Editor's Note:

Big cap stocks drifted higher but small caps underperformed on Wednesday. Overall the market was left to drift sideways.

We have removed SHW as a candidate.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 113.97 change: +0.89

Stop Loss: 107.75
Target(s): 118.50
Current Option Gain/Loss: +37.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/19/12: ALXN continues to march higher with a +0.7% gain today. Readers may want to start inching up their stop losses. I am not suggesting new positions at current levels.

Our multi-week target is $118.50. FYI: The Point & Figure chart for ALXN is bullish with a $124 target.

- Suggested Positions -

Long Oct $115 call (ALXN1220j115) Entry $2.83

09/15/12 new stop loss @ 107.75

Entry on September 10 at $110.72
Average Daily Volume = 905 thousand
Listed on September 08, 2012


Concur Technologies - CNQR - close: 74.76 change: -0.23

Stop Loss: 73.40
Target(s): 74.75 (Sept calls), $77.50 (Nov calls)
Current Option Gain/Loss:(Sep75c: +40.0%) & Nov75c: +13.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/19/12: CNQR's upward momentum has definitely waned. The stock has been moving sideways for about two weeks now. Shares are in a new $74-76 trading range. More conservative traders may want to tighten their stops or just take profits early.

I am not suggesting new positions at this time.

Earlier Comments:
Our plan was to exit the September $75 calls when CNQR hits $74.75. That target was hit on Thursday, Sept. 6th. Our target to exit the November calls is at $77.50.

- Suggested Positions -

(target hit for Sept calls @ 74.75 on CNQR)
Sep $75 call (CNQR1222i75) Entry $1.25 exit $1.75 (+40.0%)

- or -

Long Nov $75 call (CNQR1217j75) Entry $3.60

09/15/12 new stop loss @ 73.40
09/12/12 new stop loss @ 72.45
09/06/12 target hit for the Sept. calls @ 74.75
09/06/12 new stop loss @ 71.70
09/04/12 adjust exit target for Sept. calls to $74.75
adjust exit target for Nov. calls to $77.50
+ new stop loss @ 71.25
08/21/12 new stop loss @ 69.75
08/16/12 new stop loss @ 68.75
08/15/12 triggered at $70.25

Entry on August 15 at $70.25
Average Daily Volume = 577 thousand
Listed on August 13, 2012


Flowserve Corp. - FLS - close: 132.75 change: +0.87

Stop Loss: 129.75
Target(s): 139.50
Current Option Gain/Loss: - 2.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/19/12: FLS saw a brief spike down under $131.50 and then bounced. The stock recouped about half of yesterday's pullback and outperformed the market with a +0.6% gain today. I would use this bounce as a new bullish entry point.

There is potential resistance in the $135 area but we are aiming for $139.50. The Point & Figure chart for FLS is bullish with a $151 target.

- Suggested Positions -

Long Oct $135 call (FLS1220j135) Entry $2.15

09/18/12 triggered at $132.25

Entry on September 18 at $132.25
Average Daily Volume = 521 thousand
Listed on September 15, 2012


McDonald's Corp. - MCD - close: 92.83 change: -0.25

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: -17.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/19/12: MCD didn't see much movement today. Shares oscillated on either side of the $93.00 level all session. I suspect MCD could see a dip toward $92 soon. Our trade opened this morning but readers may want to wait for a dip into the $92-90 zone as their entry point instead.

This is an aggressive, higher-risk trade. There is still additional resistance at the simple 200-dma, the $94.00 level, and another trend line of lower highs. We want to use small positions to limit our risk.

- Suggested (SMALL) Positions -

Long Oct $92.50 call (MCD1220j92.5) entry $2.00

Entry on September 19 at $93.24
Average Daily Volume = 4.7 million
Listed on September 18, 2012


The Ultimate Software Group - ULTI - close: 100.25 change: -0.18

Stop Loss: 97.85
Target(s): 106.00 or 109.50
Current Option Gain/Loss: -40.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/19/12: ULTI saw an intraday spike lower this morning. Once again traders bought the dip near short-term support at $98.00 and its rising 30-dma. Readers may want to wait for a new rally past $101.00 before considering new bullish positions.

I am raising our stop loss to $97.85.

I am setting two different targets. Our conservative target is $106.00. Our aggressive target is $109.50.

- Suggested Positions -

Long Oct $105 call (ULTI1220j105) Entry $2.45

09/19/12 new stop loss @ 97.85

Entry on September 17 at $100.75
Average Daily Volume = 169 thousand
Listed on September 15, 2012


Vertex Pharma. - VRTX - close: 57.90 change: +0.45

Stop Loss: 54.75
Target(s): 59.90
Current Option Gain/Loss: - 5.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/19/12: Shares of VRTX are coiling for a bullish breakout past resistance near $58.00. As this consolidation narrows VRTX is getting closer and closer to making its move. Our target is $59.90 but more aggressive traders may want to aim higher.

Earlier Comments:
This is a higher-risk trade. You can see from the chart that VRTX has been very volatile over the last few months. We want to limit our position size to reduce our risk.

- Suggested Positions -

Long Oct $57.50 call (VRTX1220j57.5) Entry $3.80

09/15/12 adjust exit target to $59.90
09/13/12 new stop loss @ 54.75
09/06/12 new stop loss @ 54.25
09/06/12 triggered @ 55.75

Entry on September 06 at $55.75
Average Daily Volume = 1.4 million
Listed on September 05, 2012


PUT Play Updates

Cerner Corp. - CERN - close: 73.25 change: +1.81

Stop Loss: 71.25
Target(s): 65.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
09/19/12: CERN continues to bounce after testing support near $70 yesterday. The stock is nearing overhead resistance at its simple 50-dma. If we see shares close over this moving average we will probably drop it as a candidate. Right now I am suggesting a trigger to buy puts at $69.65. We will aim for $65.00.

Trigger @ 69.65

- Suggested Positions -

buy the Oct $70 PUT (CERN1220v70)

Entry on September xx at $ xx.xx
Average Daily Volume = 1.0 million
Listed on September 17, 2012


O'Reilly Automotive - ORLY - close: 82.48 change: +1.31

Stop Loss: 81.55
Target(s): 75.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
09/19/12: ORLY is also seeing a strong bounce after rebounding from support yesterday. Currently we are waiting for a bearish breakdown under support. I am suggesting a trigger to buy puts at $79.75. If triggered our target is $75.10.

Trigger @ 79.75

- Suggested Positions -

buy the Oct $75 PUT (ORLY1220v75)

Entry on September xx at $ xx.xx
Average Daily Volume = 1.5 million
Listed on September 17, 2012


Transocean Ltd. - RIG - close: 45.27 change: +0.12

Stop Loss: 46.80
Target(s): 42.00
Current Option Gain/Loss: - 1.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
09/19/12: It is a little surprising to see RIG posting gains on a day that the price of oil is down sharply. Overall the bounce was pretty mild and I don't see any changes from our prior comments. I would still consider new bearish positions now at current levels.

- Suggested Positions -

Long Nov $45 PUT (RIG1217w45) Entry $2.45

09/18/12 triggered at $45.40

Entry on September 18 at $45.40
Average Daily Volume = 3.1 million
Listed on September 13, 2012


CLOSED BULLISH PLAYS

Sherwin-Williams - SHW - close: 149.05 change: +3.56

Stop Loss: 141.35
Target(s): 149.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/19/12: Sadly it looks like we may have missed the move in SHW. The stock did not dip lower enough to hit our entry trigger. Shares have rallied toward round-number resistance at $150 and already hit our exit target.

Since our trade did not open I am removing SHW from the newsletter. However, readers may want to keep an eye on this stock. Broken resistance in the $145-146 area could be new support. Nimble traders might want to consider buying a dip or bounce in this area.

Trigger @ 144.75

Trade did not open.

09/19/12 trade did not open. removed from the newsletter

chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 814 thousand
Listed on September 15, 2012