2:05pm (EST)

The market is on track for its second-straight weekly win as we head into the final hours of trading before the weekend.  The bulls have done a good job of blowing off the talking heads and the professional money managers who continue to say we are either in a bear market of the market is pulling back.

With the major averages having made a push to get back to near even for the year, we just have to laugh when we hear some of these knuckleheads on TV.  Of course, for those of you who follow us one a regular basis, we are neither, bullish or bearish, we just like price action.  As option traders, we don’t care if the Dow breaks 12,000 or falls back to 10,000.  We can wear pom-poms when the bulls are rallying and we will switch sides in the blink of an eye if there is a trend change.

One thing about trading ranges is that they can be tough to trade but what makes THIS current trading range different from the recent ones we have seen this year is this one is more volatile and well-defined.  However, what the talking heads don’t know is that the longer we stay range bound, the bigger the breakout (or breakdown) will be.

We also like to remind our reads that trading ranges can get “stretched” and that sometimes they can produce short-covering which leads to higher prices.  Sometimes, like last week, trading ranges get stretched to the downside as well.

So, as of right now, it is hard to say if the range is getting stretched or if the bulls are on the verge of a breakout.

One stock that is breaking out…

Google (GOOG, $588.67, up $29.68) smashed Wall Street’s estimates by reporting a profit of $2.7 billion, or $8.33 a share, on revenue of $7.5 billion.  Backing out employee stock options, the company earned $9.72 a share.  Analysts were looking for $2.5 billion or $8.74 a share, on $7.2 billion in sales.

We profiled a call and put option yesterday that we looked at but decided the risk wasn’t worth it.  The Google October 600 calls (GOOG111022C00600000, $5.10, down $1.10) were at $6.20 yesterday and would have cost $620 for 1 contract.  They traded to a high of $10.68 this morning.

The October 500 puts (GOOG111022P00500000, $0.10, down $3.30) were at $3.40 and would have set you back $340 for 1 contract.  This is known as a straddle or “chicken trade” and would have cost $960 to put it on.

As you can see, the calls got a nice pop while the put options fizzled but Google moved enough to make the trade profitable.

We will be back Sunday night with our Weekly Wrap to give you a better picture on where the market could be headed as we break down the charts once again.  We do know that next week has the potential to be bullish as 3Q earnings get into full swing.  If companies can come in with better-than-expected results and raise guidance going forward then the bulls could test the 2011 highs over the next couple of months.

One thing the bulls will be looking for today is a positive finish and history is on their side for Monday’s session.  In fact, over the past 3 decades, the blue-chips have finished in the green on the Monday of October options expiration week 25 times.  In other words, the bulls have a very good chance to keep the momentum going into next week.

One last look at the market before we head out and it looks like this.  The Dow is up 116 points to 11,594 while the S&P 500 is higher by 15 points to 1,218.  The Nasdaq is advancing 33 points to 2,653.

Subscribers, check the Members Area for our last minute updates and we will see the rest of you Sunday night.  Until then, have a great weekend everyone!