Current Portfolio:

CALL Play Updates

Petroleo Brasileiro - PBR - close 35.58 change -0.28 stop 33.70

Target(s): 37.40, 38.65
Key Support/Resistance Areas: 39.00, 37.50, 36.60, 34.00
Current Gain/Loss: -2.4%
Time Frame: 1 to 2 weeks
New Positions: Yes

9/28: PBR consolidated yesterday's gains, closing marginally lower. We are looking for the short interest to unwind which should cause the stock to spike higher. Be prepared to take profits or tighten stops to protect them as our target approach.

9/25: PBR gapped lower on Friday which improved our entry price into the position. All reports indicate the secondary offering was a success and was priced near the market. We are looking for the short interest to unwind which should cause a quick pop in the stock. Our stop is in place if we are wrong.

Suggested Position: Long November $37.00 CALL, entry was at $1.25

Entry on September 25, 2010
Earnings 11/11/2010 (unconfirmed)
Average Daily Volume: 13 million
Listed on September 23, 2010

Transocean Ltd - RIG - close 63.20 change +0.84 stop 53.40

Target(s): 62.95, 64.40, 66.50
Key Support/Resistance Areas: 55.50, 58.25, 63.90, 64.90
Current Gain/Loss: +27%
Time Frame: 2 to 4 weeks
New Positions: Yes, on pullbacks

9/28: After consolidating on light volume over the past couple of weeks RIG has broken out on stronger volume the past two days. The stock came within 5 cents of reaching our 2nd target in early trading today so this target has been lowered to $64.40. Options positions could have been closed for +55% gain on the initial surge this morning. Today's candlestick may be considered a reversal pattern so readers should use caution. However, I do think pullbacks will get bought but the overall broader market strength or weakness will be important.

9/23 & 9/25: Still not much movement in RIG and it is still consolidating on lighter volume. The main reason this position is negative right now is due to a bad entry at the open last Monday when the stock gapped higher. Now we need a breakout which is going to be tough if the broader market continues lower, but so far RIG has held its own. If things pick back up I expect RIG to do well and I view pullbacks as possible buying opportunities.

Current Position: Long November $65.00 CALL, entry was at $2.25

Entry on September 13, 2010
Earnings 11/3/10 (unconfirmed)
Average Daily Volume: 8 million
Listed on September 11, 2010

STEC, Inc. - STEC - close 12.79 change -0.13 stop 12.05

Target(s): 14.15, 14.65
Key Support/Resistance Areas: 14.80, 14.15, 13.45, 12.15
Current Gain/Loss: -20%
Time Frame: 1 to 2 weeks
New Positions: Yes

9/28: STEC has pulled back from big gains late last week. We may need to exhibit patience as the broader market determines its next direction. I like new positions at current levels.

9/25: The storage sector has been beaten down and is due for a comeback if the broader market cooperates. STEC bounced hard off of its 20-day SMA on Thursday and is forming an ascending triangle on its daily chart. I suggest readers initiate long positions if STEC pulls back to $13.10 or breaks higher to $13.50, whichever occurs first. We are targeting a move up to its congestion areas from April and June. If triggered at $13.10, our profit target on option positions is +50% to +75%.

Current Position: Long November $14.00 CALL, entry was at $0.96

Entry on September XX
Earnings 11/03/2010 (unconfirmed)
Average Daily Volume: 1.8 million
Listed on September 25, 2010

iPath S&P 500 VIX ST Futures - VXX - close 16.63 change -0.99 stop 16.23

Target(s): 17.55, 18.45, 19.25
Key Support/Resistance Areas: 17.50, 19.75, 20.60
Current Gain/Loss: -16%
Time Frame: 1 to 2 weeks
New positions: Yes, preferably on pullbacks

NOTE: I view this as an aggressive trade so small position size is recommended. Long VXX is a bearish play on equities, however, it is listed as long play because we are long the underlying instrument.

9/28: Volatility carried into this morning but reversed lower as the bulls stepped in pushing stocks back toward their highs. I want to add a target of $17.55 which should be considered as a place to take profits or tighten stops to protect them. We have a tight stop which will most likely get hit if the broader market continues higher in the coming days.

9/25: VXX collapsed nearly $1 as the market ripped higher on Friday. Our +24% gain is now a -8% loss. I suggest readers use caution with this position. If the market breaks out higher this week we need to get out the way. Then we can consider possibly entering at a lower price. Let's implement a stop at $16.23 and move on if we are taken out.

Current Position: Long November $18.00 CALL, entry was at $1.25

Annotated chart:

Entry on September 22, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 21 million
Listed on September 21, 2010

PUT Play Updates

Archer Daniels Midland - ADM - close 32.89 change +0.25 stop 32.95

Target(s): 32.20, 31.50, 30.85
Key Support/Resistance Areas: 33.50, 31.00, 29.80
Current Gain/Loss: -40%
Time Frame: 1 to 2 weeks
New Positions: Yes

9/28: ADM is testing the backside of a broken intraday upward trend line and a downward trend line (which remains in tact). This is the logical spot for the stock to head lower and make another lower low. $32.20 is still a valid target, although $31.50 (raised 20 cents) looks very doable if the broader market pulls back.

9/25: ADM lost more than -2% of Friday when the broader market gained +2%. I could not find any specific news that would have caused the sell-off in the stock. Nonetheless, it was good for our puts. ADM is finding support at its 20-day SMA and if the broader market breaks out next week ADM could quickly erase Friday's losses. However, if the broader market retraces some of Friday's gains ADM should quickly head to towards our more aggressive targets. I want to tighten the stop down to $32.95. This is an intraday resistance level and just above Thursday's and Wednesday's closing prices.

9/23: We got a little reprieve in ADM today as the stock lost -1.14%. We need the stock to break below today's low to get things moving in our direction, which will also break an intraday trend line. I suggest readers remain cautious on the position and my comments from below remain valid.

Current Position: Long October $32.00 PUT, entry was at $0.82

Entry on September 20, 2010
Earnings: 11/2/2010 (unconfirmed)
Average Daily Volume: 6 million
Listed on September 18, 2010

Charles Schwab - SCHW - close 14.19 change +0.26 stop 14.42

Target(s): 13.45, 13.10, 12.85
Key Support/Resistance Areas: 14.10, 13.35, 13.05, 12.65
Current Gain: -30%
Time Frame: 1 to 3 weeks
New Positions: Yes

9/28: SCHW traded up to its 50-day SMA today and closed just below it. We are very close to being stopped out which will probably happen if there is broader market strength. I've adjusted the targets and suggest readers begin to exit positions on weakness in the stock if it turns lower from here.

9/25: SCHW reversed right back up to its resistance level where the stock has struggled all month. It is a tough call to say where SCHW heads from here. I still think the stock heads lower but I could see the stock trading up to its 50-day SMA first. Our stop is 13 cents above the 50.

9/23: The gap down this morning triggered our entry into SCWH at 50 cents instead of 45 cents. In hindsight, my instructions should have been enter at 45 cents. Nonetheless, SCHW looks vulnerable but we have to get below $13.36 before the stock will head towards its lows. My comments from below remain valid.

NOTE: November strikes were just recently released in SCHW so the open interest not as great as other months. The spreads are reasonable and I am not worried about liquidity as trading will begin to pick up.

Current Position: Long November $13.00 PUT, entry was at $0.50

Annotated chart:

Entry on September 23, 2010
Earnings: 10/14/2010 (unconfirmed)
Average Daily Volume: 11 million
Listed on September 22, 2010