Editor's Note:

The U.S. markets ended the month of October out of breath after sprinting higher nearly all month long. The S&P 500 closed with a +4.4% gain in October.

Our FFIV trade was triggered today.


Current Portfolio:


CALL Play Updates

The Walt Disney Company - DIS - close: 68.59 change: +0.12

Stop Loss: 65.85
Target(s): 74.00
Current Option Gain/Loss: + 16.6%
Time Frame: exit PRIOR to earnings on November 7th.
New Positions: see below

Comments:
10/31/13: DIS managed to squeak out a small gain, which was enough to outperform the major indices. Although it looks like shares will retest support near $68.00 soon.

Our target is $74.00 but we will plan to exit prior to DIS' earnings report on November 7th.

FYI: Tuesday's rally has produced a new buy signal on the Point & Figure chart that is currently suggesting an $80 price target.

- Suggested Positions -

Long NOV $70 call (DIS1316K70) entry $0.66

Entry on October 22 at $68.10
Average Daily Volume = 7.1 million
Listed on October 21, 2013


Dover Corp. - DOV - close: 91.79 change: -0.05

Stop Loss: 89.95
Target(s): 99.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see below

Comments:
10/31/13: DOV recovered off its morning lows but failed to hit new highs. There is no change from my prior comments.

I see the mid-September peak near $92.85 as potential trouble. Therefore we're suggesting a trigger to buy calls at $93.00. If triggered our target is $99.50. The Point & Figure chart for DOV is bullish with a $105 target.

Trigger @ 93.00

- Suggested Positions -

Buy the DEC $95 call (DOV1322L95)

Entry on October -- at $---.--
Average Daily Volume = 1.0 million
Listed on October 29, 2013


Honeywell Intl. - HON - close: 86.73 change: +0.01

Stop Loss: 84.75
Target(s): 98.50
Current Option Gain/Loss: -26.2%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
10/31/13: HON tried to rally but gave back all of its gains in the market's afternoon slide. Shares did close virtually unchanged which was enough to outperform the major indices. I remain cautious here. Traders may want to wait for a rally above $88.00 before considering new positions.

- Suggested Positions -

Long 2014 Jan $90 call (HON1418a90) entry $1.45

10/30/13 Caution. HON hit our trigger but the stock produced a potential bearish reversal pattern today.

Entry on October 30 at $87.65
Average Daily Volume = 2.9 million
Listed on October 23, 2013


Helmerich & Payne, Inc. - HP - close: 77.55 change: +0.04

Stop Loss: 75.75
Target(s): 79.50
Current Option Gain/Loss: +34.1%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
10/31/13: HP also managed to eke out a small gain and outperform the major indices. More conservative traders may want to take profits now. I am not suggesting new positions.

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

10/29/13 new stop loss @ 75.75
10/24/13 new stop loss @ 74.25
10/22/13 new stop loss @ 73.75

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


iShares Russell 2000 ETF - IWM - close: 109.19 change: -0.64

Stop Loss: 107.75
Target(s): 114.00
Current Option Gain/Loss: - 1.4%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/31/13: The small cap Russell 2000 index (and ETF) underperformed the S&P 500 and the NASDAQ composite. That doesn't bode well for the bulls. IWM shares look poised to drop toward support near $108.00 soon.

I am not suggesting new positions.

- Suggested Positions -

Long 2014 Jan $110 call (IWM1418a110) entry 2.80

10/29/13 new stop loss @ 107.75
10/23/13 new stop loss @ 105.95

Entry on October 16 at $108.55
Average Daily Volume = 41 million
Listed on October 14, 2013


J2 Global, Inc. - JCOM - close: 54.98 change: +0.03

Stop Loss: 53.75
Target(s): 59.75
Current Option Gain/Loss: -23.2%
Time Frame: exit PRIOR to earnings on November 5th
New Positions: see below

Comments:
10/31/13: JCOM also managed to close in positive territory today but it was a fight. We do not have much time left on this trade and more conservative traders may want to exit immediately. Currently we are planning to exit positions on November 4th to avoid holding over JCOM's earnings report on November 5th.

Earlier Comments:
The stock looks ready to launch its next leg higher. New highs could spark a short squeeze. The most recent data listed short interest at 31% of the 43.7 million share float. Our target is $59.75 but more aggressive traders could aim higher. The Point & Figure chart for JCOM is bullish with a $77 target.

- Suggested Positions -

Long NOV $55 call (JCOM1316K55) entry $2.15

10/31/13 prepare to exit on Nov. 4th
10/29/13 new stop loss @ 53.75

Entry on October 21 at $55.05
Average Daily Volume = 329 thousand
Listed on October 19, 2013


Medtronic, Inc. - MDT - close: 57.40 change: -0.54

Stop Loss: 56.45
Target(s): 59.75
Current Option Gain/Loss: +22.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/31/13: MDT continued to see some profit taking, down for a second day on Thursday. Shares did find some short-term support at the rising 10-dma. We'd like to see a bounce here but I am not convinced the pullback is over. I'm not suggesting new positions at this time.

- Suggested Positions -

Long NOV $55 call (MDT1316K55) entry $2.07

10/29/13 new stop loss @ 56.45

Entry on October 22 at $56.75
Average Daily Volume = 3.4 million
Listed on October 21, 2013


Packaging Corp. of America - PKG - close: 62.28 change: +0.50

Stop Loss: 59.75
Target(s): 67.50
Current Option Gain/Loss: - 23.3%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
10/31/13: PKG bucked the market's down trend today and added +0.8%. Traders bought the dip near its 10-dma this morning and the stock actually hit a new record high before paring its gains.

- Suggested Positions -

Long 2014 Jan $65 call (PKG1418a65) entry $1.50

Entry on October 28 at $62.50
Average Daily Volume = 1.0 million
Listed on October 23, 2013


Pall Corp. - PLL - close: 80.52 change: -0.01

Stop Loss: 77.90
Target(s): 86.00
Current Option Gain/Loss: -13.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/31/13: The intraday rally in PLL rolled over below yesterday's highs. Shares closed virtually unchanged on the session but they do look poised for more profit taking tomorrow morning. I would not be surprised to see PLL retest the $80.00 mark or its 10-dma.

Earlier Comments:
Our target is $86.00. However, we will plan to exit prior to PLL's earnings report in late November (not date set yet). FYI: The Point & Figure chart for PLL is bullish with a long-term $113 target.

- Suggested Positions -

Long DEC $85 call (PLL1321L85) entry $1.10

Entry on October 28 at $80.50
Average Daily Volume = 551 thousand
Listed on October 23, 2013


SanDisk Corp. - SNDK - close: 69.50 change: -0.14

Stop Loss: 67.90
Target(s): 74.75
Current Option Gain/Loss: -20.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
10/31/13: SNDK churned sideways before settling on its 10-dma this afternoon. I would wait for a rally above $70.35 before considering new bullish positions.

Our target is $74.75 but we may want to aim higher. The Point & Figure chart for SNDK is bullish with an $82 target.

NOTE: SNDK will begin trading ex-dividend on October 31st. The quarterly cash dividend should be 22.5 cents.

- Suggested Positions -

Long 2014 Jan $72.50 call (SNDK1418a72.5) entry $2.75

Entry on October 29 at $70.60
Average Daily Volume = 5.0 million
Listed on October 28, 2013


Constellation Brands - STZ - close: 65.30 change: +0.61

Stop Loss: 63.40
Target(s): 68.50
Current Option Gain/Loss: +113.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/31/13: Thankfully there was no follow through on yesterday's bearish reversal pattern. STZ rebounded from its 10-dma this morning and closed up +0.9%.

- Suggested Positions -

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

10/30/13 new stop loss @ 63.40
10/29/13 new stop loss @ 63.25
10/28/13 adjust exit target to $68.50
10/22/13 new stop loss @ 61.90, readers may want to take profits now. Our option is up +84%.
10/16/13 new stop loss @ 59.75
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


PUT Play Updates

F5 Networks - FFIV - close: 81.54 change: -1.96

Stop Loss: 85.01
Target(s): 76.00
Current Option Gain/Loss: + 3.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/31/13: As we expected the relative weakness in FFIV continued and shares broke down below support. The stock underperformed the market with a -2.3% decline. Our trigger to buy puts was hit at $82.00.

- Suggested Positions -

Long DEC $80 PUT (FFIV1322X80) entry $3.15

Entry on October 31 at $82.00
Average Daily Volume = 2.2 million
Listed on October 30, 2013


Union Pacific Corp. - UNP - close: 151.40 change: +0.81

Stop Loss: 151.55
Target(s): 141.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Comments:
10/31/13: UNP was testing significant support yesterday so it's not a complete surprise to see it bounce today. Overall the intermediate trend is still down. There is no change from my prior comments.

Wednesday's low was $149.23. The June low was $148.45. I am suggesting a trigger to buy puts at $148.00. If triggered our target is $141.00.

Trigger @ 148.00

- Suggested Positions -

Buy the DEC $145 PUT (UNP1322X145)

Entry on October -- at $---.--
Average Daily Volume = 2.7 million
Listed on October 30, 2013



Longer-Term Play Updates



Vanguard FTSE Europe ETF - VGK - close: 56.78 change: -0.30

Stop Loss: 53.90
Target(s): Sell half @ $58.00, sell the rest at $63.00
Current Option Gain/Loss: +61.1%
Time Frame: exit PRIOR to 2014 March option expiration
New Positions: see below

Comments:
10/31/13: The VGK continued to see a little profit taking today. I would expect shares to drop toward the $55-56 zone soon.

Don't forget that we have two exit targets for this trade! More conservative traders could lock in gains now with our option up +94%.

Earlier Comments:
We are taking a multi-month time frame with this trade. FYI: The Point & Figure chart for VGK is bullish with a $63 target.

- Suggested Positions -

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

10/22/13 Strategy Update: Plan to exit half @ $58.00 and exit the rest at $63.00. New stop loss @ 53.90
10/19/13 new stop loss @ 52.75
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