Editor's Note:

Disappointing PMI results from Europe sparked some profit taking this morning but U.S. equities managed a bounce off the intraday lows.

Traders should bear in mind that tomorrow (Friday) is quadruple-witching expiration. Equity stock options, index options, index futures and single-stock futures all have expirations tomorrow (or after tomorrow's close).

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 113.73 change: -0.24

Stop Loss: 109.40
Target(s): 118.50
Current Option Gain/Loss: +30.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/20/12: ALXN spent Thursday's session consolidating sideways. If the stock were to correct we could look for short-term support at the 10-dma near $111 and the $110 level. Please note that I am raising our stop loss to $109.40. 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

09/20/12 new stop loss @ 109.40
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: 74.54 change: -0.22

Stop Loss: 73.40
Target(s): 74.75 (Sept calls), $77.50 (Nov calls)
Current Option Gain/Loss:(Sep75c: +40.0%) & Nov75c: + 8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/20/12: CNQR has been slowly drifting lower all week but the stock remains inside its $74-76 trading range.

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


Commvault Sys. - CVLT - close: 56.47 change: +0.13

Stop Loss: 53.90
Target(s): 59.85
Current Option Gain/Loss: -11.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/20/12: Today looks a lot like yesterday with a tiny bit of volatility at the open and then a sideways churn. Traders did buy the dip at its rising 10-dma. Bigger picture I remain bullish here and would use the intraday bounce as a new bullish entry point to buy calls.

Our exit target is $59.85. More aggressive traders could aim higher.

- Suggested Positions -

Long Oct $60 Call (CVLT1220j60) Entry $1.24

Entry on September 20 at $56.07
Average Daily Volume = 427 thousand
Listed on September 19, 2012


Flowserve Corp. - FLS - close: 132.53 change: -0.22

Stop Loss: 129.75
Target(s): 139.50
Current Option Gain/Loss: -13.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/20/12: FLS gapped down at the open this morning but there wasn't much follow through. The stock bounced off its intraday low of $131.00. Readers can use this dip as a new 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: 93.15 change: +0.32

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: -11.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/20/12: MCD is holding up reasonably well. The company had good news for shareholders today. MCD is raising its quarterly cash dividend by +10% to 77 cents a share.

I don't see any changes from my prior comments. I suspect MCD could see a dip toward $92 soon. 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: 100.06 change: -0.19

Stop Loss: 97.85
Target(s): 106.00 or 109.50
Current Option Gain/Loss: -46.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/20/12: Today was rather boring for ULTI. Shares just churned sideways on either side of support/resistance at the $100.00 mark. Readers may want to wait for a new rally past $101.00 before considering new bullish positions.

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: 58.13 change: +0.23

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:
09/20/12: There is no change from my prior comments on VRTX. The stock is still struggling with resistance near $58.00 as it consolidates sideways. 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


Watson Pharmaceuticals - WPI - close: 84.22 change: +0.49

Stop Loss: 82.75
Target(s): 88.50
Current Option Gain/Loss: - 6.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/20/12: Our new trade on WPI has been triggered. Shares broke out from their $81-84 trading range and hit our entry point to buy calls at $84.25. I would still consider new positions now.

FYI: The Point & Figure chart for WPI is bullish with a long-term $105 target.

- Suggested Positions -

Long Oct $85 call (WPI1220j85) Entry $1.55

Entry on September 20 at $84.25
Average Daily Volume = 1.0 million
Listed on September 19, 2012


PUT Play Updates

Cerner Corp. - CERN - close: 73.61 change: +0.36

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:
09/20/12: CERN is still bouncing. Shares are testing resistance near $74.00 and its simple 50-dma. If shares close over $74.00 we'll probably drop it as a bearish 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: 84.08 change: +1.60

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:
09/20/12: The bounce in ORLY continues with its fourth gain in a row. The stock is nearing what should be resistance in the $85 area. If shares clear $85 we'll probably drop it as a candidate. 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: 46.38 change: +1.11

Stop Loss: 46.80
Target(s): 42.00
Current Option Gain/Loss: -22.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
09/20/12: Many of the big oil stocks were up today. Shares of RIG outperformed the market with a +2.4% bounce. This may have been a reaction to news that Brazilian oil giant Petrobras is helping RIG in a legal battle against the Brazilian government. The Brazilians found RIG to be at fault on a recent oil spill. The government has banned RIG from operating in the country. It was a serious blow for RIG and one of the reasons we added it as a bearish candidate. However, today Petrobras announced it was using its legal team to help RIG overturn the ban since seven of RIG's ten drilling units are currently being leased to Petrobras. Some have claimed the "ban" on RIG was a grandstanding political move by current leaders to look tough for an upcoming midterm election.

If there is any follow through higher in RIG tomorrow it will likely hit our stop loss at $46.80.

- 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