 change: +3.14

Stop Loss: 62.05
Target(s): 50.50
Current Option Gain/Loss: -47.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/05 update: Shares of WLT continue to do what they are good at and that's whipsaw back and forth. The oversold bounce continued to day and WLT surged +5.3%. The stock did stall under short-term resistance at $62.00. Yet if the stock market continues to rally higher tomorrow I would expect WLT to stop us out. I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

Long OCT $50 PUT (WLT1122V50) Entry $2.95

Entry on October 04 at $55.72
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 4.2 million
Listed on October 03, 2011


CLOSED BEARISH PLAYS

Regal-Beloit - RBC - close: 47.52 change: +2.65

Stop Loss: 46.25
Target(s): 43.50, 40.50
Option Gain/Loss: (wide spreads) Oct$45: + 45.0% & Nov$45: +10.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/05 update: The oversold bounce in RBC continued on Wednesday and shares hit our new stop loss at $46.25. Readers may want to keep RBC on their watch list for a failed rally near resistance at $50.00 as a new bearish entry point.

Earlier Comments:
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)

OCT $45 PUT (RBC1122V45) Entry $1.00, exit $1.45 (+45.0%)

- or -

NOV $45 PUT (RBC1119W45) Entry $2.30, exit $2.55 (+10.8%)

10/05 stopped out at $46.25
10/04 new stop loss @ 46.25, readers may want to just exit early now
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