Option Investor
Newsletter

Daily Newsletter, Thursday, 6/16/2011

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Two Days Of Gains, But Questions Remain

by Todd Shriber

Click here to email Todd Shriber
Stocks tried to turn lemons into lemonade on Thursday in the face of several less-than-stellar economic reports and rising political turmoil in Greece. Even with those headwinds, the Dow Jones Industrial Average posted a solid gain, while the S&P 500 and Russell 2000 showed gains of a more meager stature. The Nasdaq closed lower and will probably open lower tomorrow, a situation that will be addressed momentarily.

Stats Table

It was a busy day in terms of economic data and none of it was particularly wonderful, though that has become the norm in recent weeks. The Labor Department said initial claims for jobless benefit by 16,000 last week to 414,000. The decline is good news, the fact that the four-week moving average remains stubbornly above 400,000 is not. Last week was the tenth consecutive week the four-week moving average resided above 400,000. Still, last week's reading was below the 420,000 new claims economists were forecasting.

Jobless Claims Chart

The new residential construction report issued today was another case of ''not exactly great, but certainly less bad.'' Permits for single-family homes jumped 2.5% in May to a seasonally adjusted rate of 405,000 units. There ends the good news because the May 2011 number is 6.9% below the May 2010 number and almost 77.5% below the number posted in September 2005, according to Blytic.com. Single-family housing starts rose 3.7% last month, but that is almost 9% below the May 2010 level and 77% below the 2006 peak, Blytic reports. Ugly is all I can say.

Single-Family Housing Permits

And speaking of ugly, we have the Philly Fed manufacturing index which plunged to -7.7 in June from 3.9 in May. That gives us the worst reading in 31 months. Economists were expecting a reading of 5.5.

Philly Fed Manufacturing Index

Normally, I do not start with the after-hours action, but today I will make an exception because BlackBerry maker Research In Motion (RIMM) treated investors to yet another quarter of disappointing results and an even more disappointing outlook. Before getting into the most recent quarterly numbers from RIM, it pays to take a look at why the stock's chart, which I include momentarily, is so ugly. This chart help explains why.

Smartphone Market Share

What that chart shows is smartphones operating on Google's (GOOG) Android are eating everyone's lunch, at least here in the U.S., and that includes BlackBerry and the iPhone. To be sure, Apple's (AAPL) iPhone is nowhere near as vulnerable as BlackBerry and it is widely expected that iPhone will surpass BlackBerry this year for the second spot in U.S. smartphone market share. The problem for RIM is not only is it losing market share in the U.S., it is relying on international markets to make up for those lost subscribers, but in many of those markets, BlackBerry has to do battle with at least the iPhone, if not a host of other rival products.

For the most recently completed quarter, RIM earned $1.33 a share on revenue of $4.91 billion, but analysts were expecting a profit of $1.32 on sales of $5.14 billion. I have been saying for over a year that missing on the top line is a recipe for disaster for any company and given RIM's recent track record, this is damaging news.

Revenue outlook for the next quarter is even worse. RIM expects revenue of $4.2 billion to $4.8 billion, well below the $5.46 billion analysts were expecting. RIM's tablet, the PlayBook, did show sales of 500,000 units, 100,000 above estimates, but making headway against the iPad will be a formidable task and as one analyst quoted by the Wall Street Journal notes, investors are getting tired of hearing RIM say wait for new products in the back half of this year.

The company also cut its fiscal 2012 profit outlook to $5.25-$6 a share from $7.50. Co-CEO Jim Balsillie said ''Fiscal 2012 has gotten off to a challenging start.'' You don't say. The company also made a weird share repurchase announcement today, saying it will repurchase some of its own shares, but the amount and timing of the buybacks were not disclosed.

Well not to be snarky, but RIM will be getting a good deal on its own stock. The shares are plunging in the after-hours session, down 15% and hovering around $30. RIM has not traded below $30 since September 2006.

RIM Chart

In more positive news, there was a bit of mergers and acquisitions activity in the air on Thursday as Energy Transfer Equity (ETE) announced it will acquire Southern Union (SUG) for $4.2 billion, creating one of the largest U.S. natural gas pipeline operators in the process. The combined company would have more than 44,000 miles of natural gas pipelines and about 30.7 billion cubic feet per day of natural gas transportation capacity, according to the Associated Press.

The deal is the second big one for Energy Transfer in 2011. In March, the company paid $1.93 billion to acquire LDH Energy Asset Holdings. Energy Transfer will pay $33 a share for Texas-based Southern Union, a 17% premium to where the stock closed on Wednesday. Shares of Energy Transfer jumped 8.2% on volume that was nearly quadruple the daily average on news of the deal. Even with that big move higher, the stock still yields 5.2%.

For more news and commentary on the energy sector, register for the OilSlick Daily Newsletter (HERE).

Energy Transfer Chart

In the graphic evidence category, this continues to be a truly gruesome environment in which to take a company public. That statement is backed up with a quick view of almost every Chinese Internet IPO from late 2010 through this year. Remember when LinkedIn (LNKD) jumped to over $120 on its first day of trading? That is a hard event to recall when the stock closes near $68 as it did today.

Still, the allure of going public is too strong to ignore for some companies and they end up learning a lesson, at least a short-term one, the hard way. Pandora (P), the Internet music service went public yesterday and started off hot before fizzling into the close. Today was no better. With today's 24% plunge, investors that paid $26 for Pandora on Wednesday are now in the hole to the tune of nearly 50%.

Along the same lines, I read that Angie's List has selected a bank to manage its upcoming IPO. Angie's List is sort of Craigslist meets Yelp, but I have a feeling a fate similar to that of LinkedIn and Pandora awaits Angie and her list. By the way, a few years ago, banks were clamoring for Craig to take his list public, but he never did. Perhaps he made the right choice.

Pandora Chart

Looking at the charts, today's bounce for the S&P 500 really is not worth bragging about, but if the market is going to continue move higher, the Index would find resistance around 1290 and would then need to claw its way back above 1320. Support still looks to be 1250 and if that does not hold, the 1200-1210 area could be next.

S&P 500 Chart

Even with a decent move today, the Dow could not find its way back above 12,000 and resistance looms in the 12,070 area. If the blue-chip index can make its way above that area, another 150 points of upside is possible. Support is around 11,700 and if that does not hold, downside targets would be 11,450 and then perhaps below 11,200.

Dow Chart

The Nasdaq has been looking especially vulnerable and that tune will not change following RIM's terrible results. It would probably take a return to 2700 and higher to get buyers interested again, in the near-term, a run to 2600 is a real possibility. From there, 2545 could be the next stopping point.

Nasdaq Chart

The Russell 2000 seems to have found support at its 200-day moving average, but it would not be accurate to say that fund managers have suddenly embraced small-caps again. They have not. It will probably require a move above 800 to encourage small-cap buying. Likewise, a drop below 760 probably takes the Russell 2000 to 740 and then back to 700-710.

Russell 2000 Chart

I still no reason to be initiating long positions here, certainly not large ones, and I am also of the mind that the S&P 500 has probably gotten to the point where the financials need to finally start carrying their weight. Problem is, there is just too much headline risk for that group for it to start chipping in to broader market gains in any meaningful fashion.

The best I can say is that big financials ETFs like XLF and KBE are nearing critical support levels and if those areas hold, each could bounce a couple of bucks, but those moves probably will not put a Ferrari in your garage. I remain leery of financials and non-Apple tech until I find a reason not to be. Trust me, I would like to find that reason.


New Option Plays

Will Traders be in a TGIF mood?

by James Brown

Click here to email James Brown

Editor's Note:

Will stocks bounce on Friday or will the market decline and post its seventh weekly loss in a row? Tomorrow is a quadruple-witching options and futures expiration Friday. Will we see more volatility or will the market quietly drift into the weekend? I suspect we'll see the later with stocks moving sideways, hugging the nearest option strike price.

We did see the S&P 500 tag its simple 200-dma and the 1260 level. Plus, the NASDAQ composite hit potential support at the 2600 level. There is probably decent chance that stocks actually bounce tomorrow. The small cap Russell 2000 index is also trying to bounce from technical support at its simple 200-dma and its lows from Monday. If that happens then the $RUT may have formed a short-term bullish double bottom.

However, even if stocks do bounce the intermediate trend is still down. We can use the bounce as a new entry point to launch bearish positions. Of course that requires waiting for the bounce to near overhead resistance or the trend of lower highs. We may not see a new bearish entry point tomorrow. It could take a day or two of the market bouncing before we see a new entry point.

If you feel compelled to trade tomorrow then I would be tempted to buy calls on the S&P 500, the NASDAQ, or the Russell 2000 index or their appropriate ETFs (SPY, QQQ, or IWM). If you do this would be a very short-term trade for one to three days and use a very tight stop loss under today's low. I'm probably least excited about the NASDAQ since the sell-off in RIMM tonight could have an impact on the NASDAQ.

Do not forget that while it's unlikely there is still the possibility that stocks experience some end-of-quarter window dressing in the second half of June. Whether that happens next week or the last week of June I can't say and it may not happen at all.

- James


In Play Updates and Reviews

Mixed Economics Produce Mixed Results

by James Brown

Click here to email James Brown

Editor's Note:

Many stocks hit new relative lows intraday only to pare their losses by the closing bell. Tomorrow (Friday) is a quadruple witching options and futures expiration Friday.

Looking at our play list we saw DE hit our trigger to buy puts.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 325.16 change: -1.59

Stop Loss: 317.45
Target(s): 337.50, 347.50
Current Option Gain/Loss: + 9.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/16 update: Ouch! What happened to AAPL today. The stock fell from approximately $328.50 in early morning to a low of almost $318 this afternoon. It was a generally quiet day until late afternoon when AAPL, for no apparent reason, sliced through support near $325.00, through its simple 200-dma and below additional price support at $320.00. This was the first time AAPL had crossed its simple 200-dma since April 2009. The move down under these support levels surely triggered a multitude of stop losses. Then just as quickly AAPL pared its losses with a bounce back to settle above $325 again. Sharp intraday moves on no news are certainly mysterious. Readers may want to hesitate on launching new positions. However, technically this bounce from its lows could be used as a new entry point to buy puts. Alternatively you could argue that the dip toward $318 is a new lower low, which merely confirms the bearish trend of lower lows and lower highs.

This has always been a very aggressive, higher-risk trade. I am inching up our stop loss to $318.25, just under today's low.

(SMALL POSITIONS)- Suggested Positions -

Long July $340 call (AAPL1116G340) entry @ $3.05

06/16 new stop loss @ 318.25

Entry on June 15th at $325.00
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 12.9 million
Listed on June 8th, 2011


Fossil Inc. - FOSL - close: 107.53 change: +1.13

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: -13.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/16 update: FOSL managed to recoup a good portion of yesterday's losses. Traders are still buying dips near the $105 level of support. More conservative traders may want to raise their stop loss. I am not suggesting new positions at this time. Our final target is $114.00.

Earlier Comments:
We wanted to keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

Long July $110 call (FOSL1116G110) Entry @ $3.00

06/14 1st target hit @ 109.75, July option @ 3.20 (+6.6%)
06/11 Exit June calls ASAP. Option @ 0.35 (-74.6%)

Entry on May 27th at $104.96
Earnings Date 08/09/11 (unconfirmed)
Average Daily Volume = 842 thousand
Listed on May 26th, 2011


Forest Labs Inc. - FRX - close: 38.53 change: -0.05

Stop Loss: 34.90
Target(s): 39.00, 42.50
Current Option Gain/Loss: + 92.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/16 update: FRX isn't moving much. Shares are likely drifting sideways due to investors waiting for options expiration to happen after Friday's close. FRX remains overbought and due for a correction. I'm expecting a dip toward $36.00 or even its 50-dma. If you don't want to endure that sort of pull back, which would significantly hurt our options then exit now! We do have August calls but we will not hold over the July earnings report. I am not suggesting new positions at this time.

- Suggested Positions -

Long the August $37 call (FRX1120H37) Entry @ $1.40

06/13 1st target hit @ $39.00. August $37 call @ $2.85 (+103.5%)
06/11 New stop loss @ 34.90
06/10 Planned exit of June $37 call. exit $1.10 (+69.2%)
06/09 Prepare to exit the June calls on June 10th at the close
06/04 new stop loss @ 34.45
05/28 New stop loss @ 33.75

Entry on May 20th at $35.29
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on May 19th, 2011


Goldman Sachs - GS - close: 136.09 change: +1.24

Stop Loss: 128.45
Target(s): 134.00, 137.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
06/16 update: GS isn't moving. The stock has been chopping sideways for almost three weeks. I am about ready to give up and look elsewhere. This has always been an aggressive trade and we're still waiting for a dip to what should be support near $130.

Earlier Comments:
The 2010 lows are near $130. I am suggesting we launch very small bullish positions on a dip at $130.25. This is a very aggressive, higher-risk trade.

Trigger @ 130.25 (very small positions)

- Suggested Positions -

buy the July $135 call (GS1116G135)

Entry on May xxth at $ xx.xx
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 6.5 million
Listed on May 21st, 2011


Union Pacific - UNP - close: 98.79 change: -0.64

Stop Loss: n/a
Target(s): 109.00, 114.00
Current Option Gain/Loss: - 100%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
06/16 update: UNP continues to slowly drift lower. This particular trade has been dead for a few days now. We're just waiting for option expiration.

- Suggested Positions -

Long the June $105 call (UNP1118F105) Entry @ $1.62

06/11 option has deteriorated. Removing the stop loss.

Entry on May 9th at $102.19
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on May 7th, 2011


PUT Play Updates

Amazon.com Inc. - AMZN - close: 183.65 change: -2.33

Stop Loss: 192.55
Target(s): 180.25, 175.00
Current Option Gain/Loss: -27.3% & +17.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/16 update: We've got good news for the bears. AMZN has broke down from its $192-185 trading range. The intraday rebound off its afternoon lows did leave AMZN above its simple 100-dma but the close under $185.00 is bearish. I wouldn't expect a lot of movement tomorrow given it's an option expiration Friday. I am not suggesting new positions at this time.

NOTE: It was our plan to exit our June $185 puts today (Thursday) at the closing bell. The put closed with a bid at $2.10 (-27.3%).

Earlier Comments:
The plan was to keep our position size small. Our first target is $180.25. Our second target is $175.00 (or the simple 200-dma, whichever one AMZN hits first).

- small bearish positions -

June $185 PUT (AMZN1118R185) Entry @ $2.89, exit $2.10 (-27.3%)

- or -

Long July $180 PUT (AMZN1116S180) Entry @ $4.40

06/16 planned exit, June $185 put @ -27.3%
06/11 New stop loss @ 192.55
06/07 New stop loss @ 195.15.

Entry on June 6th at $188.01
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 4.5 million
Listed on June 4th, 2011


Abercrombie & Fitch Co. - ANF - close: 63.88 change: -1.50

Stop Loss: 72.05
Target(s): 65.50, 62.75(100-dma)
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/16 update: It looks like we may have missed our entry point. I am not suggesting new positions at this time. ANF has hit technical support at its 100-dma. There is a decent chance it will bounce. The plan was to launch bearish positions at $69.75. Our first target is $65.50. Our second target is the 100-dma but if this trade takes too long we may abandon the second target. Aggressive traders could aim for support near $60 but I'm concerned the 100-dma will act as support.

Trigger @ 69.75

- Suggested Positions -

buy the July $70 PUT (ANF1116S70)

Entry on June xxth at $ xx.xx
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 2.8 million
Listed on June 14th, 2011


Becton, Dickinson and Company - BDX - close: 84.88 change: -0.03

Stop Loss: 87.15
Target(s): 80.50
Current Option Gain/Loss: -20.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/16 update: There was no follow through on yesterday's sell-off. BDX is likely to churn sideways tomorrow as investors wait for option expiration to complete. I'll repeat my comments from yesterday. More conservative traders could wait for a little more confirmation and open positions at $84.45.

Our target is $80.50. We'll try and keep our target just above the 200-dma.

- Suggested (SMALL) Positions -

Long July $80 put (BDX1116S80) Entry @ $0.50

Entry on June 13th at $84.95
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on June 11th, 2011


Deere & Co - DE - close: 79.27 change: -0.94

Stop Loss: 82.75
Target(s): 75.25, 71.00
Current Option Gain/Loss: - 3.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/16 update: I am a little surprised. I really wasn't expecting DE to breakdown until Monday. Shares continued to show relative weakness and slipped to new six-month lows this afternoon. DE hit our trigger to buy puts at $79.25. I would still consider new positions now or you can wait for a failed rally in the $80-82 area. Our first target is $75.25. Our second, more aggressive target would be $71. FYI: The Point & Figure chart for DE is bearish with a $71 target.

- Suggested Positions -

Long July $75 PUT (DE1116S75) Entry @ $1.52

Entry on June 16th at $79.25
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 5.7 million
Listed on June 15th, 2011


Diamond Offshore Drilling, Inc. - DO - close: 66.94 change: +0.29

Stop Loss: 70.55
Target(s): 64.50, 62.50
Current Option Gain/Loss: +23.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/16 update: DO tagged a new relative low this morning at $65.63 but eventually pared its losses. Shares look a little bit oversold here. I wouldn't be surprised to see a bounce back toward the $69-70 area. I am not suggesting new positions at this time.

Earlier Comments:
Our targets are $64.50 and $62.50. FYI: Traders should note that the most recent data listed short interest at more than 14% of the float. That does raise the risk of a short squeeze should the stock suddenly find strength.

- Suggested Positions -

Long July $67.50 PUT (DO1116S67.5) entry @ $2.09

06/15 new stop loss @ 70.55
06/13 new stop loss @ 71.55

Entry on June 8th at $68.91
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on June 7th, 2011


General Dynamics Corp - GD - close: 71.28 change: +0.43

Stop Loss: 72.25
Target(s): 65.50
Current Option Gain/Loss: -36.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/16 update: Warning! Our put play is at risk here with GD's close above short-term resistance at $71.00. The early morning rally did fail near $72.00 but if the market is positive tomorrow we could see GD hit our stop loss at $72.25. I am not suggesting new positions at this time.

-Suggested Positions-

Long July $67.50 PUT (GD1116S67.5) Entry @ $1.25

Entry on June 10th at $69.75
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on June 9th, 2011


Nike Inc. - NKE - close: 80.29 change: -0.10

Stop Loss: 83.05
Target(s): 75.50
Current Option Gain/Loss: +36.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
06/16 update: NKE dipped just enough to hit a new relative low and then it rebounded back into its trading range. I would not expect a lot of movement tomorrow with it being an options expiration Friday. I remain bearish but you can wait for a new failed rally under the 200-dma or a new relative low to launch positions.

Our target is $75.50 but we'll adjust the target as the trade progresses. NKE is due to report earnings on June 27th and we do not want to hold over the announcement.

- Suggested Positions -

Long July $80 PUT (NKE1116G80) Entry @ $2.00

06/11 New stop loss @ 83.05

Entry on June 7th at $81.75
Earnings Date 06/27/11 (confirmed)
Average Daily Volume = 2.3 million
Listed on June 6th, 2011


Transocean Ltd. - RIG - close: 61.75 change: -0.88

Stop Loss: 66.15
Target(s): 58.00, 55.25
Current Option Gain/Loss: +37.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/16 update: RIG continues to under perform and set a new relative low this afternoon. The stock is starting to look a little oversold again. I'm not suggesting new positions at this time.

More conservative traders may want to take profits early near $60.00 since the $60 level might be support but I'm setting our targets at $58.00 and $55.25.

We wanted to keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

Long July $60 puts (RIG1116S60) Entry @ $1.32

Entry on June 13th at $63.32
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on June 11th, 2011


SanDisk Corp. - SNDK - close: 42.24 change: +0.06

Stop Loss: 46.25
Target(s): 40.50, 36.00
Current Option Gain/Loss: +56.3% & +39.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/16 update: SNDK is still churning sideways above short-term support near $42.00. There is no change from my prior comments. I would still consider new positions now or you could wait for a new relative low. The $40.00 level might offer some round-number support. More conservative traders might want to lower their stop closer to the $45.00 level.

Our targets are $40.50 and $36.00, given enough time. FYI: The P&F chart for SNDK is bearish with a $30 target.

- Suggested Positions -

Long July $42.00 PUT (SNDK1116S42) Entry @ $1.10

- or -

Long July $40.00 PUT (SNDK1116S40) Entry @ $0.69

06/08 New stop loss @ 46.25

Entry on June 6th at $44.31
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 5.8 million
Listed on June 4th, 2011


Stericycle Inc. - SRCL - close: 85.68 change: +1.29

Stop Loss: 88.05
Target(s): 84.00, 81.00
Current Option Gain/Loss: +16.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/16 update: Hmm... there was no follow through on yesterday's breakdown under support. SRCL managed a bounce back above $85.00 on decent volume. I suspect this is merely a reaction to options expiration this weekend. SRCL will probably close Friday near the $85.00 strike price. I am not suggesting new positions at this time.

- Suggested Positions - Long July $85 PUT (SRCL1116S85) Entry @ $1.50

06/15 adjusted 2nd target to $81.00.
06/11 new stop loss @ 88.05
06/08 Exit June $85 puts. Bid @ $1.00 (+100%)
06/04 new stop loss @ 90.05

Entry on May 31st at $88.78
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 502 thousand
Listed on May 28th, 2011


T.Rowe Price Associates - TROW - close: 56.79 change: +0.13

Stop Loss: 62.25
Target(s): 55.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see Trigger

Comments:
06/16 update: There is no change from my prior comments on TROW. We're still waiting for an entry point. Currently we want to buy puts on a bounce at $59.50. If triggered we'll use a stop loss at $62.25. Our target is $55.25. FYI: The Point & Figure chart for TROW is bullish with a $51 target.

Trigger @ 59.50

- Suggested Positions -

buy the July $60 PUT (TROW1116S60)

Entry on June xxth at $ xx.xx
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on June 13th, 2011


Whole Foods Market - WFM - close: 55.27 change: +1.29

Stop Loss: 58.15
Target(s): 55.10, 52.00
Current Option Gain/Loss: + 76.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/16 update: Be careful here. WFM is starting to bounce. A better than expected earnings report from grocery store chain Kroger (KR) helped fuel gains for the industry. WFM trailed its peers but the stock remains short-term oversold and due for a bigger correction higher. I wouldn't be surprised to see an oversold bounce back into the $57-58 area. I am not suggesting new positions at this time.

- Suggested Positions -

Long July $55 PUT (WFM1116S55) Entry @ $1.05

06/13 Exit June $60 puts. Bid @ $5.20 (+136.3%)
06/11 New stop loss @ 58.15.
06/11 Consider exiting our June puts early.
06/08 1st target hit @ 55.10. June $60 put @ 4.30 (+95.4%), July $55 put @ 1.92 (+82.8%)
06/06 new stop loss @ 60.15
06/04 new stop loss @ 60.65

Entry on June 2 at $58.70
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on June 1st, 2011