Editor's Note:

Worries over Spain and the EU's ongoing financial crisis reared up again and stocks are lower for it.

We are removing WFM as a candidate. WPI hit our stop loss.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 111.96 change: -1.94

Stop Loss: 109.40
Target(s): 118.50
Current Option Gain/Loss: +19.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/26/12: ALXN more than reversed yesterday's gains with a -1.7% decline today. The action over the last three days looks like a short-term bearish reversal. I strongly suspect we will see ALXN dip toward the $110 level. More conservative traders may want to just abandon ship now and exit early. 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: 55.09 change: -0.72

Stop Loss: 53.90
Target(s): 59.85
Current Option Gain/Loss: -43.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/26/12: CVLT slipped -1.29% and closed at new two-week lows. The stock is flirting with support near $55.00. I would wait for a bounce, maybe a bounce back above $56.00, before initiating new positions.

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: 65.36 change: +0.31

Stop Loss: 64.40
Target(s): 72.50
Current Option Gain/Loss: Oct70c: -70.0% & 2013jan$70c: -30.9%
Time Frame: exit prior to Oct 16th.
New Positions: see below

Comments:
09/26/12: DSW hit an intraday low of $64.75 before bouncing. Our trade is still open although it is certainly in danger of an intraday spike lower tagging our stop loss. I am not suggesting new positions at this time.

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: 56.95 change: -0.14

Stop Loss: 55.95
Target(s): 63.00
Current Option Gain/Loss: -59.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/26/12: EQT tried to rally intraday but gave it all back with an afternoon slide lower. At the moment I am expecting a dip into the $56.35-56.00 area. If EQT moves any lower it will hit our stop loss. I am not suggesting new positions at this time.

- 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: 93.20 change: +0.34

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: -17.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/26/12: MCD's bounce today is a little bit surprising considering the bearish reversal candlestick it created yesterday. Lack of follow through lower is encouraging but I would still expect a pullback lower. I would look for a dip near $92.00 at a minimum now.

Earlier Comments:
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


PUT Play Updates

Ross Stores - ROST - close: 64.77 change: +0.04

Stop Loss: 66.55
Target(s): 60.50
Current Option Gain/Loss: -10.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/26/12: Wednesday was a relatively quiet day for ROST with the stock churning in a narrow range under the $65.00 level. There is no change from my prior comments. I would still consider new positions now. More nimble traders could try and launch positions on a failed rally near its 10-dma, which is overhead resistance.

Our target is $60.50. Odds are good the $60.00 level and the simple 200-dma could be support, at least temporary support.

- Suggested Positions -

Long Oct $65 PUT (ROST1220v65) Entry $1.85

Entry on September 26 at $64.62
Average Daily Volume = 1.77 million
Listed on September 25, 2012


CLOSED BULLISH PLAYS

Whole Foods Market - WFM - close: 96.43 change: -1.69

Stop Loss: 98.25
Target(s): 107.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
09/26/12: Profit taking in WFM continues with a -1.7% decline on Wednesday. There is arguably short-term support near $96.00 but I would not buy calls at current levels. It is unlikely that WFM will hit our bullish trigger to buy calls at $100.55 any time soon so we are removing WFM from the newsletter as an active trade.

Trade did not open.

09/26/12 removed from the newsletter. trade did not open.

chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 1.3 million
Listed on September 24, 2012


Watson Pharmaceuticals - WPI - close: 82.83 change: -0.33

Stop Loss: 82.75
Target(s): 88.50
Current Option Gain/Loss: -58.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/26/12: WPI broke through short-term support near $83.00 and hit our stop loss at $82.75 before lunchtime. The larger trend for WPI remains higher but shares may retest support near $80 before resuming the up trend.

- Suggested Positions -

Oct $85 call (WPI1220j85) Entry $1.55 exit $0.65 (-58.0%)

09/26/12 stopped out at $82.75

chart:

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