Editor's Note:

The market just suffered a very ugly week but there's a decent chance that stocks can rally off their August lows. Of course that chance depends on favorable headlines out of Europe and the parade of economic data this week.

In addition to this evening's new candidates, readers may want to consider these symbols as well. VRTX and TDC both appear to be bullish candidates. If you believe stocks can bounce off their August lows then you might want to consider bullish positions on the index ETFs like DIA, IWM, and the SPY.

- James


NEW DIRECTIONAL CALL PLAYS

Dollar Tree Inc. - DLTR - close: 75.91 change: +1.59

Stop Loss: 73.40
Target(s): 79.75, 82.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
We had DLTR listed as a call play on the newsletter earlier in the week but we were stopped out on Thursday's market-wide plunge. Shares found support near the $74.00 area but the intraday low was actually $73.62. Traders bought the dip on Friday morning and the stock outperformed with a +2.1% gain.

I am suggesting we hop on board. The plan is to buy calls now but only if DLTR and the S&P 500 index both open positive on Monday morning. We'll use a stop loss at $73.40.

*See Entry Details Above*

- Suggested Positions -

buy the OCT $77.50 call (DLTR1122J77.5) current ask $2.35

- or -

buy the NOV $80.00 call (DLTR1119K80) current ask $2.75

Annotated Chart:

Entry on September xx at $ xx.xx
Earnings Date 11/17/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on September 24, 2011


iPath Copper ETN - JJC - close: 42.84 change: -1.72

Stop Loss: 39.95
Target(s): 46.50, 49.75
Current Option Gain/Loss: Unopened
Time Frame: 10 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Copper prices were crushed this past week. The combination of worries about a global economic slow down and then rumors of a margin hike for trading metals helped produce a massive -17% drop in copper. Technically copper is off more than 20% from its highs, placing it in a bear market. Yet the sell-off is so sharp that copper is oversold and due for a bounce. Normal volume is 267 thousand shares a day for the JJC copper ETN. Friday's volume was over one million. That could be signs of a capitulation.

Friday after the market close the CME did raise margin requirements but since the copper prices already sold off on the rumor they could bounce on the news but we do face some risk of follow through selling come Monday morning. Readers may want to use small positions to limit their risk.

I am suggesting bullish positions now. We want to buy calls at the open. You have to decide if you want to use a tight stop loss under Friday's low (which was 42.16) or use a wide stop. The newsletter is placing our stop loss at $39.95. I'm setting our targets are $46.50 and $49.75. We prefer the December $45 calls but I'm listing October calls for more aggressive traders.

- Suggested Positions -

buy the OCT $45 call (JJC1122J45) current ask $1.25

- or -

buy the DEC $45 call (JJC1117L45) current ask $2.55

Annotated Chart:

Entry on September 26 at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 267 thousand
Listed on September 24, 2011


Watson Pharmaceuticals - WPI - close: 70.70 change: +1.56

Stop Loss: 66.95
Target(s): 74.75, 78.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Investors seem unconcerned over a potential legal battle for WPI. The company has distribution rights to a generic version of Lovenox, produced by Amphastar Pharmaceuticals. Both companies are being sued by Momenta Pharmaceuticals and Novartis AG who plan to bring their own generic version of the drug to market. News of the lawsuit appeared to have little affect on shares of WPI.

If you look at WPI's performance last week you can see that traders bought the dip near $67.00 on Thursday morning. There was almost no sell-off on Friday morning and shares rallied back to close above potential resistance at $70.00. I am suggesting bullish positions now. However, we only want to buy calls on WPI if both the stock and the S&P 500 index both open higher on Monday morning.

We'll use a stop loss at $66.95. More conservative traders might want to use a stop closer to $68.00 instead. Our targets are $74.75 and $78.50.

*See Entry Details Above*

- Suggested Positions -

buy the OCT $75 call (WPI1122J75) current ask $1.05

- or -

buy the NOV $75 call (WPI1119K75) current ask $2.00

Annotated Chart:

Entry on September xx at $ xx.xx
Earnings Date 11/01/11 (confirmed)
Average Daily Volume = 1.4 million
Listed on September 24, 2011