Editor's Note:

The U.S. stock market ended a four-day bounce as investors worry over the lack of progress in Washington.


Current Portfolio:


CALL Play Updates

Dril-Quip, Inc. - DRQ - close: 117.72 change: -0.34

Stop Loss: 114.75
Target(s): 124.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Comments:
10/15/13: DRQ spent Tuesday bouncing off its intraday lows and trying to rally. Unfortunately shares remain stuck under resistance near $118.00. The intraday high today was $118.14. I do not see any changes from our Monday night new play description.

Earlier comments:
I am suggesting a trigger to buy calls at $118.25. If triggered we'll use a stop loss at $114.75. Our target is $124.50. However, we will most likely exit prior to DRQ's earnings report expected in early November. If you are willing to hold over the earnings announcement then you may want to use the December options instead of November options. I am suggesting small positions because the spread on DRQ's November options are a bit wide.

Trigger @ $118.25 *small positions*

- Suggested Positions -

buy the NOV $120 call (DRQ1316k120)

- or -

buy the DEC $125 call (DRQ1322L125)

Entry on October -- at $---.--
Average Daily Volume = 281 thousand
Listed on October 14, 2013


Helmerich & Payne, Inc. - HP - close: 74.58 change: -0.53

Stop Loss: 71.75
Target(s): 79.50
Current Option Gain/Loss: -11.2%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
10/15/13: HP spent most of the day churning sideways between $74 and $75. The $74.00 level should offer some short-term support. If this level fails we could see HP dip toward its simple 10-dma near $73.00. I would be tempted to buy a dip near the 10-dma but more conservative traders may want to wait for a bounce.

We do not want to hold over the mid-November earnings report. FYI: The Point & Figure chart for HP is bullish with an $82 target.

- Suggested Positions -

Long NOV $75 call (HP1316K75) entry $2.31

Entry on October 14 at $74.50
Average Daily Volume = 1.1 million
Listed on October 12, 2013


iShares Russell 2000 ETF - IWM - close: 107.16 change: -1.06

Stop Loss: 104.80
Target(s): 114.00
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
10/15/13: The small cap index was hit the hardest among the major indices with a -0.97% decline in today's widespread pullback. Lack of follow through on yesterday's breakout to new highs is disappointing. Fortunately, today's high was only $108.23. Thus far there is no change from my earlier comments.

Earlier comments:
A deal in Washington will get done eventually and that could turn on the "all clear signal" for market participants to jump back in with both feet. I am suggesting a trigger to buy calls at $108.55. If triggered our target is $114.00. We'll start with a stop loss at $104.80, just below last Thursday's low.

Trigger @ $108.55

- Suggested Positions -

buy the 2014 Jan $110 call (IWM1418a110)

Entry on October -- at $---.--
Average Daily Volume = 41 million
Listed on October 14, 2013


Starbucks Corp. - SBUX - close: 76.71 change: -1.39

Stop Loss: 75.75
Target(s): 82.50
Current Option Gain/Loss: -33.3%
Time Frame: exit PRIOR to earnings in very late October
New Positions: see below

Comments:
10/15/13: Ouch! SBUX got burned with a -1.77% decline on Tuesday. Compare that to a -0.5% drop in the NASDAQ and a -0.7% pullback in the S&P 500. I didn't see any specific news to account for today's display of relative weakness. It is worth noting that today's drop following yesterday's bullish breakout suddenly smells like a potential reversal (making yesterday a potential bull trap). I am not suggesting new positions at this time.

Earlier Comments:
Our target is $82.50. Yes, it's possible that the $80.00 level could be round-number, psychological resistance but after a three-week consolidation sideways under the $78.00 level we suspect that $80 is not going to stop the rally in SBUX. We do not want to hold over SBUX's earnings, which will likely occur at the end of the month of early November.

- Suggested Positions -

Long NOV $80 call (SBUX1316k80) entry $1.65

Entry on October 14 at $78.25
Average Daily Volume = 3.7 million
Listed on October 12, 2013


Constellation Brands - STZ - close: 62.30 change: -0.88

Stop Loss: 58.90
Target(s): 67.50
Current Option Gain/Loss: +15.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/15/13: STZ has been showing relative strength and after hitting new highs I am not surprised to see a little profit taking. The stock did underperform the broader market with a -1.39% dip today. If the $62 level fails as support then look for a dip toward STZ's rising 10-dma near $61.00. I would be tempted to use a dip or a bounce near the 10-dma as a new entry point.

Earlier Comments:
Our target is $67.50 but we may end up exiting near $65.00, which could be potential round-number resistance.

- Suggested Positions -

Long NOV $62.50 call (STZ1316k62.5) entry $1.38

10/11/13 trade opened on gap higher at $61.25,
trigger was $61.10

Entry on October 11 at $61.25
Average Daily Volume = 1.9 million
Listed on October 10, 2013


Zimmer Holdings - ZMH - close: 86.38 change: -1.27

Stop Loss: 83.49
Target(s): 89.50
Current Option Gain/Loss: +11.1%
Time Frame: exit PRIOR to earnings on Oct. 24th
New Positions: see below

Comments:
10/15/13: After a five-day rally shares of ZMH finally hit some profit taking. The stock tagged a new relative high above $88.00 this morning before reversing into a -1.44% decline. Broken resistance near $85.00 should be new support.

Earlier Comments:
FYI: The medical device stocks could see a little volatility surrounding the political wrangling in Washington. The republicans and some democrats support repealing the recent medical device tax. Yet Senate Majority Leader Harry Reid and President Obama has rejected any suggestions to repeal this tax. It could be a bargaining chip in the negotiations between both sides over the budget and debt ceiling. Although it's worth noting that shares of ZMH have been ignoring all the drama lately.

- Suggested Positions -

Long NOV $85 call (ZMH1316k85) entry $2.70

10/14/13 adjust exit target to $89.50

Entry on October 10 at $85.55
Average Daily Volume = 1.2 million
Listed on October 09, 2013


PUT Play Updates

McDonald's Corp. - MCD - close: 93.80 change: -0.92

Stop Loss: 95.05
Target(s): 90.25
Current Option Gain/Loss: -35.4%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
10/15/13: It looks like the oversold bounce in MCD might be over. Shares gapped down this morning and MCD underperformed the market with a -0.9% decline. The stock got a push lower from a bearish analyst note from Goldman Sachs. After a survey of 2,000 customers it seems that MCD might be losing customers and MCD was ranked last on a list of 23 fast-food chains for food quality and healthfulness. This is good news if you're bearish on the stock.

Earlier Comments:
Our time frame is only two, maybe three weeks as we do not want to hold over MCD's earnings report expected in late October.

- Suggested Positions -

Long NOV $90 PUT (MCD1316W90) entry $0.93

10/12/13 adjust stop loss to $95.05

Entry on October 09 at $93.75
Average Daily Volume = 4.3 million
Listed on October 07, 2013


Newmont Mining - NEM - close: 26.10 change: +0.36

Stop Loss: 27.10
Target(s): 21.00
Current Option Gain/Loss: -14.1%
Time Frame: Exit PRIOR to earnings on October 31st
New Positions: , see below

Comments:
10/15/13: Gold prices bounced off their Tuesday morning lows and shares of NEM followed suit. Today's rebound in NEM has technically produced a bullish engulfing candlestick reversal pattern. That's a warning sign for shorts and bearish option traders. More conservative traders may want to lower their stop loss. If this bounce continues I would expect NEM to test technical resistance at its simple 10-dma (near 26.50) soon.

Earlier comments:
Our target is $21.00 but we will plan to exit prior to NEM's earnings report scheduled on October 31st.

- Suggested Positions -

Long NOV $25 PUT (NEM1316W25) entry $0.92

Entry on October -- at $---.--
Average Daily Volume = 9.1 million
Listed on October 12, 2013



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 71.15 change: -1.35

Stop Loss: 64.00
Target(s): 79.00
Current Option Gain/Loss: +201.9%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
10/15/13: Hmmm... today's action in CBI could be a warning signal. The stock almost completely reversed yesterday's gain (and breakout to new highs). The $70.00 level "should" be short-term support but I suspect that if the market accelerates lower we could see CBI drop toward the $67-66 area. I am not suggesting new positions at this time.

FYI: CBI is due to report earnings on October 29th.

*Small Positions* - Suggested Positions -

Long 2014 Jan $65 call (CBI1418A65) entry $2.55

10/01/13 new stop loss @ 64.00, adjust target to $79.00
09/21/13 new stop loss @ 59.75
09/11/13 new stop loss @ 57.65
07/20/13 new stop loss @ 55.75
06/29/13 CBI might be poised to dip into the $57-55 zone again.
06/24/13 triggered @ 56.75
06/22/13 adjust entry trigger to $56.75
06/15/13 entry strategy change: change the breakout trigger at $65.25 to a buy-the-dip trigger at $56.50. Adjust the stop loss to $53.75.
Adjust the option strike to the 2014 Jan. $65 call

Entry on June 24 at $56.75
Average Daily Volume = 1.8 million
Listed on June 01, 2013


Vanguard FTSE Europe ETF - VGK - close: 54.92 change: -0.20

Stop Loss: 50.95
Target(s): 58.50
Current Option Gain/Loss: + 8.3%
Time Frame: exit PRIOR to 2014 March option expiration
New Positions: see below

Comments:
10/15/13: European markets were up across the board today. Yet selling pressure in the U.S. pulled the VGK lower. Shares produced a minor decline of -0.3%. If the market retreats lower we could see the VGK retest its 50-dma again.

Earlier Comments:
We are taking a multi-month time frame with this trade. If we are triggered our target is $58.50 but we'll adjust it as the trade progresses. FYI: The Point & Figure chart for VGK is bullish with a $63 target.

- Suggested Positions -

Long 2014 Mar $55 call (VGK1422L55) entry $1.80*

09/11/13 trade opens. VGK @ 53.60
*option entry @ 1.80 is an estimate. Ask closed at $1.75 yesterday
09/10/13 entry trigger met. open positions tomorrow.
09/10/13 new stop loss @ 50.95
08/24/13 adjust the option strike from 2013 Dec $55 to $2014 Mar $55.

Entry on September 11 at $---.--
Average Daily Volume = 3.0 million
Listed on August 10, 2013