Editor's Note:

Rising worries over Europe and Spain helped undermine the early morning rally in stocks.

We want to exit our DSW and MCD positions at the opening bell tomorrow.

ROST was stopped out this morning.

Current Portfolio:


CALL Play Updates

Alexion Pharma. - ALXN - close: 116.63 change: +0.63

Stop Loss: 111.75
Target(s): 118.50
Current Option Gain/Loss: +76.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/02/12: ALXN extended its gains and added +0.5% on Tuesday. I don't see any changes from my prior comments. Readers may want to start taking profits 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

10/01/12 new stop loss @ 111.75
09/29/12 new stop loss @ 110.75
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: 56.62 change: -0.94

Stop Loss: 54.90
Target(s): 59.85
Current Option Gain/Loss: -47.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/02/12: CVLT underperformed the market with its third decline in a row. Yet traders did buy the dip intraday near $55.50. I am not suggesting new positions at this time.

- Suggested Positions -

Long Oct $60 Call (CVLT1220j60) Entry $1.24

10/01/12 new stop loss @ 54.90
09/29/19 new stop loss @ 54.40

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


DSW Inc. - DSW - close: 65.65 change: -0.10

Stop Loss: 64.40
Target(s): 72.50
Current Option Gain/Loss: Oct70c: -80.0% & 2013jan$70c: -25.4%
Time Frame: exit prior to Oct 16th.
New Positions: see below

Comments:
10/02/12: DSW did not make much progress either direction today. We are giving up on this stock. The trend of higher lows is still intact but DSW doesn't have any momentum. I am suggesting we close positions at the opening bell tomorrow.

- Suggested Positions -

Long Oct $70 call (DSW1220j70) Entry $0.50

- or -

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

10/02/12 prepare to exit at the open tomorrow

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


DaVita Inc. - DVA - close: 104.11 change: +0.67

Stop Loss: 99.45
Target(s): 108.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/02/12: DVA spiked higher again this morning. The rally didn't last and shares pared their gains to end the day with a +0.6% advance. There is no change from my prior comments.

The plan is to buy calls on a dip at $102.00. FYI: The Point & Figure chart for DVA is bullish with a $141 target.

Trigger @ 102.00 (stop 99.45)

- Suggested Positions -

buy the Oct $105 call (DVA1220j105)

10/01/12 adjust entry strategy. move trigger to $102.00 and stop to $99.45

Entry on September xx at $ xx.xx
Average Daily Volume = 881 thousand
Listed on September 29, 2012


EQT Corp. - EQT - close: 59.65 change: -0.39

Stop Loss: 56.45
Target(s): 63.00
Current Option Gain/Loss: +63.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/02/12: It was a quiet day for EQT. Shares had bee challenging resistance near $60.00. Shares hovered in the $59-60 level today and closed down -0.6%.

More conservative traders may want to start taking profits now. I am not suggesting new positions at this time.

- Suggested Positions -

Long Oct $60 call (EQT1220j60) Entry $0.61

09/27/12 new stop loss @ 56.45

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


Infosys Ltd. - INFY - close: 49.47 change: +0.01

Stop Loss: 48.90
Target(s): 54.85
Current Option Gain/Loss: Unopened
Time Frame: about 2-to-3 weeks
New Positions: Yes, see below

Comments:
10/02/12: There was no follow through on yesterday's rally and INFY hovered under resistance at the $50.00 mark.

I am suggesting a trigger to buy calls at $50.25. We'll start with a stop loss at $48.90. Our target is $54.85. FYI: The Point & Figure chart for INFY is bullish with a $72 target.

Trigger @ 50.25

- Suggested Positions -

buy the Oct $50 call (INFY1220j50)

Entry on October xx at $ xx.xx
Average Daily Volume = 1.9 million
Listed on October 1, 2012


McDonald's Corp. - MCD - close: 90.93 change: -1.06

Stop Loss: 89.90
Target(s): 98.00
Current Option Gain/Loss: -72.5%
Time Frame: exit prior to earnings on Oct. 19th
New Positions: see below

Comments:
10/02/12: Hmm... MCD is underperforming again with a -1.1% decline on Tuesday. Shares look weak following Friday's downgrade-inspired drop. I am suggesting we abandon ship and exit positions at the opening bell tomorrow.

NOTE: I have updated the gain/loss based on a corrected option value. Yesterday I was looking at the weekly options that expired in a few days. The current bid/ask for our option is $0.55/0.57.

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

10/02/12 prepare to exit at the open tomorrow
09/28/12 MCD is downgraded before the bell.
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


NetSuite Inc. - N - close: 62.49 change: -0.19

Stop Loss: 59.75
Target(s): 67.50
Current Option Gain/Loss: Oct65: -28.5% & Nov65c: -8.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/02/12: Shares of N spent the day churning inside the $62-64 zone. Considering today's midday reversal lower, I am not suggesting new positions at this time. Our multi-week target is $67.50. FYI: The Point & Figure chart for N is bullish with an $82 target.

- Suggested Positions -

Long Oct $65 call (N1220j65) Entry $1.05

- or -

Long Nov $65 call (N1217k65) Entry $2.90

10/01/12 triggered @ 62.50

Entry on October 01 at $62.50
Average Daily Volume = 565 thousand
Listed on September 29, 2012


Onyx Pharma. - ONXX - close: 86.51 change: +1.24

Stop Loss: 82.90
Target(s): 89.50
Current Option Gain/Loss: + 3.3%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
10/02/12: Our new trade on ONXX is off to a good start. Shares opened at $85.08 and rallied to a +1.4% gain, outperforming the major indices.

It was an aggressive entry point and the plan was to keep our position size small to limit our risk.

- Suggested Positions - *Small Positions*

Long Oct $90 call (ONXX1220j90) Entry $1.50

Entry on October 02 at $85.08
Average Daily Volume = 1.4 million
Listed on October 1, 2012


Sears Holding Corp. - SHLD - close: 55.40 change: +0.10

Stop Loss: 53.95
Target(s): 62.50
Current Option Gain/Loss: -18.2%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
10/02/12: I do not see any changes from my prior comments. SHLD is churning sideways and definitely not cooperating with us. More conservative traders will want to consider an early exit now. I am not suggesting new positions at this time.

Earlier Comments:
SHLD could see some short covering. The most recent data listed short interest at 37% of the 31.3 million share float.

NOTE: There are two October $57.50 option strikes. Make sure you pick the normal one. Pay attention to the symbol.

- Suggested Positions -

Long Oct $57.50 call (SHLD1220j57.5) Entry $1.75

Entry on September 28 at $56.11
Average Daily Volume = 1.7 million
Listed on September 27, 2012


PUT Play Updates

Rockwell Automation - ROK - close: 69.14 change: -0.24

Stop Loss: 70.10
Target(s): 63.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/02/12: ROK drifted lower but remains above support near the $68.00 level. We want to stick to our original plan and wait for a breakdown. I am suggesting a trigger to buy puts at $67.90.

Trigger @ 67.90

- Suggested Positions -

buy the Oct $65 PUT (ROK1220v65)

Entry on September xx at $ xx.xx
Average Daily Volume = 1.1 million
Listed on September 26, 2012


Tech Data Corp. - TECD - close: 45.12 change: +0.12

Stop Loss: 46.30
Target(s): 42.00
Current Option Gain/Loss: - 20.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/02/12: TECD continues to hover near the $45.00 level. Shares remain oversold and could see another bounce. Readers may want to wait for a drop under yesterday's low before initiating new positions.

Earlier Comments:
I would keep our position size small to limit our risk.

*Small Positions* - Suggested Positions -

Long Nov $45 PUT (TECD1211w45) Entry $1.95

10/01/12 triggered @ 44.90

Entry on October 01 at $44.90
Average Daily Volume = 333 thousand
Listed on September 29, 2012


CLOSED BEARISH PLAYS

Ross Stores - ROST - close: 65.94 change: -0.21

Stop Loss: 66.55
Target(s): 60.50
Current Option Gain/Loss: -55.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/02/12: It was a frustrating day for our bearish play on ROST. The stock gapped open higher at $66.71 and quickly reversed to trade back down under the $66.00 level. It was too late. The gap higher was above our stop loss at $66.55, closing our trade.

- Suggested Positions -

Oct $65 PUT (ROST1220v65) Entry $1.85 exit $0.83 (-55.1%)

10/02/12 stopped out on gap open higher at $66.71

chart:

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