Editor's Note:

Overall the market did not move that much but we still ended up closing several trades today.

CNQR and ULTI were closed at the open as planned. VRTX hit our exit target. FLS and VMW hit our stop loss. We are dropping ORLY as a candidate.

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: +41.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/24/12: Positive analyst comments on ALXN this morning were not enough to keep the stock aloft. Shares pulled back to a -1.1% decline. I would not be surprised to see a dip toward the 10-dma or the $110 area. 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


Commvault Sys. - CVLT - close: 56.15 change: -1.02

Stop Loss: 53.90
Target(s): 59.85
Current Option Gain/Loss: -23.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/24/12: CVLT gapped open lower at $56.87 and then dipped toward short-term support near $56.00 and its 10-dma. I would use this pullback to $56 as a new entry point but more conservative traders may want to wait for a bounce first.

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


DSW Inc. - DSW - close: 65.73 change: -1.19

Stop Loss: 64.40
Target(s): 72.50
Current Option Gain/Loss: Oct70c: -50.0% & 2013jan$70c: -27.2%
Time Frame: exit prior to Oct 16th.
New Positions: see below

Comments:
09/24/12: DSW is a new play and our plan was to open positions this morning. Shares gapped open lower at $66.45. Readers can use this pullback as a new entry point given the late afternoon bounce off its intraday lows.

We will tentatively aim for $72.50 but I suspect the $70.00 level might offer some resistance. More conservative traders may want to exit in the $69.50-70.00 zone. We will plan on closing positions prior to Oct. 16th.

- Suggested Positions -

Long Oct $70 call (DSW1220j70) Entry $0.50

- or -

Long 2013 Jan $70 call (DSW1319a70) Entry $2.75

Entry on September 24 at $66.45
Average Daily Volume = 353 thousand
Listed on September 22, 2012


EQT Corp. - EQT - close: 57.90 change: -0.35

Stop Loss: 55.95
Target(s): 63.00
Current Option Gain/Loss: -26.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/24/12: EQT also gapped open lower and then spent the rest of the day churning sideways in a narrow range. I don't see any changes from my weekend comments and would still consider new positions now at current levels.

- Suggested Positions -

Long Oct $60 call (EQT1220j60) Entry $0.61

Entry on September 24 at $ xx.xx
Average Daily Volume = 1.0 million
Listed on September 22, 2012


McDonald's Corp. - MCD - close: 93.71 change: +0.00

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: - 1.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/24/12: MCD recovered from its morning lows to close unchanged on the session. The stock looks like it still has resistance at $94.00 and I would expect a pullback soon, probably toward the $92.50-92.00 area.

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.

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


SPX Corp. - SPW - close: 67.17 change: -0.90

Stop Loss: 66.45
Target(s): 74.50
Current Option Gain/Loss: -58.9%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
09/24/12: Just as we suspected, SPW produced a dip toward $67.00. Shares actually fell to $66.62 before bouncing. Readers can use the intraday bounce as a new entry point. Our stop remains at $66.45.

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.

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


Watson Pharmaceuticals - WPI - close: 83.34 change: -0.56

Stop Loss: 82.75
Target(s): 88.50
Current Option Gain/Loss: -41.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/24/12: WPI continues to pullback. Shares are testing short-term support near $83.00 and its 10-dma. If there is any further weakness the stock will likely hit our stop loss at $82.75. I would wait for a new bounce above $84.00 to launch new positions.

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

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Concur Technologies - CNQR - close: 74.67 change: +0.24

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:
09/24/12: CNQR's upward momentum had stalled. We planned to exit at the open this morning. Shares opened at $74.13.

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 exit $3.80 (+5.5%)

09/24/12 closed at the open this morning,
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


Flowserve Corp. - FLS - close: 130.91 change: -1.11

Stop Loss: 129.75
Target(s): 139.50
Current Option Gain/Loss: -65.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/24/12: Shares of FLS were downgraded this morning before the open. That prompted shares to gap open lower at $130.11. Our stop loss was quickly hit at $129.75 before the stock pared its losses.

- Suggested Positions -

Oct $135 call (FLS1220j135) Entry $2.15 exit $0.75 (-65.1%)

09/24/12 stopped out at $129.75
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


The Ultimate Software Group - ULTI - close: 98.40 change: -0.60

Stop Loss: 97.85
Target(s): 106.00 or 109.50
Current Option Gain/Loss: -67.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/24/12: We thought ULTI looked vulnerable on Friday so we decided to exit positions on Monday morning. The stock gapped open lower at $98.51.

- Suggested Positions -

Long Oct $105 call (ULTI1220j105) Entry $2.45 exit $0.80 (-67.4%)

09/24/12 planned exit this morning
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


VMware, Inc. - VMW - close: 97.29 change: -3.39

Stop Loss: 97.45
Target(s): 108.50
Current Option Gain/Loss: -29.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/24/12: I didn't see any news to account for VMW's relative weakness today. Shares gapped open lower at $98.81 and then fell to a -3.3% decline. This is a new lower low under last week's dip and under its 150-dma. Our trade opened this morning and was stopped out by this afternoon. Our stop was hit at $97.45.

Earlier Comments:
VMW can be a volatile stock so we want to limit our position size to reduce our risk.

- Suggested Positions -

Oct $105 call (VMW1220j105) entry $1.20 exit $0.85 (-29.1%)

09/24/12 opened this morning and stopped out this afternoon

Annotated Chart:

Entry on September 24 at $98.81
Average Daily Volume = 1.8 million
Listed on September 22, 2012


Vertex Pharma. - VRTX - close: 58.72 change: -0.32

Stop Loss: 54.75
Target(s): 59.90
Current Option Gain/Loss: +21.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/24/12: Target achieved. VRTX rallied up toward resistance at $60.00, hit our exit target at $59.90, and then reversed.

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 -

Oct $57.50 call (VRTX1220j57.5) Entry $3.80 exit $4.60*

09/24/12 target hit at $59.90
*option exit price is an estimate since the option did not trade at the time our play was closed.
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


CLOSED BEARISH PLAYS

O'Reilly Automotive - ORLY - close: 84.24 change: +0.35

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

Comments:
09/24/12: ORLY is not cooperating. The multi-month trend is bearish with a pattern of lower highs. Aggressive traders might want to speculate on a resumption of the trend with new bearish positions now and a stop loss above $85 or $86. It seems unlikely that ORLY is going to hit our suggested entry point at $79.75 any time soon so we are dropping ORLY as an active candidate.

Trade did not open.

09/24/12 removed from the newsletter
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