Editor's Note:

Traders need to be careful here. The U.S. markets are short-term overbought. Of course they can always grow more overbought. It could be a case of fund managers chasing performance before their fiscal year-end Oct. 31st.

-James

Current Portfolio:


CALL Play Updates

Alexion Pharma - ALXN - close: 67.38 change: +1.41

Stop Loss: 64.90
Target(s): 74.00
Current Option Gain/Loss: -31.2%
Time Frame: exit on Wednesday 10/19 at the close
New Positions: see below

Comments:
10/15 update: We need to adjust our timeframe for this ALXN trade. Earnings are coming up on Thursday morning (Oct. 20th) and we do not want to hold over the announcement. After big gains last quarter there could be an urge to sell the news. Our trade was opened on Friday morning but unfortunately ALXN underperformed the market on Friday. You could buy this dip but we need to plan on exiting Wednesday at the closing bell.

(Small Positions) - Suggested Positions -

Long NOV $70 call (ALXN1119K70) Entry $3.20

10/15 adjusted time frame. plan to exit on Wednesday
10/14 trade opened

chart:

Entry on October 14 at $68.08
Earnings Date 10/20/11 (confirmed)
Average Daily Volume = 1.9 million
Listed on October 13, 2011


Bed Bath & Beyond Inc. - BBBY - close: 61.17 change: +1.38

Stop Loss: 58.90
Target(s): 64.75
Current Option Gain/Loss: +0.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
10/15 update: The stock market extended its gains on Friday and BBBY managed to breakout past resistance to close at new all-time highs. Our trigger to open bullish positions was hit at $61.00. I would still consider new positions now.

*Small Positions*- Suggested Positions -

Long NOV $62.50 call (BBBY1119K62.5) Entry $1.50

chart:

Entry on October 14 at $61.00
Earnings Date 12/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on October 12, 2011


Hewlett Packard - HPQ - close: 26.11 change: +0.48

Stop Loss: 24.45
Target(s): 29.50
Current Option Gain/Loss: +68.2%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/15 update: It was a bullish week for HPQ with a breakout past its 50-dma. Yet shares have been struggling to escape the $26.00 level. We are going to try and reduce our risk by raising the stop loss to $24.45. I am not suggesting new positions at this time.

- Suggested Positions -

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

10/15 new stop loss @ 24.45
10/11 new stop loss @ 22.90
10/11 planned to sell half at the open
bid 2012 Jan. $24 call @ $3.60 (+68.2%)
10/10 Take some $$ off the table. Sell 1/2 at the open tomorrow
09/27 new stop loss @ 21.45

chart:

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


Ingram Micro - IM - close: 18.86 change: +0.29

Stop Loss: 18.25
Target(s): 21.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/15 update: IM continues to rise. Shares broke through technical resistance at the 200-dma this past week. Now it faces historical price resistance in the $19.00-19.20 zone. We are suggesting a trigger to launch small bullish positions at $19.25 with a stop loss at $18.25. More conservative traders may want to use a tighter stop loss. FYI: The P&F chart has turned bullish with a $25 target.

Trigger @ $19.25 (small positions!)

- Suggested Positions -

buy the NOV $20 call (IM1119K20) current ask $0.50

chart:

Entry on October xx at $ xx.xx
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on October 13, 2011


PUT Play Updates

Edwards Lifesciences - EW - close: 72.00 change: +0.77

Stop Loss: 73.55
Target(s): 66.00
Current Option Gain/Loss: -29.2%
Time Frame: exit prior to earnings on Oct. 19th
New Positions: see below

Comments:
10/15 update: It's tough to own puts when the market is melting higher. EW underperformed the major indices on Friday but it still posted a gain. We are running out of time. EW is due to report earnings on Oct. 19th after the closing bell. We will plan on closing our position on Oct. 19th at the close to avoid holding over the announcement. More conservative traders might want to inch down their stop loss.

- Suggested Positions -

Long NOV $65 PUT (EW1119W65) Entry $2.05

10/15 plan to exit before earnings on Oct. 19th.
10/13 EW gapped open lower at $70.29

chart:

Entry on October 13 at $70.29
Earnings Date 10/19/11 (confirmed)
Average Daily Volume = 1.3 million
Listed on October 12, 2011