12:55pm (EST) 

Now this is what we call the start of earnings season…

Third-quarter earnings got underway on Tuesday with Alcoa (AA, $9.81, down $0.24) “officially” kicking things off but we were looking forward to today’s announcements from JPMorgan (JPM, $31.35, down $1.85), which has already reported, and Google (GOOG, $555.01, up $6.51) which reports after the closing bell.

We don’t see the need to take on any risk when it comes to the Financial stocks and although they look cheap, they still can’t be “trusted” given the uncertainty with Europe’s issues and the drama here at home.  Some of the Financial stocks have been beaten to a pulp so it’s been hard to short them because they could jump any day.  They have bounced over the past week so we were hoping JPMorgan could offer us some clues on which way this sector could trade over the next month, not just weekly.

JPMorgan beat Wall Street’s estimates by posting a profit of $4.3 billion, or $1.02 a share, while analysts were looking for 92 cents a share.  However, if you back out the company’s nearly $2 billion “accounting benefit” they actually would have earned $3.1 billion, or $0.73 a share.

We plan on listening to the company’s conference call later tonight but the jury is still out on the sector.  At some point, JPMorgan will be a “Buy” but there is no rush right away and we wouldn’t be surprised if shares take another dip below $30.

The last time out Google reported they smashed analysts’ forecasts and shares soared $70 from nearly $530 to $600 back in July.  We aren’t sure which way the stock will move in after-hours but a good report is crucial for the Nasdaq. 

As far as the options, they are too expensive for us to play with and aren’t worth the risk unless maybe you are selling them.  The Google October 600 calls (GOOG111022C00600000, $6.20, up $.150) would cost you $600 for 1 contract while the October 500 puts (GOOG111022P00500000, $3.40, down $0.60) would cost you $340.

If you bought both options your breakeven point would be $610 or $490.  This is also know as a strangle trade or “chicken” trade but the premiums will keep us on the sidelines.  We will do a follow-up in the morning on this trade but it is too risky for us to consider trading.

The market has traded lower for much of the day but Tech has shown a little strength as the Nasdaq has popped into positive territory.  The index is currently down 5 points to 2,599.  The Dow is lower by 99 points and is at 11,420 while the S&P is down 12 points to 1,195.

We have more great news concerning our current trades as Rambus (RMBS, $16.62, up $0.93) has made a strong move above $16.  Our call option recommendation from late September is now up 60% but we are looking for triple-digits.  We are also closing our Pepsico (PEP, $62.14, down $0.56) trade today for a 40% profit and another trade recommendation of ours was stopped out this morning for a 56% win.

Subscribers, check the Members Area for the updates.