Current Portfolio:


CALL Play Updates

Diana Shipping, Inc - DSX - close 13.31 change -0.25 stop 12.90

Target(s): 14.00, 14.35, 14.75
Key Support/Resistance Areas: 15.00, 14.40, 14.15, 13.50, 13.25, 13.00
Current Gain/Loss: -9.7%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
DSX is hanging on to a key support level at $13.30. In reality it is closer to $13.25 so I have changed that level above. I mentioned a pullback to $13.25 is possible in the play release and that's what DSX did today. This fills the opening gap higher from last Tuesday to Wednesday and I am looking for DSX to bounce from here. I have also listed a lowered target to $14.00 for readers looking for a quicker exit. This level is just below last Thursday's highs of $14.16 and is a good area to consider tightening stops. Our stop remains at $12.90. My comments from the weekend remain mostly the same. DSX found long term support near the $12.35 area and has bounced nicely. The stock broke through its recent downtrend line and I am looking for it to retrace some of the recent gains prior to entering long positions. DSX has good fundamentals trading at a PE below 10 and has beaten earnings estimates in recent quarters. I am looking for a pullback near $13.50 which I suggest readers use as a trigger to enter long positions. This would also be a logical area for the stock to make a higher low and then proceed higher, although a pullback to $13.25 is possible as well. We are looking to make about a dollar in this trade.

Current Position: July $12.50 CALL, entry $1.55

Entry on 5/28/10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.4 million
Listed on 5/27/10


Qualcomm Inc - QCOM - close 35.07 change -.49 stop 33.45

Target(s): 36.45, 36.95, 38.00, 38.95
Key Support/Resistance Areas: 37.00, 36.25, 34.50
Current Gain/Loss: -4.6%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
The gap lower today gave us an opportunity to initiate July $36.00 CALLS in QCOM at $1.30 which was a better price than Friday's close. The stock back tested the broken down trend line which began on April 21st today and is above the bullish wedge pattern I mentioned in the play release over the weekend. I'm expecting QCOM to bounce from here. I've also listed two lowered targets at $36.45 (just below the 20-day SMA) and $36.95 (below the low on 2/11) for readers looking for a quicker exit. These are prudent areas to tighten stops. I'll leave my comments from the weekend as they remain the same. QCOM has been taken out to the woodshed this year after a couple of earnings reports that investors didn't like. It wasn't that they missed earnings estimates, rather the company's guidance was lower than previously released estimates. As a result, investors ran for the exits but I believe it is time to take advantage of the value this company has to offer. Their technology is right smack in the middle of a fast growing smart phone industry and from everything I have read the supply chain remains robust which should bode well for QCOM. The company earns almost $2.00 per share and trades around 18 times trailing twelve months earnings which is cheap for a growth company. Technically, QCOM has long term support near $35.25 dating back to 2007. The stock also appears to be breaking out of its recent downward trend line and has formed both a long term and short term bullish wedge pattern. I suggest readers initiate long positions at current levels. Our initial stop will be $33.45 which will give QCOM some room to work.

Current Position: July $36.00 CALL, entry at $1.30

Entry on 6/1/2010
Earnings Date 7/21/2010 (unconfirmed)
Average Daily Volume: 26 million
Listed on 5/29/10


Rino International - RINO - close 11.92 change -0.99 stop 11.70

Target(s): 13.25, 13.65, 14.00, 14.50, 15.95, 16.90
Key Support/Resistance Areas: 15.00, 14.50, 13.75, 12.75, 11.75
Current Gain/Loss: -33%
Time Frame: Several weeks
New Positions: Yes, with a tight stop

Comments:
RINO had a terrible day probably because China's PMI Manufacturing report came in at a 3 month low and we are close to being stopped out of this position. If the market gaps down tomorrow we will use our gap rule to manage the stop in RINO. When there is an opening gap up or down through, or very close to stops/targets/entries we have a rule for exiting/entering positions. For long positions that gap below stops here is the rule of thumb: If a stock gaps down below the stop that has been established, wait for the first 15 minutes of trading before doing anything. Then place a new protective stop just under the low of that first 15 minutes of trading. Reverse the entire scenario for shorts. The reason I do this is because I want to measure the real strength or weakness in the stock. I don’t want a Good Til Cancelled (GTC) stop to be unnecessarily triggered at the open because often times stocks gap and reverse immediately, which keeps us in the position and looking for a better exit. Considering today's weakness I've listed a couple more lower targets of $13.25 and $13.65 for readers looking for a quicker exits. Fundamentally, RINO trades at a low PE ratio of about 5 and I think there is a lot of room to for this stock to run. But the overall market weakness is proving too much for RINO, at least for now. If RINO breaks here we'll probably see $10.70 or lower in the near future so I urge readers to not hang on to positions hoping for a rebound.

Current Position: July $12.50 CALL, entry at $1.50

Entry on May 27, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 926,000
Listed on 5/25/10, 2010


Trina Solar - TSL - close 16.65 change -0.85 stop 16.45

Target(s): 17.45, 17.95, 18.40, 19.00, 19.95
Key Support/Resistance Areas: 16.55, 17.25, 18.50, 19.00, 20.00, 21.00
Current Gain/Loss: -13%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

Comments:
We initiated TSL July $18 calls on the gap lower today at $1.50. It looked like things were turning around until the rug was pulled out from the market in the afternoon. Our calls are now worth about $1.30 and we are close to our stop at $16.45. TSL has support at $16.55 so hopefully this will hold. If not I urge readers to just get out of the way and potentially look for a better price to enter long positions later. If TSL gaps below our stop we will use the same rule for exiting as described in the RINO play above. I have also listed a couple of lower targets at $17.45 and $17.95 for readers looking for quicker exits. I suggest tightening stops at these areas. I'll leave my comments in the play release as they remain the same. The selling in TSL appears to be overdone when compared to its counterparts in the solar industry. And with all of the news about the oil spill and focus on green technology I expect solar stocks to rebound from these levels, including TSL. TSL is breaking out of a steep downward trend line and I believe the stock is poised to bounce higher and even possibly test its 200-day SMA which is all the way up near $21.00. But we don't even need that big of a bounce to book a profitable trade and I suggest readers take advantage of the building momentum by initiating long positions at current levels. We'll use an initial stop at $16.45.

Current Position: July $18.00 CALL, entry at $1.50

Entry on 6/1/2010
Earnings Date 7/21/2010 (unconfirmed)
Average Daily Volume: 5.4 million
Listed on 5/29/10


PUT Play Updates

The Gymboree Corporation - GYMB - close 43.93 change -0.65 stop 46.60

Target(s): 43.50, 42.90, 42.40, 40.25
Key Support/Resistance Areas: 46.30, 46.00, 44.00, 43.45
Current Gain/Loss: +12%
Time Frame: 1 to 2 weeks
New Positions: Yes

Comments:
For whatever reason GYMB is not breaking lower as hard as I expected, especially with today's weak market. Therefore, I have listed $43.50 as a new lowered target to exit positions or at least tighten stops. If GYMB trades down to $43.50 our options should be worth about $3.75 which would be a +25% gain. My comments from the weekend remain the same. GYMB oscillating above and below the $44.60 level. It has formed a bear flag and I am looking for the stock break lower. I've listed targets above that I suggest traders use to exit positions or tighten stops. The stock keeps getting knocked down on any rally attempt and remains below its 200-day SMA. We have a fairly tight stop on the position to limit risk and also have realistic targets to book quick profits. We should know early this week the direction of the stock. Retailers have been offering weak guidance for the remainder of 2010 and I think it is a matter of time before more selling starts in GYMB. The bear flag also provides a good reference point to place a protective stop at $46.60 which is above the 100-day SMA. NOTE: the bid/ask spread on GYMB options is a little wide. Place a limit order between the two and you should get filled.

Current Position: July $45.00 PUT, entry at $2.95

Entry on May 27, 2010
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 22, 2010


Smith International, Inc - SII - close 34.45 change -3.11 stop 35.75 *NEW*

Target(s): 34.55 (hit), 33.60, 32.15
Key Support/Resistance Areas: 42.00, 40.90, 39.00, 37.00, 34.00
Current Gain/Loss: +37%
Time Frame: 1 to 2 weeks
New Positions: No

Comments:
SII gapped below our trigger of $36.90 to enter short positions so we implemented the gap rule as mentioned in other positions. Essentially, when SII broke below the first 15 minute bar it showed the overall relative weakness of the stock and gave the green light to enter short positions. We are now long July $37.00 PUTS at $3.30. The stock traded all the way down to our first target of $34.55. I have listed a higher second target of $33.60 which would complete the gap fill in February. I suggest readers take profits or tighten stops at this level if SII trades down here. The oil service sector could reverse on a dime on any good news so I urge readers to protect profits. My comments from the play release remain the same. SII looks vulnerable and is on the verge of possibly filling a gap all the way down to the $34.00 area. The oil services sector has been beaten down recently and SII has not been spared. SII remains below its downtrend line and if it trades below $36.95 there is a lot of air underneath. I'm looking for SII to fill this gap and I suggest readers initiate short positions if the stock trades up near $38.95 or down to $36.90, whichever occurs first. I view this trade as a good candidate to buy options as opposed to simply shorting the stock so that you know how much money is at risk. Our new stop is $35.75 which should be breakeven trade if the stop is hit. *NOTE: I view this trade as aggressive so please use proper position size to manage risk.

Current Position: July $37.00 PUT, entry at $3.30

Entry on 6/1/2010
Earnings 7/28/10 (unconfirmed)
Average Daily Volume: 7.6 million
Listed on May 29, 2010


CLOSED BULLISH PLAYS

Walter Energy - WLT - close 79.33 change -0.72 stop 71.75 *DROPPED*

Target(s): 72.50, 73.50, 77.25, 80.95
Key Support/Resistance Areas: 81.00, 79.00, 77.75, 74.50, 72.50
Current Gain/Loss: N/A
Time Frame: 1 week
New Positions: Dropped

Comments:
Just as we use our gap rule for managing exits on stocks that gap below established stops, we use the same rule for entering and exiting positions that gap below or above our entry and exit triggers. In the case of WLT's gap below our entry trigger this morning, we wanted to see WLT trade above its first 15 minute bar prior to entering long positions. Since this never happened we did not enter long positions and WLT proceeded to sell off the remainder of the day. I have included a 15 minute chart for illustration. The stock actually traded all the way down to our stop. As such, we are dropping the play and staying away from the volatility in WLT. If readers did initiate long positions I strongly urge you to consider devising a gap rule similar to the ones I have been utilizing and writing about in the updates over the last several weeks. These rules are especially helpful when markets are as volatile as they have been recently. If readers do have long positions I have listed $72.50 and $73.50 as possible targets which are just below WLT's 200-day and 20-day SMA's, respectively.

Suggested Position: June $75.00 CALL (Dropped)

Annotated 15 Minute Chart:

Entry on 6/1/2010
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 3.4 million
Listed on 5/25/10