Editor's Note:

The market's major indices are hovering near support. The question traders are wondering is whether or not the market will bounce from support or break support.

FYI: DE hit our entry point on Friday.

Current Portfolio:


CALL Play Updates

Peabody Energy - BTU - close: 28.22 change: +0.19

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

Comments:
10/27/12: BTU continues to buck the market's down trend. Shares almost hit our entry point this past week. I suspect BTU will see another dip to its 10-dma soon.

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)

chart:

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


Deere & Co - DE - close: 85.47 change: +0.78

Stop Loss: 84.25
Target(s): 89.90
Current Option Gain/Loss: - 5.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/27/12: DE displayed some relative strength on Friday and climbed +0.9%. The stock hit our entry point to buy calls at $85.55 on Friday afternoon. I would still consider new positions now.

Trigger @ 85.55

- Suggested Positions -

Long NOV $87.50 call (DE1217k87.5) entry $0.88

10/26/12 triggered @ 85.55
10/25/12 adjust the entry trigger to $85.55, stop to $84.25

chart:

Entry on October 26 at $85.55
Average Daily Volume = 3.3 million
Listed on October 22, 2012


Green Mountain Coffee Roasters - GMCR - close: 24.36 change: -0.05

Stop Loss: 23.90
Target(s): 29.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/27/12: GMCR continues to churn sideways under resistance near $25.00 and its 50-dma near $25.30.

GMCR could see a short squeeze. The most recent data listed short interest at 37% of the 127 million-share float. There is short-term technical resistance at the 50-dma.

I am suggesting we open small bullish positions if GMCR trades at $25.50 or higher. If triggered our target is $29.50.

Trigger @ 25.50 *Small Positions*

- Suggested Positions -

buy the NOV $27 call (GMCR1217k27)

chart:

Entry on October xx at $ xx.xx
Average Daily Volume = 6.0 million
Listed on October 24, 2012


Medivation, Inc. - MDVN - close: 52.21 change: -2.04

Stop Loss: 49.95
Target(s): 57.00
Current Option Gain/Loss: -12.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/27/12: Ouch! After a three-day bounce MDVN hit some profit taking on Friday and shares fell -3.7%. The close back underneath its 50-dma is technically bearish as is the failure at its 20-dma.

I am not suggesting new positions at this time. More conservative traders may want to start adjusting their stop loss higher.

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

chart:

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


Sempra Energy - SRE - close: 68.98 change: +0.33

Stop Loss: 66.95
Target(s): 72.00
Current Option Gain/Loss: + 7.1%
Time Frame: Exit prior to the Nov. 6th earnings report
New Positions: see below

Comments:
10/27/12: SRE continued to rally on Friday and set a new two-month high. The relative strength is certainly bullish but there is a good chance SRE might dip back toward the $68 area if the broader market continues to sink. A dip near $68 can be used as an alternative entry point.

- Suggested Positions -

Long DEC $70 call (SRE1222L70) Entry $0.70

chart:

Entry on October 26 at $68.65
Average Daily Volume = 939 thousand
Listed on October 25, 2012


PUT Play Updates

Garmin Ltd. - GRMN - close: 38.99 change: -0.27

Stop Loss: 40.10
Target(s): 36.00
Current Option Gain/Loss: +10.8%
Time Frame: exit prior to the Oct. 31st earnings report
New Positions: see below

Comments:
10/27/12: Thursday's failed rally at resistance near $40 still looks like a new entry point for bearish positions. Unfortunately we are almost out of time. GRMN is due to report earnings on October 31st. Aggressive traders may want to risk holding over the report. The newsletter will plan to exit positions on October 30th at the closing bell to avoid holding over the announcement (assuming GRMN doesn't hit our target or stop before then).

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

10/27/12 prepare to exit on Oct. 30th at the close
10/23/12 lack of downward movement today is trouble. Readers may want to exit now. New stop loss @ 40.10

chart:

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


The Mosaic Co. - MOS - close: 52.78 change: -0.47

Stop Loss: 54.25
Target(s): 48.00
Current Option Gain/Loss: + 8.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/27/12: Shares of Mosaic continue to drift lower. It is possible that the $52.00 level is short-term support so I am not suggesting new positions at this time. We will lower our stop loss down to $54.25.

- Suggested Positions -

Long NOV $55 PUT (MOS1217w55) entry $2.60

10/27/12 new stop loss @ 54.25
10/23/12 triggered @ 53.45

chart:

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


Schlumberger Ltd. - SLB - close: 70.10 change: -0.64

Stop Loss: 71.05
Target(s): 65.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
10/27/12: SLB just erased Thursday's bounce and now shares are once again sitting on support near $70.00 and its 150-dma. The stock looks poised to breakdown. SLB appears to have formed a bearish head-and-shoulders pattern, which would forecast a drop toward the $62 area.

Wednesday's low was $69.75. I am suggesting a trigger to open bearish positions at $69.65. Our target is $65.25. FYI: The Point & Figure chart for SLB is bearish with a $64 target.

Trigger @ 69.65

- Suggested Positions -

buy the NOV $70 PUT (SLB1217w70) current ask $1.71

chart:

Entry on October xx at $ xx.xx
Average Daily Volume = 5.3 million
Listed on October 25, 2012