Option Investor
Newsletter

Daily Newsletter, Monday, 8/29/2011

Table of Contents

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

Market Wrap

Seriously? Economic Data Lifts Stocks

by Todd Shriber

Click here to email Todd Shriber
Believe it or not, the primary catalyst behind the big up day for stocks was some decent economic data here in the U.S. as an unexpected jump in consumer spending in July helped lift the S&P 500 to a gain of nearly 3%. The Nasdaq surged by more than 3% while the Dow Jones Industrial Average tacked on nearly 255 points for a jump of almost 2.3%. The Russell 2000 surged nearly 4%.

Stats Table

No doubt, the consumer spending data was a pleasant surprise. The Commerce Department reported showed consumer spending climbed 0.8% in July and the June reading was revised upward to a drop of just 0.1% compared with the previous reading of 0.2%. Economists had been expecting a July increase of half a percent.

July's consumer spending data was good enough to prompt some positive revisions to GDP growth projections by some analysts. While the second-quarter GDP number was nothing short of anemic, Capital Economics said July's consumer spending data could lead to full-year GDP growth of 2.5%. Not amazing, but better than the 1.5%-2% many banks and economists have been forecasting.

Real personal consumer expenditures increased by half a percent in July compared with the 0.1% drop seen in June while personal income climbed 0.3% to $42.3 billion. The June personal income reading was also revised up to an increase of 0.2% from the previous reading of 0.1%. All this means consumers are saving less as the savings rate as a percentage of disposable income fell 5% last month.

There was some economic news that was not so good. The National Association of Realtors said pending home sales declined 1.3% last month. Contracts signed to purchase previously owned homes fell to 89.7 from 90.9 in June, indicating low mortgage rates and foreclosure prices have not been enough to get home buyers off the sidelines.

Personal Expenditures And Income Chart

Post-Jackson Hole, positivity permeated the market today as just three S&P 500 constituents closed in the red and all 10 industry groups traded higher. While there may have been some initial disappointment on Friday to Federal Reserve Chairman Ben Bernanke not announcing a third round of quantitative easing, a couple of things on that front are worth remembering. First, Bernanke was clear to remind investors that the Fed still has tools as its disposal to jolt the economy if necessary. Second, if QE3 is not announced in the near-term, perhaps that signals the Fed is bullish in its outlook for economic growth. Today's economic data would underscore that view.

Keeping with the positivity theme, Monday was a stellar day for insurance stocks. According to Bloomberg News, last week, Kinetic Analysis Corp. estimated that the total loss to insurance providers related to Hurricane Irene could be as much as $14 billion. That estimate was slashed to $2.6 billion today, sparking a rally in almost every major insurance stock. Rather than run through each of them individually, I have included a chart of the SPDR KBW Insurance ETF (KIE), which gained nearly 6% on volume that was almost twice the daily average. Total economic losses, including those that are not insured, may be about $7 billion, Bloomberg reported.

Insurance ETF Chart

Bank of America (BAC), the Dow component and largest U.S. bank by assets, enjoyed another solid day and this time, it had nothing to do with Warren Buffett. Shares of BofA gained more than 8% on volume that was well above the daily average after the bank announced it will sell half its stake in China Construction Bank to a group of unidentified investors in a transaction worth about $8.3 billion.

This is just the latest in a number of asset sales that BofA has engaged in an almost desperate attempt to assuage investors that it does have sufficient capital. Bruce Thompson, BofA's CFO, said the deal to sell half of its China Construction stake will boost its Tier 1 capital reserves by $3.5 billion and reduce its risk-weighted assets by $7.3 billion under the Basel I rules, the New York Times reported.

All told, BofA will be parting with about 13.1 billion shares of China Construction, more than likely to sovereign wealth funds in Asia and the Middle East. Even the after that massive share dump, BofA will still own 5% of China Construction, the Times reported. The transaction is slated to close later this quarter.

Bank Of America Chart

And from the category of ''can you believe it,'' one of the biggest gainers on any major U.S. exchange today were the U.S.-listed shares of National Bank of Greece (NBG). Admittedly, by price tag this is a penny stock, but a 38% gain on almost triple the average daily volume for any stock with ties to Greece is noteworthy these days.

Still suffocating from the grip of an epic financial crisis, Greek stocks got some good news today when Eurobank and Alpha Bank, the country's second- and third-largest banks respectively, agreed to merge in a deal that will make the combined bank larger than NBG. The merger creates a bank with almost $212 billion in assets. NBG tried to acquire Alpha earlier this year, but the latter dismissed the offer as too low.

A bank with $212 billion in assets is a big bank, especially by the standards of Greece, but to put things in perspective, Greece has received $315 billion in bailout funds over the past two years, according to the Associated Press.

National Bank of Greece Chart

Looking at the charts, I do not want to go out on a limb and say we are suddenly in the throes of a legitimate bullish rally, but Monday's action does add to that case. Resistance for the S&P 500 looked strong at 1205, but that level was taken out today. Now the test becomes the ability of 1200 to hold as support. If not, a firmer floor is found at 1175. On the upside, the S&P 500 now has a lot of room to work with before encountering next resistance in the 1245-1250 area.

S&P 500 Chart

Twenty-nine of the Dow's 30 members managed to close in the green today with Home Depot (HD) the lone laggard. On an individual basis, Monday's surge for TRV was probably a one-off event and BAC is still beholden to substantial headline risk, but there is some good news as well. Oil bears have been unable to force West Texas Intermediate below $80 and every positive economic data point is good for oil prices. In turn, that is good for CVX and XOM.

Fund managers looking for safety and dividends could also drive the Dow higher in the coming days. Monday's close above 11,500 could prove to be a bullish sign as that was some solid resistance. Support should be old resistance at 11,325.

Dow Chart

The Nasdaq was able to take out its August high at 2555 today while smashing through resistance at 2480. Now the index has a clear runway for another 75-100 points. The Nasdaq's bullish tell would be the 2550 zone turning into support. If not, a pullback could mean a retreat to 2480. A source of encouragement for tech bulls could be strong charts for AAPL, AMZN and PCLN.

Nasdaq Chart

The Russell 2000 was a stout performer today and a couple more days of this type of action and it might be safe to say money managers are embracing risk again. Resistance at 700 was did not prove to be much of a hurdle at all and the Russell 2000 looks it could make a run back to the 750 area where it would start to encounter more congestion. From a psychological standpoint, it would be a positive to see the Russell remain above 700.

Russell 2000 Chart

Monday's trade was significant in that there was a legitimate catalyst in the form of some surprisingly strong economic data and that is important because this week is chock full of economic data points with the big ones being ISM, the ADP jobs report and then the August non-farm payroll number on Friday. Since we are heading into a holiday weekend, this is the perfect opportunity for buyers to take advantage of absent sellers and tack on some light volume gains. Encouraging economic data provides the perfect excuse to do some buying now with the expectation of a rally into year end.


New Option Plays

Specialty Retailer

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Tractor Supply Co. - TSCO - close: 60.96 change: +1.62

Stop Loss: 58.75
Target(s): 64.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The RLX retail sector (+2.4%) lagged behind the S&P 500 (+2.8%) today. Yet that didn't stop TSCO from breaking out past resistance near $60.00. The stock has been consolidating with a bullish trend of lower highs and traders just bought the dip near its 200-dma on Friday. Today's breakout could signal a move toward the next level of price resistance near $65.00. However, I need to point out that the 50-dma and 100-dma could be technical resistance in the $62-64 area.

I would consider small bullish positions now but only if TSCO and the S&P500 index both open positive tomorrow morning. If the trade is opened we'll use a stop loss at $58.75. Our first target is $64.75.

NOTE: The September options expire in less than there weeks. If TSCO does not see any follow through higher these will evaporate fast. The spread is a larger percentage of the overall trade with the Septembers.

*See Entry Details Above*

- Suggested Positions -

buy the SEP $65 call (TSCO1117I65) current ask $0.65

- or -

buy the OCT $65 call (TSCO1122J65) current ask $2.10

Annotated Chart:

Entry on August xx at $ xx.xx
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 858 thousand
Listed on August 29, 2011


In Play Updates and Reviews

DIA & WFM Hit Our Targets

by James Brown

Click here to email James Brown

Editor's Note:

Our bullish plays on DIA and WFM hit our profit targets today. We also had five trades opened on the strength this morning. Meanwhile our ALEX put play was stopped out.

-James

Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 93.39 change: +1.93

Stop Loss: 87.40
Target(s): 94.75, 98.25
Current Option Gain/Loss: Sep.$85: -5.4% & Oct. $95: -2.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/29 update: Our BCR trade is finally open. Both BCR and the S&P500 opened higher. BCR opened a lot higher with a gap up at $92.11 (our entry point). Shares then rose to a +2.1% gain and managed to close above resistance at its August 15th high. If you missed the entry point today you may want to wait for a dip near $92.00. More conservative traders will want to consider a tighter stop loss.

- Suggested (small) Positions -

Long SEP $95 call (BCR1117I95) Entry $1.85*

- or -

Long OCT $95 call (BCR1122J95) Entry $3.40*

08/29 play opened. BCR gap open entry at $92.11
* these are estimates. options did not trade today
08/27 Adjusted back to old strategy. Buy calls now if both BCR and S&P500 open positive on Monday.
08/27 move stop loss to $87.40 and adjusted strikes to $95
08/25 New strategy. Buy the dip at $86.50, new stop 84.85

Entry on August 29 at $92.11
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.25 million
Listed on August 23, 2011


Caterpillar Inc. - CAT - close: 83.25 change: -2.15

Stop Loss: 79.49
Target(s): 87.00, 94.50
Current Option Gain/Loss: Sep.$90: +6.0% & Oct. $90: +3.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/29 update: Our bullish trade on CAT was also opened with the market's widespread rally on Monday. Shares of CAT gapped open higher at $87.11 and eventually settled with a +3.5% gain. If you missed the entry this morning then consider waiting for a dip the $86 level. Readers will want to consider raising their stop loss.

Earlier Comments:
We want to keep our position size small.

- Suggested Positions -

Long SEP $90 call (CAT1117I90) Entry $2.30

- or -

Long OCT $90 call (CAT1122J90) Entry $4.35

08/29 trade opened. CAT gapped open at $87.11
08/27 buy-the-dip trigger not hit. We will switch back to buying calls now if both CAT and S&P500 open positive on Monday.
08/27 new stop loss at $79.49
08/24 play was not triggered. New strategy to buy the dip at $80.50 with a stop at $78.75.

Entry on August 29 at $87.11
Earnings Date 10/24/11 (unconfirmed)
Average Daily Volume = 13.9 million
Listed on August 23, 2011


Cabot Oil & Gas - COG - close: 73.98 change: +2.03

Stop Loss: 67.75
Target(s): 75.85, 79.25
Current Option Gain/Loss: Sep.$75: +3.5% & Oct.$75: +8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/29 update: Our new trade on COG was opened this morning. Shares of COG actually gapped open higher at $72.79 (our entry point). Nimble traders could have taken advantage of the morning dip back down to $71.64. COG eventually rallied to a +2.8% gain. Today's move appears to be a bullish breakout from the pattern of lower highs and higher lows.

- Suggested Positions -

Long SEP $75 call (COG1117I75) Entry $2.80

- or -

Long OCT $75 call (COG1122J75) Entry $4.80

08/29 COG gapped open higher at $72.79

Entry on August 29 at $72.79
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on August 27, 2011


Deckers Outdoor - DECK - close: 88.40 change: +3.75

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: -25.5%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/29 update: It was another strong session for DECK with a +4.4% gain. The stock has broken through resistance near $85 and its 200-dma. Shares settled right under resistance at its 50-dma, 100-dma and the $90 area. I am not suggesting new positions at this time.

DECK has reduced the loss on our option position to -25%. Cautious traders may want to exit now or exit on a move into the $92.50-95.00 zone, which is the next level of resistance.

Earlier Comments:
I do consider this an aggressive trade. DECK can be a volatile normally and in this market the moves get a little crazy. We definitely want to keep our position size small. I am not listing a stop loss on this trade.

- Suggested (SMALL) Positions -

Long SEP $90 call (DECK1117I90) Entry $4.70

08/20 Remainder of our August $90 call position expires at $0.00 (-100%), We took profits on these on the 12th at +232%
08/18 DECK is down nearly 20 points in three days
08/12 1st target hit @ 93.50
bid on Aug. $90 call @ $5.05 (+232.2%)
bid on Sep. $90 call @ $8.45 (+79.7%)

Entry on August 11 at $83.53
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on August 9, 2011


Dow Jones Industrial (ETF) - DIA - close: 115.14 change: +2.44

Stop Loss: 111.25
Target(s): 114.50, 117.50
Current Option Gain/Loss: Sep $110: +90.4% & Sep $112: +113.6%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/29 update: Target achieved. The DIA opened higher at $113.97 and then rallied to resistance at $115.00. Our first target to take profits was hit at $114.50. The bid on the Sept. $110 call was at $5.95 (+88.8%) and the Sept. $112 call was at $4.30 (+95.4%). More conservative traders will want to consider a complete exit now with the DIA at resistance and less than three weeks left on our September options. Over the weekend the newsletter added a secondary, more aggressive target at $117.50.

NOTE: I am raising our stop loss to $111.25. I am not suggesting new positions at this time.

Earlier Comments:
We will need to use our position size to limit risk.

- Suggested (small) Positions -

Long SEP $110 call (DIA1117I110) Entry $3.15

- or -

Long SEP $112 call (DIA1117I112) Entry $2.20

08/29 new stop loss @ 111.25
08/29 1st target hit at $114.50
Sept. $110 call bid at $5.95 (+88.8%)
Sept. $112 call bid at $4.30 (+95.4%)
08/27 new stop loss at $108.90
08/27 added 2nd target at $117.50. We still want to take $$ off the table at $114.50
08/20 add a stop loss at $105.70

chart:

Entry on August 19 at $108.00
Earnings Date --/--/--
Average Daily Volume = 15 million
Listed on August 18, 2011


Energy XXI Ltd. - EXXI - close: 26.24 change: +1.78

Stop Loss: 21.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 65.3%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
08/29 update: Good news! Today's +7.2% rally in EXXI is also a bullish breakout from the neutral pattern of lower highs and higher lows. Shares also managed to close over short-term resistance at $26.00. My only complaint would be the lack of volume behind the move. I would not chase EXXI here. We will raise our stop loss to $21.90. More conservative traders may want to use a stop closer to $23 instead.

- Suggested Positions -

Long DEC $25 call (EXXI1117L25) Entry $2.60

08/29 new stop loss @ 21.90
08/27 new stop loss @ 20.90

Entry on August 22 at $22.00
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on August 20, 2011


Green Mountain Coffee Roasters - GMCR - close: 98.71 change: + 0.80

Stop Loss: 89.50
Target(s): 104.00
Current Option Gain/Loss: ---.-- & (+17.8%)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/29 update: The action in GMCR today was troubling. With the market in rally mode it would have been the perfect day to see GMCR surge toward resistance near $105. Instead the stock produced a gap open near $101 that petered out. GMCR eventually closed with a gain of +0.8%. So why did shares underperform? That's the mystery.

It could have been CNBC talking all day about the +18% climb in coffee prices in the last two weeks. You may recall that in the past couple of months companies like SJM and KFT both announced price reductions because they were paying less for coffee. Looks like that could change.

In other news GMCR announced a $145 million-deal to sell its Van Houtte "Filterfresh" business to ARAMARK. Maybe investors were worried it was a bad move.

We are not suggesting new positions at this time. Our final target is $104.00. Cautious traders may want to exit early now.

Earlier Comments:
As a high-risk, speculative play we wanted to keep our position size very small.

- Suggested (SMALL) Positions -

Long SEP $100 call (GMCR1117I100) Entry $3.65

08/27 Strategy Update: Stop loss @ 89.50. New target at $104.00.
08/23 Cautious traders may want to exit now with the bid on our Sep. $100 call at $3.25 (-10.9%)
08/18 if you're bearish on the market, then exit now! Sep.bid @$2.29
08/15 exit August $95 calls immediately. Bid @ $7.95 (+190.1%)
08/10 Consider exiting all August options now
08/09 adjusting 2nd target to $107.50
08/09 1st target hit at $99.50.
Aug. $95 call bid $6.30 (+129.9%), Sep. $100 call bid $6.95 (+90.4%)
08/08 we are not using a stop loss on this trade

Entry on August 8 at $91.26
Earnings Date 12/08/11 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on August 6, 2011


Hansen Natural Corp. - HANS - close: 89.03 change: +4.40

Stop Loss: 80.90
Target(s): 89.75, 94.50
Current Option Gain/Loss: Sep.90: +43.9% & Oct.90: +13.6%
Time Frame: 2 to 6 weeks
New Positions: see below

Comments:
08/29 update: Our new trade in HANS is off to a strong start. Shares gapped open at $86.00 and then surged to a +5.1% gain and a new high. Our first target to take profits could be hit soon at $89.75. I probably would not chase HANS here if you missed the entry point this morning.

- Suggested Positions -

Long SEP $90 call (HANS1117I90) Entry $2.05

- or -

Long OCT $90 call (HANS1122J90) Entry $4.40

08/29 HANS gapped open at $86.00

Entry on August 29 at $86.00
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on August 27, 2011


Lululemon Athletica - LULU - close: 52.31 change: +3.19

Stop Loss: 47.90
Target(s): 56.00, 59.50
Current Option Gain/Loss: + 12.5%
Time Frame: up to September 9th
New Positions: see below

Comments:
08/29 update: LULU produced a +5.6% gain. Unfortunately, most of that was on the opening gap higher at $54.05. Our trade was opened this morning. I would not chase LULU now. The $55 level is potentially short-term resistance. Wait for a dip back toward the $53.00 area and consider new positions there.

NOTE: This is a short-term trade. We do not want to hold over the Sept. 9th earnings report.

- Suggested Positions -

Long SEP $55 call (LULU1117I55) Entry $3.20

Entry on August 29 at $54.05
Earnings Date 09/09/11 (confirmed)
Average Daily Volume = 4.2 million
Listed on August 27, 2011


O'Reilly Automotive - ORLY - close: 65.24 change: +1.31

Stop Loss: 61.75
Target(s): 63.75, 66.00
Current Option Gain/Loss: +173.6%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/29 update: ORLY has been a steady performer. Shares added another +2% today. The stock could hit our final target at $66.00 tomorrow. More conservative traders may want to go ahead and exit now. I'm not suggesting new positions at this time.

Earlier Comments:
Use a small position size to limit your risk.

- Suggested (small) Positions -

Long SEP $60 call (ORLY1117I60) entry $1.90

08/24 new stop loss @ 61.75
08/24 1st target hit @ 63.75, option @ $4.00 (+110.5%)
08/23 new stop loss @ 59.40
08/20 new stop loss @ 57.80
08/15 trade opened
08/13 adjusted entry point. removed Aug. strike
08/10 new trigger at $55.00
08/09 adjusted targets to $63.75 and $66.00.

Entry on August 15 at $60.37
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on August 6, 2011


SPDR S&P500 ETF - SPY - close: 121.36 change: +3.39

Stop Loss: n/a
Target(s): ---.--, 122.50
Current Option Gain/Loss: Sep.$120call (+52.9%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/29 update: It was a very bullish day for stocks. The SPY rallied +2.8% and closed above potential resistance at its mid August highs. There is a very good chance that the SPY will hit our target at $122.50 soon. More aggressive traders may want to aim for the $124-125 zone as their final exit target instead. I am not suggesting new positions at this time.

Earlier Comments:
We are not using a stop loss on this trade.

- Suggested (SMALL) Positions -

Long SEP $120 call (SPY1117I120) Entry $2.55

08/20 Trigger to add positions at $112.00 was NOT hit. We are removing the entry point. Do not add to positions at this time.
08/18 adding a new entry point to buy the Sep.$118call at $112.00
08/16 exit Aug. $118 call now. bid $2.26 (+5.1%)
08/15 1st target hit @ 119.75
bid on the Aug. $118 call @ $2.15 (+0.0%)
bid on the Sep. $120 call @ $3.32 (+30.1%)
08/08 trade opened at $115.00. We are not using a stop loss.

Entry on August 8 at $115.00
Earnings Date --/--/--
Average Daily Volume = 235 million
Listed on August 6, 2011


Stericycle Inc. - SRCL - close: 87.36 change: +3.02

Stop Loss: 81.25
Target(s): --.--. 88.50
Current Option Gain/Loss: +105.7%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/29 update: SRCL produced another strong performance. The stock quickly broke through resistance near $85 and rallied to a +3.5% gain. Our final target to take profits is at $88.50. More aggressive traders may want to aim higher near $90 or near $92.50ish. Cautious traders will want to consider an early exit now since the option has doubled! We are not suggesting new positions at this time.

- Suggested (small) Positions -

Long SEP $85 call (SRCL1117I85) Entry $1.75

08/29 consider exiting now since the option is up +105%
08/27 new stop loss @ 81.25
08/25 new stop loss @ 79.75
08/25 1st target hit @ 84.90, option @ $2.75* (+57.1%)
*this is an estimate. the option did not trade today.

Entry on August 23 at $81.29
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 858 thousand
Listed on August 22, 2011


U.S. Oil Fund - USO - close: 33.96 change: +0.81

Stop Loss: 31.90
Target(s): $37.50, 40.00
Current Option Gain/Loss: +23.4%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/29 update: I heard some analysts on TV today sharing their opinion on how oil prices should go down. One of their main points was now that the Libyan civil war is over that production would come back on line and ease the supply issues. Yet Libya may not hit full production for several months so their premise seemed a little premature.

Meanwhile the USO gapped open higher near $34 and hovered there the rest of the day. I am not suggesting new positions at this time.

Earlier Comments:
Keep your position size small! This is a lottery-ticket style of play.

- Suggested Positions -

Long NOV $34 call (USO1119K34) Entry $2.05

08/27 new stop loss @ $31.90
08/27 removing 2nd trigger to add another position.
08/20 Adding a new buy-the-dip entry at $30.50, stop @ 29.00

Entry on August 9 at $31.97
Earnings Date --/--/--
Average Daily Volume = 10.7 million
Listed on August 8, 2011


United Technologies Corp. - UTX - close: 73.87 change: +2.31

Stop Loss: 68.75
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 23.4%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/29 update: The rebound in UTX continues and the stock outperformed the DJIA today with a +3.2% gain. We are still not suggesting new bullish positions at this time. Cautious traders may want to exit early now and limit our loss to just -24%.

Earlier Comments:
We want to keep our position size small.

- Suggested Positions -

Long SEP $75 call (UTX1117I75) Entry $1.83

08/27 Adding a stop loss at $68.75
08/27 We have removed the buy-the-dip entry at $65.00
08/20 New entry point to buy calls on dip at $65.00
08/20 Our aggressive, higher-risk trade with August options has expired. Entry price on Aug. $75 call (UTX1120H75) was $0.29. exit 0.00 (-100%)

Entry on August 15 at $73.21
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on August 13, 2011


PUT Play Updates

CBOE Volatility Index - VIX - close: 32.28 change: - 3.31

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -91.2%
Second Position Gain/Loss: - 86.0%
Third Position Gain/Loss: -62.2%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/29 update: The VIX fell -9.3% as stocks surged to their fifth gain in six sessions. I don't see any changes from my prior comments.

We are not suggesting new positions at this time.

Earlier Comments:
I am not listing a stop loss on this trade. We should consider this a higher-risk, speculative trade. I'm setting our targets at 26.00 and 22.50.

- Suggested Positions -

Long SEP $25.00 PUT (VIX1121U25) Entry $4.00

- Second Position, entered at the open on Monday, Aug. 8th -
(very small positions)

Long SEP $25.00 PUT (VIX1121U25) Entry $2.50

- 3rd Position, listed Aug. 8th, Open Aug. 9th @ open. -

Long SEP $30.00 PUT (VXI1121U30) Entry $5.70

08/17 August VIX options expire
1st position Aug. $25 put @ $0.00 (-100%)
2nd position Aug. $25 put @ $0.00 (-100%)
08/08 3rd position listed to buy at the open on Aug. 9th
08/08 2nd position was filled the open.

Entry on August 5 at $28.48
Earnings Date --/--/--
Average Daily Volume = xxx
Listed on August 4, 2011


CLOSED BULLISH PLAYS

Whole Foods Market, Inc. - WFM - close: 64.29 change: +3.21

Stop Loss: 57.25
Target(s): 64.00
Current Option Gain/Loss: + 95.9%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/29 update: Target achieved. WFM surged +5.25% and managed to hit our newly adjusted target at $64.00 this afternoon.

Earlier Comments:
We want to keep our position size small.

- Suggested Positions -

SEP $60 call (WFM1117I60) Entry $2.45, exit $4.80 (+95.9%)

08/29 target hit at $64.00
08/27 new stop loss @ 57.25

chart:

Entry on August 15 at $58.68
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on August 13, 2011


CLOSED BEARISH PLAYS

Alexander & Baldwin, Inc. - ALEX - close: 40.88 change: +2.03

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: Sep: -80.0%, DEC: -45.4%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
08/29 update: Another sharp market rally was too much for the bears and shorts started getting covered. ALEX rallied +5.2% and hit our stop loss at $40.75. This is likely just a short-term move and the bearish fundamentals for the shipping industry will reassert themselves. I'd keep ALEX on your watch list for anther bearish entry point on a failed rally near the 200-dma or the $45 level.

- Suggested Positions -

SEP $35 PUT (ALEX1117U35) Entry $1.00* exit $0.20 (-80.0%)

- or -

DEC $30 PUT (ALEX1117X30) Entry $1.10* exit $0.60 (-45.4%)

08/29 stopped out @ 40.75
08/22 ALEX gapped open higher at $38.33
* options did not trade on Monday. These entries are estimates.

chart:

Entry on August 22 at $38.33
Earnings Date 11/10/11 (unconfirmed)
Average Daily Volume = 279 thousand
Listed on August 20, 2011