Editor's Note:

Tech giant IBM disappointed investors with their earnings report tonight. The headline EPS number was better than expected but revenues were a miss on falling sales growth. The tech sector could gap open lower tomorrow morning.

Another surprise after the closing bell was an earnings warning from IM. Shares of IM are also poised to gap open lower.

We have removed IBM and IM as potential trades. Our SPW trade is on hold, no entry point for tomorrow.

If you have bullish positions open I would double check your stop loss placement. Odds are the market could see a sharp spike down at the open. You might want to raise your stop to protect profits or limit risk.

-James

Current Portfolio:


CALL Play Updates

Alexion Pharma - ALXN - close: 66.21 change: -0.59

Stop Loss: 64.90
Target(s): 74.00
Current Option Gain/Loss: -39.0%
Time Frame: exit on Wednesday 10/19 at the close
New Positions: see below

Comments:
10/17 update: ALXN held up pretty well today. Shares lost -0.8% versus -1.9% in the NASDAQ. We are running out of time though. The plan is to exit on Wednesday at the close to avoid holding over earnings on Thursday morning. I am not suggesting new positions at this time.

(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

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: 60.25 change: -0.28

Stop Loss: 58.90
Target(s): 64.75
Current Option Gain/Loss: -20.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
10/17 update: BBBY is providing a dip toward short-term support at $60.00 today. I would be tempted to buy calls right here but I'm concerned the market will drop tomorrow on disappointing earnings news (not from BBBY). If we see BBBY bounce near $60 or open positive then I would go ahead and buy calls.

*Small Positions*- Suggested Positions -

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

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: 24.86 change: -1.25

Stop Loss: 24.45
Target(s): 29.50
Current Option Gain/Loss: +35.9%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/17 update: Uh-oh! HPQ was an underperformer today. Shares dropped -4.7% and closed under what should have been support near $25.00. The reason is concern over flooding in Thailand, which will impact production of hard-disk drives by Western Digital (WDC), who is a major supplier to HPQ. WDC closed down -7.3%. On top of this investors are disappointed with IBM's results out tonight. This will put pressure on all the major tech stocks. Shares of HPQ could gap open lower tomorrow morning. There is a good chance that HPQ will hit our stop loss at $24.45 tomorrow. I am not suggesting new positions at this time.

- Suggested Positions -

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

10/17 HPQ could gap open lower tomorrow on IBM's earnings news
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

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


SPX Corp. - SPW - close: 50.71 change: -2.25

Stop Loss: 49.90
Target(s): 57.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/17 update: Our trade on SPW is not open yet. Both the stock and the S&P 500 index opened lower this morning. Shares of SPW underperformed with a -4.2% drop and a close under its 50-dma. The $50.00 level could be support but I'm not betting on it tonight. We will temporarily put our entry point strategy on hold as we wait to see how the market reacts to earnings news tomorrow (from IBM tonight and GS tomorrow morning).

Nimble traders may want to look for a dip near $48 or $47 as a potential entry point.

Repeat: No Entry Point for Tomorrow.

*See Entry Details Above* (Small Positions)

10/17 Trade not open. Remove entry point for 24 hours, then re-evaluate.

Entry on October xx at $ xx.xx
Earnings Date 11/02/11 (unconfirmed)
Average Daily Volume = 701 thousand
Listed on October 15, 2011


PUT Play Updates

Edwards Lifesciences - EW - close: 68.53 change: -3.47

Stop Loss: 72.30
Target(s): 66.00
Current Option Gain/Loss: +17.0%
Time Frame: exit prior to earnings on Oct. 19th
New Positions: see below

Comments:
10/17 update: It was a good day for bears. Shares of EW underperformed the market with a -4.8% drop and a close at its lows for the session. That's a good sign for tomorrow. Remember, we plan to exit on October 19th at the closing bell, assuming shares do not hit our target at $66.00 first.

New stop loss at $72.30.

- Suggested Positions -

Long NOV $65 PUT (EW1119W65) Entry $2.05

10/17 new stop loss @ 72.30
10/15 plan to exit before earnings on Oct. 19th.
10/13 EW gapped open lower at $70.29

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


Goldman Sachs - GS - close: 96.90 change: +0.17

Stop Loss: n/a
Target(s): TBD
Current Option Gain/Loss: +0.0%
Time Frame: less than 5 days
New Positions: see below

Comments:
10/17 update: GS managed to buck the market's downtrend today. Investors were not interested in selling or buying as they waited for results from GS' earnings report tomorrow morning. It was our plan to open bearish positions at the closing bell. GS will most likely gap open several points higher or lower as traders react to the earnings news tomorrow. More conservative traders will want to consider exiting early on the opening spike.

I will set our initial exit target at $86.00 and we'll readjust it tomorrow. No new positions at this time.

*Buy Puts at the CLOSE on Monday*

- Suggested Positions -

Long OCT $95 PUT (GS1122V95) Entry $2.30

- or -

Long OCT $90 PUT (GS1122V90) Entry $0.94

Entry on October 17 at $96.90
Earnings Date 10/18/11 (confirmed)
Average Daily Volume = 7.9 million
Listed on October 15, 2011


CLOSED BULLISH PLAYS

Ingram Micro - IM - close: 18.72 change: -0.38

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

Comments:
10/17 update: Look out below! IM was not due to report earnings until October 27th. Yet the company released an earnings warning after the closing bell tonight. Earnings per share will be significantly below what Wall Street was looking for thanks to soft demand in the quarter. Shares of IM are trading under $17 in after hours markets.

I am removing IM as a candidate. Our trigger to open positions was not hit.

Trigger @ $19.25 (small positions!)

Trade Was Not OPEN.

10/17 IM issues earnings warning after the closing bell

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


CLOSED BEARISH PLAYS

Intl. Business Machines - IBM - close: 186.59 change: -3.94

Stop Loss: n/a
Target(s): TBD
Current Option Gain/Loss: Unopened
Time Frame: less than 5 days
New Positions: Yes, see below

Comments:
10/17 update: Our speculative trade on IBM will not be triggered tomorrow. Our plan was to buy puts on IBM if shares hit $199.50 on a post-earnings spike tomorrow. Unfortunately the stock delivered a disappointing earnings report tonight and shares are trading down near $179.50 in after hours.

I am removing IBM as a candidate.

Trade will not be opened.

Chart:

Entry on October xx at $ xx.xx
Earnings Date 10/17/11 (confirmed)
Average Daily Volume = 6.6 million
Listed on October 15, 2011