Current Portfolio:

CALL Play Updates

Archer Daniels Midland Co. - ADM - close 33.39 change +0.07 stop 31.90

Target(s): 33.75, 34.15, 35.15, 35.95, and possibly higher
Key Support/Resistance Areas: 38.00, 34.15, 33.00, 32.00
Current Option Gain/Loss: +32%
Time Frame: 2 to 4 weeks
New Positions: No

11/1: ADM started off strong this morning but got knocked down just under its 52-week high of $34.03. On the initial strength positions could have been closed for more than a +50% gain. The company reports earnings tomorrow so I would expect some volatilty. If the stock shoots higher I suggest readers use the strength to closed positions and book a gain, or at least tighten your stops to protect capital. The stock has struggled at near $33.80 in recent weeks so I have added a lower target.

10/30 (James): Shares of ADM continue to consolidate sideways. The stock saw some volatility on Friday after Credit Suisse downgraded the stock on valuation concerns and yet the analyst kept their $37 price target. I agree with Scott that traders will want to consider an early exit on any strength next week. ADM is due to report earnings on Tuesday morning (Nov. 2nd) before the opening bell. Wall Street is looking for a profit of 75 cents a share. Holding over earnings is a higher-risk strategy so I am raising our stop loss to $31.90, just under the 50-dma (currently 32.32). FYI: The Point & Figure chart is very bullish with a long-term $53 target.

Note: ADM reports earnings before the market opens on 11/2. The company has beaten earnings estimates in 3 of the past 4 quarters and I am expecting another surprise beat. Holding positions is a higher risk play so please consider using small position size.

Current Position: Long December $34.00 CALL, entry was at $0.77

Entry on October 27, 2010
Earnings Date 11/2/2010 before market (confirmed)
Average Daily Volume: 5 million
Listed on October 25, 2010

ATP Oil & Gas Corp - ATPG - close 14.09 change -0.26 stop 13.75

Target(s): 14.70, 15.10, 15.40, 16.10
Key Support/Resistance Areas: 18.00, 17.00, 16.25, 14.75, 14.10
Current Gain/Loss: -40%
Time Frame: 1 to 3 weeks
New Positions: No

11/1: Nothing has changed from our comments below. Readers should use caution and consider exiting positions to protect capital, especially on bounces. Our stop is just below and I have adjusted the targets.

10/30 (James): We remain very cautious on ATPG. The stock appeared to breakdown under support at the $14.00 level on Thursday. Fortunately, shares saw a strong bounce (+2.8%) on Friday but I would not buy it. The stock has been underperforming its peers in the oil sector. If the OIX oil index rolls over it will make it even tougher on ATPG to maintain its current share price. The situation could change soon with ATPG reporting earnings on Thursday, Nov. 4th before the opening bell. Wall Street expects a loss of 58 cents a share. Although I have to say ATPG's earnings report could be completely ignored if the market is moving on the FOMC announcement from Wednesday afternoon. I am not suggesting new positions and more conservative traders will want to strongly consider exiting ahead of the earnings report (or even the FOMC meeting).

10/28: The slide in ATPG continues and we are on the verge of getting stopped out. The stock has lost its 20-day and 200-day SMA's as well as a couple of support levels. It is do or die time or we will have to step aside and close the position. The bullish case of a descending wedge remains but the stock may be headed for its 50-day SMA prior to breaking higher, which is below our stop.

Current Position: Long December $16.00 CALL, entry was at $1.00

Entry on October 25, 2010
Earnings Date 11/4/2010 (unconfirmed)
Average Daily Volume: 2.7 million
Listed on October 23, 2010

Genco Shipping - GNK - close 16.20 change -0.35 stop 15.50

Target(s): 16.10 (hit), 16.70, 17.35, 17.95
Key Support/Resistance Areas: 18.25, 17.75, 16.90, 16.25, 15.75
Current Option Gain/Loss: -56%
Time Frame: 1 to 3 weeks
New Positions: No

11/1: Friday's price action in GNK was promising, however, the gains were erased as the stock printed a bearish engulfing candlestick on Monday. In early trading the stock came with 5 cents of our $16.80 target before falling apart. GNK is finding support at its 50-day SMA. If the stock bounces I would use the strength as an opportunity to close positions or tighten stops. The 2nd target has been lowered slithly.

10/30 (James): GNK does have a steady, bullish trend of higher lows. However, shares don't move very fast and I would not open new positions ahead of the company's earnings report. GNK is due to report on November 3rd, after the closing bell. Wall Street is looking for a profit of 98 cents a share. Unfortunately, this report will be completely lost in the shuffle as the market tries to digest the FOMC decision earlier that afternoon. There is a chance that GNK's earnings could surprise given the sharp improvement in shipping rates back in August but in September and October prices leveled off.

Current Position: Long November $17.00 CALL, entry was at $0.80

Note: Readers who want to give this more time to work may want to consider buying the JAN 2011 $17.50 CALLS

Entry on October 12, 2010
Earnings 11/1/2010 (unconfirmed)
Average Daily Volume: 1.2 million
Listed on October 11, 2010

Humana Inc. - HUM - close: 58.68 change: +0.39 stop: 49.75

Target(s): 57.50, 60.00
Key Support/Resistance Areas: 50.00, 51.00, 53.50, 55.00
Current Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see entry point below

11/1: HUM crushed earnings today on the bottom line but fell just short on revenue. The stock gapped higher but immediately began to trade lower. We are keeping our trigger at $53.00 and will use dips as buying opportunities. $53.80 could also be considered an entry point.

10/30 (James): Wow! The rally in HUM has been very impressive. Unfortunately, we're still sitting on the sidelines as spectators since the stock never pulled back. I think that's about to change. HUM is due to report earnings on November 1st (Monday) before the opening bell. Analysts expect a profit of $1.66 a share. Odds are very good HUM should see some profit taking on Monday. Plus, we're expecting a market-wide pull back on Wednesday and Thursday this week. While I'm tempted to raise the trigger to buy calls I am actually going to lower the trigger down to $53.00 (from 53.80).

Suggested Position:

Trigger to buy calls at $53.00 <-- new trigger!

BUY the 2011 January $55 calls.

Entry on November xxth at $ xx.xx
Earnings Date 11/01/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on October 16th, 2010

Volatility Index - VIX - close: 21.83 change: +0.63 stop: 17.45

Target(s): 24.90, 29.00
Key Support/Resistance Areas: 18.00, 21.00, 25.00, 30.00
Current Option Gain/Loss: +4.5%
Time Frame: Two or Three weeks
New Positions: Yes


11/1: Volatility started to climb after the initial gap higher and early strength in the S&P 500. The early strength failed after the first 45 minutes of trading. We are long December $25.00 calls at $2.25 per the play release below.

10/30: Stocks have been climbing for weeks on expectations the Federal Reserve will launch a new round of quantitative easing. Expectations are too high and odds are very strong that no matter what Ben Bernanke says on Wednesday that the market will see a sell-the-news reaction. Obviously a market sell-off will help push the VIX higher.

I am suggesting new bullish positions now but nimble traders could try and launch positions anywhere in the $19-23 zone. The key here is to make sure you have your bullish position open before the FOMC announcement on Wednesday afternoon. Personally I would want to do it on Monday morning but you could wait until Tuesday afternoon before the election results are out.

The VIX moves fast. I am suggesting our first target to take profits at 24.90. Our second target is 29.00. We'll use a relatively wide stop loss at 17.45. Keep in mind that VIX options do not expire on the normal expiration schedule.

Current Position: Long December 2010 25.00 calls (VIX1022L25), entry was at $2.25

Entry on November 1, 2010
Earnings Date --/--/--
Average Daily Volume = xxx million
Listed on October 30th, 2010

PUT Play Updates

Fastenal Co. - FAST - close: 51.76 change: +0.28 stop: 53.40

Target(s): 51.20 (hit), 50.25, 49.65, 48.25, maybe lower
Key Support/Resistance Areas: 55.00, 52.00, 50.00, 48,00,
Current Option Gain/Loss: -35%
Time Frame: 3 to 4 weeks
New Positions: Maybe

11/1: FAST gapped higher this morning and experienced a surge up towards its 20-day SMA where the rally failed. The stock immediately turned lower and closed neat its lows of the day. The stock keeps getting saved near its 50-day and 100-day SMA's, but a deeper correction in the broader market may provide the momentum to break lower towards its 200-day SMA. Time decay is beginning to accelerate so I would use weakness as an opportunity to close positions or tighten stops.

10/30 (James): Scott is right. We have three weeks left before November options expire and the time decay is going accelerate. If you are looking for a new entry point I'd wait for another failed rally under $53.00 and then use December options. On a very short-term basis FAST has found support near its 100-dma three days in a row. A breakdown under this level would be great news for us but I wouldn't be surprised to see a bounce soon.

Current Position: Long November $50.00 PUT, entry was at $1.00

Entry on October 18, 2010
Earnings Date 10/12/10
Average Daily Volume = 1.0 million
Listed on October 16, 2010

Illinois Tool Works - ITW - close 46.23 change +0.55 stop 47.83

Target(s): 44.95, 44.15, 43.50
Key Support/Resistance Areas: 47.75, 46.10, 45.50, 44.60, 44.00, 43.00
Current Gain/Loss: -8%
Time Frame: 2 to 3 weeks
New Positions: Yes

11/1: The bounces in ITW keep getting sold. We need a break below $45.50 to get things moving towards our targets. I've raised the first target to $44.95 to account for the 100-day SMA. A move to this level should produce a +33% gain.

10/30 (James): The post-earnings, oversold bounce has failed. The new trend for ITW seems to be down. Shares are hovering near short-term support at $45.50 and a drop under this level could be used as a new entry point to buy puts. If the market corrects I wouldn't be surprised to see ITW hit the $42-41 zone.

Current Position: Long December $45.00 PUT, entry was at $1.20

Entry on October 27, 2010
Earnings: More than two months (unconfirmed)
Average Daily Volume: 4.5 million
Listed on October 26, 2010

Mechel OAO - MTL - close 23.68 change +0.13 stop 24.60

Target(s): 22.30, 21.25, 20.25
Key Support/Resistance Areas: 24.25, 24.00, 23.60
Current Gain/Loss: -8%
Time Frame: 1 to 3 weeks
New Positions: Yes

11/1: Friday's bounce in MTL continued on Monday and the stock closed above its 200-day SMA. The stock rallied up to touch its 50-day SMA from below for the first time since it broke below on 10/21, which is where today's selling began. There is resistance at current levels but we are going to need to see the broader market correct to see MTL make new lows and reach our targets.

10/30 (James): Our new play on MTL is now open! The stock rallied from the bottom of its current range and tagged the 200-dma on Friday. MTL hit our trigger to buy puts (December $23 strike). If you missed the entry point I would still consider new positions now. Or you could wait for a bounce closer to what should be resistance near $24.00 and MTL's 50-dma. I am suggesting we move our stop loss to $24.60.

Current Position: Long December $23.00 PUT, entry was at $1.30

Entry on October 30, 2010
Earnings Date: More than two months (unconfirmed)
Average Daily Volume: 2.1 million
Listed on October 27, 2010

Millicom Intl. - MICC - close: 95.00 change: +0.40 stop: 98.25

Target(s): 90.25, and the 200-dma
Key Support/Resistance Areas: 98.00, 96.00, 92.00, 90.00
Current Gain/Loss: +0.00%
Time Frame: Three weeks
New Positions: Yes

11/1: MICC is consolidating under its 50-day SMA and declining 20-day SMA (both at $96.50). There is also resitance at $96.00 so this is a logical spot for the stock to turn lower and make a lower low. The 100-day SMA is just under $93.00 which may provide support on weakness. I like new positions to play for a pullback but we are most likely going to need help from the broader market.

10/30: The long-term trend for MICC is bullish but short-term the bulls have lost their focus. MICC has a bearish double top formed in the last six weeks and now shares are failing at the 50-dma in what almost looks like a bear flag pattern. I am suggesting we buy puts now to capture a move toward its long-term trendline. Then we can think about switching directions and buying calls.

I would open positions now. However, you could wait and try and time your entry point on a bounce near $96.00. There is some support near $92.00 but our first target is $90.25.

Suggested Position: Long December 2010 $90 puts (MICC1018X90), entry was at $2.45

Entry on November 1, 2010
Earnings Date 02/01/11
Average Daily Volume = 490 thousand
Listed on October 30th, 2010

PNC Financial - PNC - close 53.17 change -0.73 stop NONE

Target(s): 53.00(hit), 52.10, 51.05 (hit), 50.35
Key Support/Resistance Areas: 54.50, 53.50, 50.50, 49.50, 48.75, 47.00
Current Gain/Loss: -80%
Time Frame: 1 to 2 weeks
New Positions: Neutral

11/1: PNC lost -1.35% today and printed a bearish engulfing candlestick. However, the stock is finding support at its 20 and 50-day SMA's. We have three weeks for PNC to break down and are playing for a move back towards the recent lows. We are most likely going to take a loss on this trade but if we can gain another 20 to 30 cents in premium I suggest exiting the position.

10/30 (James): The larger trend for PNC is certainly down but the breakout over its 50-dma several days ago concerns me. I would hesitate to launch new positions with PNC trading above $52.50 (or even $52.00). We're expecting a market-wide correction soon and believe PNC will be testing new lows for the year before November is done. Keep in mind we only have three weeks left before November options expire. If we see a new entry point I suggest the December or January puts.

Current Position: Long November $48.00 PUT, entry was at $1.26

Entry on September 30, 2010
Earnings: 10/21/2010 (unconfirmed)
Average Daily Volume: 5 million
Listed on September 29, 2010

VMWare Inc - VMW - close: 76.63 change: +0.17 stop: 80.25

Target(s): 72.25, 68.50
Key Support/Resistance Areas: 80.00, 78.65, 75.00, 72.00, 200-dma
Current Gain/Loss: +10%
Time Frame: 3 to 4 weeks
New Positions: Yes

11/1: VMW reached Friday's high in early trading and immediately turned lowere. The stock is consolidating just below its 100-day SMA and declining 20-day SMA. The first level of support is near $75.00. If the stock breaks this level it may find support at $73.00 but I would be surprised if $72.25 is not reached.

10/30: VMW has seen an incredible two-year fun but it appears that the upward momentum has reversed. The stock started selling off days ahead of its earnings report. When VMW reported on Oct. 18th shares gapped down again. Now traders are selling into strength and VMW has a bearish trend of lower highs and lower lows. I do think VMW could be a bullish candidate again but it might take a correction toward $70 or its 200-dma before shares find any real support. In the meantime the short-term trend is down.

I am suggesting bearish positions now. We'll use a stop at $80.25 but more conservative traders might be able to get away with a stop close to $79.00. Our first target is $72.25. Our secondary target is $68.50 (or the 200-dma, whichever VMW its first).

Suggested Position: Long December 2010 $70.00 put (VMW1018X70), entry was at $1.85

Entry on November 1, 2010
Earnings Date 01/25/11
Average Daily Volume = 4.5 million
Listed on October 30th, 2010


First Solar Inc. - FSLR - close 134.44 change -3.24 stop 134.75

Target(s): 145.00, 147.50, 149.75
Key Support/Resistance Areas: 137.50, 140.00, 145.00, 147.50, 150.00
Current Gain/Loss: -35.48%
Time Frame: 3 to 4 weeks
New Positions: Yes, but look for a bounce

11/1: We were taken out of FSLR today as the post-earnings sell-off failed to reverse course as we expected. The next levels of support are $130, $126, and $123. I would keep an eye on these levels as possible bullish entry points.

10/30 (James): Bingo! Scott was right on the money expecting a post-earnings dip in FSLR. Shares gapped open at $139.15 (our new entry point). There was a brief bounce toward $142 but FSLR eventually settled under potential support near $140, under its 50-dma, and under the bottom of its bullish channel. All of those "unders" in the previous sentence make me a little nervous but there is a decent chance FSLR could fill the gap. Since we got a better than expected entry point (139.15 instead of 141.00) I'm adjusting our stop loss down to $134.75. More conservative traders may want to keep their stops tight and closer to the $136 level.

10/28: FSLR reported earnings today after the bell and the stock is down -$10 in afterhours trading as of the time of this writing. The report looked good to me as FSLR beat earnings by 9 cents, revenues were better than expected, and guidance was slightly above analysts' estimates. However, the company said they see some uncertainties in Europe which explains the weakness. The stock closed the extended session right at $141.00 to the penny which was my anticipated support level for the stock. I suggest we use the weakness to our advantage and open small positions tomorrow. This is a higher risk play so I suggest using smaller position size. We are targeting a bounce and have close targets. If buyers step in these targets could be reached quickly so be ready to take profits.

Closed Position: Long December $155 CALL at $1.60, entry was at $2.48

Annotated Chart:

Entry on October 30th at $139.15
Earnings Date 10/28/10 (confirmed)
Average Daily Volume = 1.5 million
Listed on October 16th, 2010