Editor's Note:

Quadruple-witching Friday did see a little volatility on Friday morning but stocks produced a slow fade lower into the weekend.

SPW was triggered. RIG was stopped out.

I have removed CERN. We are suggesting an early exit on CNQR and ULTI.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 114.21 change: +0.48

Stop Loss: 109.40
Target(s): 118.50
Current Option Gain/Loss: +73.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/22/12: ALXN continues to show relative strength and set another new high on Friday. Shares are arguably somewhat short-term overbought here. I would not be surprised to see a dip toward $112.00. More conservative traders may want to take profits now with our call up +73%. 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

chart:

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


Concur Technologies - CNQR - close: 74.43 change: -0.11

Stop Loss: 73.40
Target(s): 74.75 (Sept calls), $77.50 (Nov calls)
Current Option Gain/Loss:(Sep75c: +40.0%) & Nov75c: + 5.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/22/12: We are choosing an early exit on CNQR. The long-term trend is up but short-term the stock has gone sideways for more than two weeks.

I am suggesting an early exit on Monday morning at the opening bell. We can keep CNQR on our radar screen for a pull back toward support (maybe $70 or maybe the 100-dma) as a potential entry point for a new trade.

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

- 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

09/22/12 prepare to exit remaining positions on Monday at the opening bell
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

chart:

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


Commvault Sys. - CVLT - close: 57.17 change: +0.70

Stop Loss: 53.90
Target(s): 59.85
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/22/12: CVLT soared on Friday morning with a quick rally of more than two dollars. Yet momentum faded before lunchtime and CVLT gave back almost all of its gains. I didn't see any specific news behind the rally. The fade back is certainly disappointing. Shares should still have short-term support near $56 and the 10-dma. More conservative traders may want to raise their stops.

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

- Suggested Positions -

Long Oct $60 Call (CVLT1220j60) Entry $1.24

chart:

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


Flowserve Corp. - FLS - close: 132.02 change: -0.51

Stop Loss: 129.75
Target(s): 139.50
Current Option Gain/Loss: -27.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/22/12: FLS also spiked higher on Friday morning and then reversed to give back all of its gains and more. I suspect we could see FLS pullback toward what should be support near $130. At this point I would wait for a bounce near $130 before considering new bullish positions.

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

chart:

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


McDonald's Corp. - MCD - close: 93.71 change: +0.56

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: - 0.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/22/12: MCD continued to post gains on Friday and outperformed much of the market with a +0.6% gain. This was in spite of news that MCD and its rival YUM Brands were temporarily closing stores in Pakistan due to rising anti-American protests and violence.

Shares of MCD have rallied to the next level of resistance near $94.00 and another trend line of lower highs. I would expect a pullback here. We can look for a dip (maybe near $92.50-92.00) as our next bullish entry point.

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

09/22/12 I suspect MCD will see a pullback here.

chart:

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


SPX Corp. - SPW - close: 68.07 change: -0.81

Stop Loss: 66.45
Target(s): 74.50
Current Option Gain/Loss: -38.4%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
09/22/12: Our new trade on SPW is open but our entry point did not work out as planned. We listed a trigger to buy calls at $69.25. Yet SPW gapped open higher on Friday morning at $69.52. So our trade opened on the gap higher. Unfortunately the rally in SPW failed at technical resistance at its simple 150-dma, just under the $70.00 level. The spike higher and reversal is short-term bearish. I would look for a new dip toward the $67.00 level. Wait for SPW to bounce before considering new bullish positions. Nimble traders could look for an intraday bounce in the $67.00-66.50 area as an entry point.

Our target is $74.50. The Point & Figure chart for SPW is bullish with an $85 target.

- Suggested Positions -

Long Oct $70 call (SPW1220j70) Entry $1.95

09/21/12 triggered on gap open higher at $69.52. Trigger was $69.25.

chart:

Entry on September 21 at $69.52
Average Daily Volume = 622 thousand
Listed on September 20, 2012


The Ultimate Software Group - ULTI - close: 99.00 change: -1.06

Stop Loss: 97.85
Target(s): 106.00 or 109.50
Current Option Gain/Loss: -59.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/22/12: The long-term trend for ULTI is bullish but short-term the stock looks vulnerable. Shares have been moving sideways this past week. That's not a surprise given the sideways move in the major indices. However, Friday's performance looks like a bearish reversal.

We are suggesting an early exit on Monday morning.

- Suggested Positions -

Long Oct $105 call (ULTI1220j105) Entry $2.45

09/22/12 prepare to exit on Monday morning
09/19/12 new stop loss @ 97.85

chart:

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


Vertex Pharma. - VRTX - close: 59.04 change: +0.91

Stop Loss: 54.75
Target(s): 59.90
Current Option Gain/Loss: + 7.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/22/12: So far so good. VRTX continues to rally. Shares hit $59.50 intraday on Friday. Our exit target is $59.90 but more aggressive traders may want to aim higher. I am concerned that the $60.00 level might be resistance.

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

chart:

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


Watson Pharmaceuticals - WPI - close: 83.90 change: -0.32

Stop Loss: 82.75
Target(s): 88.50
Current Option Gain/Loss: -22.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/22/12: Hmm... it seems a gap open higher and then a slow fade lower the rest of the session was a popular pattern on Friday. WPI participated although it was a relatively low-volatility day. The stock could see a bit more volatility on Monday because after the bell on Friday afternoon the company announced a voluntary recall.

WPI said that some of its Hydrocodone Bitartrate and APAP tablets were the wrong color and might have an inaccurate amount of active ingredients. WPI recalled two lots of these pills. Shares did see a spike down toward $83.00 after hours on Friday.

I would not open new positions at this time. We'll see how shares act on Monday and re-evaluate.

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

chart:

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


PUT Play Updates

O'Reilly Automotive - ORLY - close: 83.89 change: -0.19

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:
09/22/12: Aggressive traders may want to buy puts on ORLY right now. The stock's oversold bounce just failed at resistance near $85.00 on Friday. Aggressive traders could buy puts now with a stop just above Friday's high (which was $85.11).

The newsletter is still waiting for a breakdown under support at $80.00 as our entry point. 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)

09/22/12 aggressive traders may want to buy puts now with a stop above Friday's high. We are keeping our trigger at $79.75.

chart:

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


CLOSED BEARISH PLAYS

Cerner Corp. - CERN - close: 74.46 change: +0.85

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:
09/22/12: The rebound in CERN continues. Shares are now above technical resistance at their 50-dma. I am removing CERN as a candidate. Our play never opened.

Trigger @ 69.65

Trade did not open.

09/22/12 removed from the newsletter. trade did not open.

chart:

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


Transocean Ltd. - RIG - close: 48.55 change: +2.17

Stop Loss: 46.80
Target(s): 42.00
Current Option Gain/Loss: -42.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
09/22/12: RIG has blown up on us! We waited patiently for shares to break to a new relative low. Our trade was opened on Sept. 18th at $45.40. Then on Thursday shares saw a big bounce on news of a new contract and news that Petrobras was lending RIG some legal help in the company's fight with Brazilian officials over the country's outright ban on RIG's ability to do business in the country. The short covering continued on Friday. I warned readers that RIG looked poised to hit our stop loss on Thursday. Instead of hitting our stop loss at $46.80 the stock gapped right over it with an open at $47.44 on Friday morning. RIG dipped low enough to fill the gap and then took off again to post a +4.6% gain on the session.

- Suggested Positions -

Nov $45 PUT (RIG1217w45) Entry $2.45 exit $1.40 (-42.8%)

09/21/12 stopped out on gap open higher at $47.44
09/18/12 triggered at $45.40

chart:

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