Editor's Note:

The market's early gains this morning faded lower. The major indices settled in the red.

Our RVBD trade was triggered.

ESI was closed this morning as planned.

Current Portfolio:


CALL Play Updates

Peabody Energy - BTU - close: 27.48 change: -0.87

Stop Loss: 25.60
Target(s): 31.50
Current Option Gain/Loss: Unopened
Time Frame: several weeks
New Positions: Yes, see below

Comments:
10/24/12: Not surprisingly BTU pulled back today. Technically today actually looks likes a bearish engulfing candlestick reversal pattern. Currently I am suggesting we buy calls on a dip at $27.25. More conservative traders may want to wait for a deeper pullback, maybe $27.00 or even in the $27.00-26.50 area. Our multi-week target is $31.50.

Trigger @ 27.25

- Suggested Positions -

buy the 2013 Jan $30 call (BTU1319a30)

Entry on October xx at $ xx.xx
Average Daily Volume = 10.6 million
Listed on October 23, 2012


Deere & Co - DE - close: 84.31 change: -0.72

Stop Loss: 84.75
Target(s): 89.90
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/24/12: DE continues to churn sideways above support at $84.00. If we see shares close under $84.00 we'll probably drop it as a bullish candidate. I am adjusting our trigger to buy calls down to $86.00. Our target is $89.90. We'll use a stop loss at $84.75.

Trigger @ 86.00

- 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: 53.64 change: +0.60

Stop Loss: 49.95
Target(s): 57.00
Current Option Gain/Loss: + 6.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/24/12: MDVN displayed relative strength with a +1.1% gain. Unfortunately the rally struggled with short-term resistance near $54.00 al day long. Overall the long-term up trend is still in effect.

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


Riverbed Technology - RVBD - close: 23.74 change: -0.22

Stop Loss: 22.49
Target(s): 29.00
Current Option Gain/Loss: -12.9%
Time Frame: several weeks
New Positions: see below

Comments:
10/24/12: It was a bit of a volatile session for RVBD. Shares spiked higher and traded above resistance at $24.00 only to immediately reverse lower. Our trigger to open positions was hit at $24.20. Fortunately, traders bought the dip near $23.00 midday and RVBD produced a decent bounce this afternoon.

I would wait for a new rally past $24.00 before initiating new positions.

I do consider this an aggressive, higher-risk trade.

- Suggested Positions -

Long 2013 Jan $25 call (RVBD1319a25) Entry $1.85

Entry on October 24 at $24.20
Average Daily Volume = 5.1 million
Listed on October 23, 2012


PUT Play Updates

Garmin Ltd. - GRMN - close: 39.29 change: +0.08

Stop Loss: 40.10
Target(s): 36.00
Current Option Gain/Loss: + 0.5%
Time Frame: exit prior to the Oct. 31st earnings report
New Positions: see below

Comments:
10/24/12: GRMN is still not cooperating. Shares bucked the market's down trend today and GRMN closed in positive territory. The stock did find resistance at its 100-dma. However, yesterday's lack of weakness combined with today's relative strength is definitely a warning signal for bearish traders. I am not suggesting new positions.

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: 53.21 change: +0.14

Stop Loss: 55.05
Target(s): 48.00
Current Option Gain/Loss: - 0.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/24/12: MOS managed a bit of a bounce after yesterday's breakdown below support. Today's rebound dif fail at new resistance near $54.00. Readers can use today's action as a new entry point for bearish positions.

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 BEARISH PLAYS

ITT Educational Services - ESI - close: 25.11 change: -1.18

Stop Loss: 30.05
Target(s): 25.25
Current Option Gain/Loss: +30.6%
Time Frame: exit prior to earnings on Oct. 25th
New Positions: see below

Comments:
10/24/12: ESI was kind enough to fall to new relative lows with a -4.4% decline today. The stock actually hit our exit target at $25.25. Unfortunately we had already decided to exit positions at the open this morning given the lack of movement in the stock yesterday. ESI opened at $26.40 this morning.

- Suggested *SMALL* Positions -

2013 Jan $27.50 PUT (ESI1319m27.5) Entry $3.10 exit $4.05 (+30.6%)

10/24/12 closed this morning at the open
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

chart:

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