Editor's Note:

Stocks extend the oversold bounce to three days in a row. Shorts continue to cover with the market's major indices bouncing back toward resistance. We had both our PNRA and WLT put plays get stopped out.

-James

Current Portfolio:


CALL Play Updates

Alexion Pharmaceuticals - ALXN - close: 65.64 change: +0.93

Stop Loss: 59.90
Target(s): 67.90
Current Option Gain/Loss: +32.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/06 update: Volume on ALXN dropped but shares extended their gains to three in a row. The stock's close above potential resistance at $65.00 is short-term bullish. I am not suggesting new positions at this time.

More conservative traders might want to raise their stop loss.

- 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: 56.45 change: +2.39

Stop Loss: 53.45
Target(s): 55.75 , 57.75
Current Option Gain/Loss: +52.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/06 update: Target achieved. It was a big day for CHKP with the stock's +4.4% gain outperforming the major indices. The breakout past $55.00 and its 100-dma is bullish but CHKP does look short-term overbought now. The top of the gap down near $56.50 could be resistance. Our first target was hit at $55.75. The bid on the October $55 call was near $2.30 (+27.7%). Our final target is $57.75. Please note our new stop loss at $53.45.

- Suggested Positions -

Long OCT $55 call (CHKP1122J55) Entry $1.80

10/06 new stop loss @ 53.45
10/06 1st target hit at $55.75
bid on Oct. $55 call @ 2.30 (+27.7%)
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.

chart:

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: 25.05 change: +1.19

Stop Loss: 21.45
Target(s): 29.50
Current Option Gain/Loss: +58.8%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/06 update: HPQ rallied to new two-week highs with today's +4.9% gain. The rally did stall at round-number, psychological resistance and the mid September high near $25.00. It is worth noting that HPQ is up +14.6% from its Tuesday low. This would be a good spot for the stock to see some profit taking.

I am not suggesting new positions at this time. More conservative traders may want to take a little money off the table. The next level of resistance for HPQ is the $26.25-26.50 zone.

- 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: 70.98 change: +1.37

Stop Loss: 66.80
Target(s): 74.50
Current Option Gain/Loss: +23.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/06 update: Yesterday I was worried that UTX was not participating in the rally. Today shares managed to outperform its peers by a small amount with a +1.9% gain. I want to remind you that conservative traders may want to exit early at technical resistance at the 50-dma (currently 72.70). 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

None. Currently we do not have any active put plays.


CLOSED BEARISH PLAYS

Panera Bread Co. - PNRA - close: 106.80 change: +0.73

Stop Loss: 107.25
Target(s): 98.00, 92.50
Current Option Gain/Loss: Oct$100: -62.8% & NOV$95: -40.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/06 update: PNRA underperformed the market today with a +0.6% gain versus +1.8% for the NASDAQ composite. Yet shares still managed to hit an intraday high of $107.86. Our stop loss was hit at $107.25. PNRA still has a lot of overhead resistance in the $110--115 zone.

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 -

OCT $100 PUT (PNRA1122V100) Entry $3.50 exit $1.30* (-62.8%)

- or -

NOV $95 PUT (PNRA1119W95) Entry $4.60, exit $2.75* (-40.2%)

10/06 stopped out at $107.25
*options did not trade when PNRA hit our stop loss. 10/04 new stop loss @ 107.25.

chart:

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: 63.06 change: +1.76

Stop Loss: 62.05
Target(s): 50.50
Current Option Gain/Loss: -61.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/06 update: WLT opened at $61.86 this morning and very quickly hit our stop loss at $62.05. Shares managed to close above their simple 10-dma, which is short-term bullish. Overall, I am not convinced that this week is a bottom for WLT.

*Small Positions* - Suggested Positions -

OCT $50 PUT (WLT1122V50) Entry $2.95, exit $1.15 (-61.0%)

10/06 stopped out at $62.05

chart:

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