NEW DIRECTIONAL CALL PLAYS

Genesse & Wyoming - GWR - close: 29.30 change: +0.19 stop: 26.90

Why We Like It:
GWR has been lagging behind the rally in the larger railroad names. Now that shares are breaking out past resistance it has a chance to catch up with its peers. I'm suggesting call positions now with a stop loss at $26.90 (under the 100-dma). More conservative traders might want to wait for a rise over $30.00 before launching positions. Our first target is $32.90. Our second target is $34.75.

Note: The market is still very overbought. We want to cut back on our position size and reduce our risk.

Suggested Options:
I am suggesting the September calls.

BUY CALL SEP 30.00 GWR-IF open interest= 40  current ask $1.10

Annotated Chart:

Picked on   August 15 at $ 29.30
Change since picked:      + 0.00
Earnings Date           11/03/09 (unconfirmed)
Average Daily Volume =       230 thousand
Listed on August 15, 2009         


U.S. Oil Fund - USO - close: 36.03 change: -1.77 stop: 33.30

Why We Like It:
Crude oil has begun to correct but the larger trend is up. We want to buy calls on the USO on a dip toward its trendline. Use a trigger to open positions at $34.50. We'll place our stop at $33.30. Our first target is $37.50.

Suggested Options:
I'm suggesting the September calls. Strikes are available in $1.00 increments.

BUY CALL SEP 34.00 UBO-IH open interest=2431 current ask $3.20
BUY CALL SEP 36.00 UBO-IJ open interest=4279 current ask $2.05
BUY CALL SEP 38.00 UBO-IL open interest=3028 current ask $1.20

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 34.50
Change since picked:      + 0.00
Earnings Date           00/00/00
Average Daily Volume =      11.5 million  
Listed on August 15, 2009         


NEW DIRECTIONAL PUT PLAYS

First Solar - FSLR - close: 141.78 chg: -2.98 stop: 151.00

Why We Like It:
FSLR is poised to breakdown. The stock is testing support at $140.00 and its 61.8% Fibonacci retracement (see chart) for the second time in five weeks. The trend of lower highs is forecasting the next move will be down. If FSLR breaks $140 the next level of support is probably $120 and then $100. I am suggesting a trigger to buy puts at $139.00. If triggered our first target is $122.50. Our second target is $111.00. This is a very aggressive trade and FSLR can be an extremely volatile stock. I'm suggesting very small position sizes. FYI: the Point & Figure chart is bearish with a $108 target.

Suggested Options:
We want to use September puts. I would prefer to buy Octobers but none are available. The next month available is December.

BUY PUT SEP 130 QHB-UZ open interest=2973 current ask $5.20
BUY PUT SEP 120 QHB-UD open interest=7952 current ask $2.70

Annotated Chart:

Picked on   August xx at $ xx.xx <-- TRIGGER @ 139.00
Change since picked:      + 0.00
Earnings Date           11/03/09 (unconfirmed)
Average Daily Volume =       3.5 million  
Listed on August 15, 2009         


NEW MARKET NEUTRAL STRANGLE PLAYS

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

Schlumberger - SLB - close: 53.38 change: -1.75 stop: n/a

Why We Like It:
SLB has been consolidating in a large pennant formation of higher lows and lower highs. A breakout is imminent. I'm suggesting we use a strangle to capture the move.

Suggested Options:
We want to buy the September $60 calls and September $45 puts. Our estimated cost is $1.05. The plan is to sell if either options hits $2.50 or higher.

BUY CALL SEP 60.00 SLB-IL open interest=2006 current ask .60
-and-
BUY PUT SEP 45.00 SLB-UI open interest=3427 current ask .45

Annotated Chart:

Picked on   August xx at $ xx.xx 
Change since picked:      + 0.00
Earnings Date           10/15/09 (unconfirmed)
Average Daily Volume =       9.2 million  
Listed on August 15, 2009