Editor's Note:

It was an ugly day for the U.S. stock market with stocks seeing a widespread decline. The S&P 500 index broke support near 1430 and the NASDAQ composite broke support at the 3,000 level.

We saw DEO, HCN, and NBL all stopped out. I have removed TWC. We want to exit ESI tomorrow morning. MOS has been triggered.

Current Portfolio:


CALL Play Updates

Deere & Co - DE - close: 85.03 change: -0.86

Stop Loss: 84.95
Target(s): 89.90
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/23/12: DE was not immune to the market's widespread decline today. Shares gave back yesterday's bounce. Traders did buy the dip near support at $84 and its 10-dma.

Currently I am suggesting readers wait and use a trigger to buy calls at $86.30. Our target is $89.90. We'll use a stop loss at $84.95.

Trigger @ 86.30

- Suggested Positions -

buy the NOV $87.50 call (DE1217k87.5)

Entry on October xx at $ xx.xx
Average Daily Volume = 3.3 million
Listed on October 22, 2012


Medivation, Inc. - MDVN - close: 53.04 change: +0.36

Stop Loss: 49.95
Target(s): 57.00
Current Option Gain/Loss: - 4.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/23/12: Traders bought the dip in MDVN this morning and shares bounced back to close in positive territory. The relative strength is encouraging. I would be tempted to buy this bounce or you could wait for a rally past $53.50.

Earlier Comments:
We will plan to exit prior to the early November earnings report.

- Suggested Positions -

Long Nov $55 CALL (MDVN1217K55) Entry $2.00

10/20/12 Friday's bounce looks like a new entry point.
10/17/12 MDVN is not cooperating and closed under the 50-dma, readers may want to exit immediately.
10/15/12 triggered @ 52.50

Entry on October 15 at $52.50
Average Daily Volume = 780 thousand
Listed on October 12, 2012


PUT Play Updates

ITT Educational Services - ESI - close: 26.29 change: -0.10

Stop Loss: 30.05
Target(s): 25.25
Current Option Gain/Loss: +25.8%
Time Frame: exit prior to earnings on Oct. 25th
New Positions: see below

Comments:
10/23/12: Uh-oh! The market just produced a very widespread decline and ESI barely budged. That's a warning sign. I am suggesting we exit positions immediately on Wednesday morning.

- Suggested *SMALL* Positions -

Long 2013 Jan $27.50 PUT (ESI1319m27.5) Entry $3.10

10/23/12 prepare to exit on Wednesday morning
10/22/12 prepare to exit on Oct. 24th at the close
10/20/12 new stop loss @ 30.05, readers may want to go ahead and take profits now (+35%). Adjust target to $25.25.
10/17/12 new stop loss @ 30.40

Entry on October 04 at $29.47
Average Daily Volume = 408 thousand
Listed on October 3, 2012


Garmin Ltd. - GRMN - close: 39.21 change: -0.17

Stop Loss: 40.10
Target(s): 36.00
Current Option Gain/Loss: + 2.1%
Time Frame: exit prior to the Oct. 31st earnings report
New Positions: see below

Comments:
10/23/12: Shares of GRMN did not see much of a decline either. Traders bought the dip this morning and GRMN almost closed in positive territory. Readers will want to seriously consider an early exit right now. I am not suggesting new positions. We will lower our stop loss to $40.10.

Earlier Comments:
We want to limit our position size since the most recent data listed short interest at 16% of the 123 million share float. We will plan to exit prior to the October 31st earnings report.

- Suggested *Small* Positions -

Long NOV $40 PUT (GRMN1217w40) Entry $1.85

10/23/12 lack of downward movement today is trouble. Readers may want to exit now. New stop loss @ 40.10

Entry on October 18 at $39.51
Average Daily Volume = 787 thousand
Listed on October 17, 2012


The Mosaic Co. - MOS - close: 53.07 change: -1.16

Stop Loss: 55.05
Target(s): 48.00
Current Option Gain/Loss: + 3.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/23/12: MOS broke down to new relative lows and hit our trigger to buy puts at $53.45. Broken support near $54.00 should offer new resistance. I want to remind readers that POT's earnings report on October 25th could have a big influence on MOS shares.

- Suggested Positions -

Long NOV $55 PUT (MOS1217w55) entry $2.60

10/23/12 triggered @ 53.45

Entry on October 23 at $53.45
Average Daily Volume = 3.9 million
Listed on October 20, 2012


CLOSED BULLISH PLAYS

Diageo Plc. - DEO - close: 111.73 change: -1.72

Stop Loss: 111.90
Target(s): 119.75
Current Option Gain/Loss: -65.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/23/12: The market's sell-off started in Europe today and that didn't bode well for our DEO trade. The stock gapped open lower under the $112.00 level. Shares opened at $111.84. Our stop was $111.90 so the trade was closed immediately.

Earlier Comments:
The stock tends to gap open each morning as shares here in the U.S. react to trade that started in Europe. Thus we want to limit our position size due to the volatility.

- Suggested *Small* Positions -

NOV $115 call (DEO1217k115) Entry $1.90 exit $0.65 (-65.7%)

10/23/12 DEO gapped open lower, below our stop loss.

chart:

Entry on October 17 at $114.24
Average Daily Volume = 529 thousand
Listed on October 16, 2012


Health Care REIT, Inc. - HCN - close: 59.00 change: -0.83

Stop Loss: 58.80
Target(s): 63.50
Current Option Gain/Loss: -75.0%
Time Frame: exit prior to earnings on Nov. 6th,
New Positions: see below

Comments:
10/23/12: HCN also gapped open lower and opened at $59.43. The stock fell to a new two-week low and pierced its 50-dma and 100-dma. Our stop loss was hit at $58.80 in the process.

- Suggested Positions -

NOV $60 call (HCN1217k60) Entry $1.20 exit $0.30 (-75.0%)

10/23/12 stopped out at $58.80

chart:

Entry on October 19 at $60.68
Average Daily Volume = 2.8 million
Listed on October 18, 2012


Noble Energy, Inc. - NBL - close: 91.51 change: -2.76

Stop Loss: 92.95
Target(s): 99.75
Current Option Gain/Loss:(Oct95c: - 6.8%) & Nov95c: -54.8%
Time Frame: exit prior to earnings on Oct. 25th
New Positions: see below

Comments:
10/23/12: A sharp drop in crude oil helped accelerated the sell-off in the energy stocks. NBL gapped open lower at $92.45 and then broke down under both its 200-dma and its 50-dma. Our stop loss was $92.95 so the gap open lower closed our trade.

- Suggested Positions -

(closed on Oct. 18th at the open)
Oct $95 call (NBL1220j95) Entry $1.45 exit $1.35 (- 6.8%)

- or -

Nov $95 call (NBL1217k95) Entry $3.10 exit $1.40 (-54.8%)

10/23/12 stopped out on gap open lower. final position (Nov call) closed
10/22/12 new stop loss @ 92.95, prepare to exit on Oct. 24th at the closing bell
10/18/12 closed the Oct. call at the open this morning
10/17/12 new stop loss @ 92.75
Prepare to exit the Oct. $95 call at the open tomorrow morning

chart:

Entry on October 08 at $94.25
Average Daily Volume = 1.0 million
Listed on October 2, 2012


Time Warner Cable - TWC - close: 97.70 change: -1.59

Stop Loss: 99.15
Target(s): 104.50
Current Option Gain/Loss: Unopened
Time Frame: Exit prior to the Oct 31st earnings report.
New Positions: see below

Comments:
10/23/12: The up trend in TWC may be at risk. Shares gapped open lower and closed under the 10-dma. Our plan was to buy calls at $100.60 but TWC has not yet hit our trigger. I am removing TWC as a candidate.

Trade did not open.

10/23/12 removed TWC from the newsletter. Trade did not open.

chart:

Entry on October xx at $ xx.xx
Average Daily Volume = 1.9 million
Listed on October 20, 2012