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Call Updates

UltraShort Russell2000 - TWM - cls: 68.37 chg: -0.92 stop: 64.75

The small cap Russell 2000 is trying to bounce and continues to look poised for a rebound but it's struggling. This is putting pressure on the TWM, which moves twice the inverse of the RUT. Technically the TWM looks short-term bearish with two failed rallies near its exponential 200-dma in the last several days. I would look for a dip and a bounce in the $66.00 area before considering new bullish positions in the TWM. Of course things could change on Monday morning if the market's plunge on negative news. More conservative traders could always exit early now and jump back in when we see another entry point. We have two targets. Our first target is $77.50. Our second target is $82.50.

Suggested Options:
If the TWM provides a new entry point we would use the October calls.

Picked on September 09 at $ 71.37
Change since picked: - 3.00
Earnings Date 00/00/00
Average Daily Volume = 7.4 million


CBOE Volatility Index - VIX - close: 25.66 chg: +1.27 stop: n/a

The VIX is still inching higher. A number of traders are waiting for the VIX to spike towards 30% volatility before considering bullish positions. A few pundits expect that could occur soon. This week has enough drama in it that it could happen before September option expiration. We're not suggesting new positions at this time. Our target is the $29.75 mark. Readers might want to consider scaling out of positions in the 28-29 region.

FYI: More conservative traders might want to stick a stop loss under 22.00.

Suggested Options:
We're not suggesting new positions. We were using the October calls.

Picked on August 03 at $ 22.57
Change since picked: + 3.09
Earnings Date 00/00/00
Average Daily Volume = x million

Put Updates

Intuitive Surgical - ISRG - cls: 278.19 chg: +0.52 stop: 280.55

I am a little surprised that ISRG did not hit our stop loss on Friday but the market was not acting very bullish. Thus far resistance at the $280.00 level is holding. Of course Murphy's law will probably influence the situation and ISRG could spike above $280 on Monday, hit our stop, and then collapse! That's the way it goes. You have to play with stop losses. As long as the $280 level, bolstered by the exponential 200-dma and now the 10-dma, holds up as resistance we're going to let resistance do its job. I'd probably wait for a new decline under $270.00 before initiating new bearish positions. Right now we're only listing one target at $251.00. More aggressive traders might want to consider aiming for the January 2008 lows near $225 but keep in mind the $250 level could be strong support. This should be considered a higher-risk play because the stock price can be so volatile and the options can have wide spreads.

Suggested Options:
If ISRG provides a new entry point we'd use the October puts.

Picked on September 09 at $268.11
Change since picked: +10.08
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume = 655 thousand


Lamar Advertising - LAMR - cls: 37.16 chg: -0.14 stop: 38.01

The long-term trend for LAMR is lower. The bounce from its summer lows has failed at its descending 200-dma twice in the last few weeks. Early last week was the latest bearish reversal. More aggressive traders may want to buy puts now. We want to see LAMR break support near $36.00 first. We're suggesting a trigger to buy puts at $35.90. If triggered our target is 31.50 mark. More aggressive traders could aim for a new relative low.

Suggested Options:

Picked on September xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 1.4 million


Roper Industries - ROP - cls: 58.13 chg: +0.09 stop: 60.55*new*

After looking more closely at ROP I'm starting to wonder if our stop loss is a little too tight. Look at the chart below and you can see the larger trendline of lower highs. More aggressive traders might want to adjust their stop to just over the $61.00 level. We're going to move our stop to $60.55, which is above technical resistance at the 50-dma and above the 200-dma. Wait and watch for another failed rally in the $59.00-60.00 zone as an entry point to buy puts again. Our target is $54.25. FYI: The Point & Figure chart is bearish with a $45 target but the P&F chart also shows some support near $53.00.

Suggested Options:
If ROP provides a new entry point we would use the October puts.

Picked on September 03 at $ 58.19
Change since picked: - 0.06
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 664 thousand


Unibanco - UBB - close: 108.53 chg: +5.65 stop: 110.85

Wow! We thought UBB might bounce but not all in one day. On Thursday we warned readers that UBB could bounce back toward $110 and its 10-dma. That's exactly what happened on Friday. Shares rallied to $110.38 before paring its gains a bit. This actually looks like another entry point to buy puts again. The rebound back toward $110 is a 50% retracement of its two-week sell-off. UBB has already exceeded our first target at $100.50. Our second target is $92.50. The Point & Figure chart has produced a triple-bottom breakdown sell signal and the bearish target has dropped from $92 to $84. The stock can be volatile so readers should consider this a higher-risk play.

Suggested Options:
We are suggesting the October puts.

Picked on September 04 at $108.82 /1st target hit 9/10/08
Change since picked: - 0.29
Earnings Date 11/06/08 (unconfirmed)
Average Daily Volume = 1.5 million

Strangle Updates


Dropped Calls

United States Oil - USO - cls: 81.49 chg: -1.48 stop: 77.45

Did you read the weekend wrap yet? A massive hurricane is hitting the Gulf of Mexico. Most of our Gulf oil and gas production is shut down. Yet the price of oil barely budged. Even a big drop in the U.S. dollar wasn't enough to spark a rally in oil on Friday. We're dropping the USO as a bullish candidate. More nimble traders may want to keep trying. We were looking for a dip near $80.00 (maybe $79.00) as a potential entry point to buy calls. At this point it looks like oil will continue to slide. It will bounce eventually but that bounce may not last very long. Our official entry point to buy calls was $80.50, which has not been hit yet.

Picked on September xx at $ xx.xx <-- Never Opened
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 13.8 million

Dropped Puts

Valero Energy - VLO - close: 35.87 chg: +2.84 stop: 32.01

VLO has bounced from one edge of its trading range to the other. Shares are challenging resistance near $36.00 and the bounce has been fueled by strong volume. It is the big volume that makes this move look so bullish. A sharp reduction in the amount of gasoline available and the refinery shutdowns along the coast due to hurricanes is contributing to the rebound in VLO and the rest of the refiners. Aggressive traders might want to consider bullish plays if VLO can clear $36.25 or $36.50. I don't trust the bounce just yet and if VLO does break out we'll probably get another chance to jump in on a pull back. If shares can breakout broken resistance near $36.00 should become new support. Watch the 100-dma near $40.00 to be overhead resistance. Our plan for this bearish play was to buy puts at $28.99, which the stock never hit.

Picked on September xx at $ xx.xx <-- Never Opened
Change since picked: + 0.00
Earnings Date 11/04/08 (unconfirmed)
Average Daily Volume = 11.7 million

Dropped Strangles


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