12:25pm (EST)

It has been an incredible week (and month) to say the least, and one of historic proportions which is why we love playing this game so much.  Trust us, sometimes we know it can be hard to stay the course but being a professional option trader is the best job on the planet.  Hands down.

The high and lows can be nerve-racking sometimes but as long as you stick to your trading strategies then it helps keep your emotions in check.  For those of you who stuck out the 8-week trading range and stayed in the market with us then you are reaping the rewards of being patient.

Of course, sometimes we get trapped and we are on the wrong side of the trade or the market but over the last few months we have been all spades while other fund managers and specifically, other option newsletters have struggled to give you winning trades in this tough market.  We know, we read your comments and we are happy to have you on board.

We made big bets building up bullish call positions all month long while the suit-and-ties and talking heads kept calling for a pullback.  However, we got so many clues that this market was heading higher and we kept feeding them to you.  The current 4-week rally was setting up beautifully on the charts each week and when we got the bounce off the October 4 lows, there was no looking back.  In fact, we mentioned that day it felt like capitulation, and we made some great trades buying put options ahead of the drop as the indexes fell through the bottom of their trading ranges but held support by the close.

If you look at our closed trades for 2011 (if you are not a subscriber, request it), you will see where we opened 8 put trades near the end of September and we closed all of them except 1 when the market bottomed on October 4.  You will also see where we started buying call options the VERY next day when we saw support holding.

We weren’t sure if there would be a breakout, but what we did know is that a test back to the top of the trading range was a given.  Yes, we did get a bonus package with yesterday’s surge which has allowed us to close 22-straight winning option trades and 26-out-of-28 since late September.  However, our Weekly Wrap and Monday morning outlook have nailed support and resistance all YEAR long. 

Having said that, we are also trying to keep our portfolio “light” because we do expect the volatility to continue and there are a few headwinds coming up in November that worry us.  The main one will be the “Super Committee” and the possibility of a curve ball over the European debt crisis.  There are already whispers concerning Italy again.

The charts this weekend will offer better clues in what lies ahead for the major indexes, but for now, let’s give the bulls their due.  The Dow will be heading into Monday’s session up nearly 11% for the month while the Nasdaq and S&P are up a staggering 13%.  20% if you count the bounce off the intraday lows.

Unless the bottom falls out on Halloween, the market is poised for a double-digit gain for October.

As we head to press, the Dow is down 8 points to 12,200 while the S&P is off by 3 points to 1,281.  The Nasdaq is lower by 10 points to 2,728. 

We have incredible news again today as one of the trades we opened this morning is up nearly 80% in 3 hours!  Our subscribers will be locking in half profits as soon as we send this update out!  We are also closing another trade that is up 69% in 2 days.  Subscribers, check the Members Area for the updates!

We will be back Sunday night with the Weekly Wrap and some chart work for you to study.  Until then, have a great weekend!