NEW DIRECTIONAL CALL PLAYS

Sturm, Ruger & Co. Inc. - RGR - close: 52.32 change: +0.61

Stop Loss: 49.95
Target(s): 57.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
RGR is an American firearm manufacturer. The stock has been pretty volatile in recent weeks with the early August rally reversing. Yet it looks like investors are back to buying the dips near its trend of higher lows.

RGR displayed impressive relative strength today by completely ignoring the market's widespread weakness. Instead RGR posted a +1.1% gain. If this rally continues it could spark a short squeeze. The most recent data listed short interest at 30% of the very small 18.8 million share float.

We are suggesting a trigger to buy calls at $52.65. If triggered our target is $57.50.

Trigger @ 52.65

- Suggested Positions -

buy the Oct $55 call (RGR1319j55) current ask $1.10

Annotated Chart:

Entry on August -- at $---.--
Average Daily Volume = 341 thousand
Listed on August 27, 2013


NEW DIRECTIONAL PUT PLAYS

Sherwin-Williams Co. - SHW - close: 167.20 change: -4.65

Stop Loss: 170.25
Target(s): sell half at 161.00, then exit the rest at $156.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
SHW is facing a number of headwinds including rising input costs, a deteriorating housing market, and slowing sales. When SHW reported Q2 earnings in July the company missed estimates, missed revenues, and guided lower.

A couple of weeks ago SHW closed below its simple 200-dma for the first time in over a year. Since then SHW has tried to bounce but shares reversed lower again today. Now SHW's long-term up trend is in serious jeopardy. The Point & Figure chart has turned bearish and is forecasting a $136 target.

The recent lows are near $166.00. We are suggesting a trigger to buy puts at $165.90. If triggered you could target a drop toward $160.00 and its 300-dma. I am suggesting we plan on exiting half of our position at $161.00. We'll plan on exiting the remain of our position at $156.00.

Trigger @ 165.90

- Suggested Positions -

Buy the Sep $160 PUT (SHW1321u160) current ask $1.80

Annotated Chart:

Entry on August -- at $---.--
Average Daily Volume = 781 thousand
Listed on August 27, 2013