Editor's Note:
Friday's reversal off of the morning lows was nothing short of amazing and I suspect we could get some follow through. I think a dip early in the week could be a buying opportunity and I suggest keeping a tight leash on short positions. Please email me with any questions.

Current Portfolio:


CALL Play Updates

Cameron International - CAM - close 37.97 change +1.69 stop 35.45

Target(s): 37.85 (hit), 38.40, 38.95, 40.50
Key Support/Resistance Areas: 45.00, 42.50, 41.00, 38.75, 36.00
Current Gain/Loss: -42%
Time Frame: Several weeks
New Positions: Yes, with later month options

Comments:
8/28: CAM gained nearly +5% and closed right on its 20 and 100-day SMA's. I've been saying use strength in the stock to close positions and Friday presented opportunities to do so. Considering the bullish reversal I think we may be able to get more out of the position so I am willing to give this a few more days. The stock closed above a recent down trend line and if the broader market continues higher this week we should be able to get a better exit. Ultimately, I'm looking for CAM to make a move up towards its 200-day SMA but with September options I still suggest selling into any further strength. There will probably be a retracement of some of the gains from Friday but I think the dips will be bought. Readers may want to consider a new entry on a pullback to the $37.00 area with October or November options.

8/26: It looked like CAM was headed higher today but the stock reversed and posted a minor loss. It outperformed the broader market signaling relative strength but it can't keep bucking the trend. My suggestion remains the same which is to use strength in the stock and consider exiting positions as time decay is starting to affect the option premium. CAM printed $37.15 today which is 87 cents higher than the closing price. $36.95 is a logical target to cut losses or tighten stops.

8/25: CAM came close to hitting our stop this morning but reversed. My comments haven't changed much. I suggest readers use strength in the stock and consider exiting positions as time decay will start to affect the option premium. Our targets were adjusted yesterday and remain the same except I have lowered the first target by 10 cents.

Current Position: Long September $40.00 CALL, entry was $0.95

Annotated chart:

Entry on August 16, 2010
Earnings Date 11/3/2010 (unconfirmed)
Average Daily Volume: 4.6 million
Listed on August 14, 2010


FMC Technologies, Inc - FTI - close 63.94 change +2.17 stop 58.80 *NEW*

Target(s): 65.25 (hit), 67.00, 68.75
Key Support/Resistance Areas: 69.00, 65.50, 62.40, 59.00
Current Gain/Loss: +5%
Time Frame: Several weeks
New Positions: Yes, with a tight stop

Comments:
8/28: FTI has a lot of support below and I am looking for the stock to head back up towards our targets. There is resistance in the $65.50 area which is above our $65.25 target that was reached on 8/17. If we get above this level we will have a nice winner, but readers should still consider taking profits or tightening stops to protect them at this target.

8/26: FTI closed just about flat on the day which is much better than the broader market. The bad news is FTI closed $1.50 off of its highs. The stock was up +2.5% early before imploding the remainder of the day. If the market breaks down tomorrow nimble traders may want to exit FTI early to preserve capital. Our official stop is below the 50 and 200-day SMA's but a tighter stop could be placed just under the lows of from Tue and Wed, perhaps at $59.90 which is also below the 50-day SMA. My concern with this is if we get a quick spike down stocks could just as easily reverse after they have taken out a bunch of stops.

8/25: FTI made a double bottom with Tuesday's lows and closed near its highs of the day. Broader market strength will do wonders for our position and the fact that crude oil gained today on bearish inventory data should be good for FTI. But now we need follow through. This is not a bad spot to open new positions with tight stops.

Current Position: Long October $70.00 CALL, entry was at $1.10

Annotated chart:

Entry on August 16, 2010
Earnings 10/27/2010 (unconfirmed)
Average Daily Volume: 1.5 million
Listed on August 14, 2010


Panera Bread Co. - PNRA - close: 79.81 change: +0.66 stop: 76.90 *NEW*

Target(s): 82.95, 84.50
Key Support/Resistance Areas: 73.00, 76.00, 80.00, 85.00, 88.50
Current Gain/Loss: N/A
Time Frame: 1 to 2 weeks
New Positions: Yes, trigger $80.65

Comments:
8/28: Considering the broader market reversal on Friday I doubt we will get triggered in PNRA at $74.75. But with the broader market behind it PNRA looks on the verge of breaking out. The stock closed right on a downtrend line from its April highs and if it breaks through I believe buyers will step in. Further, the stock is forming an ascending triangle and is above all of its moving averages. If PNRA breaks out with the broader market behind it the stock should see $83.00 relatively quick. Let's use $80.65 as our trigger to buy October calls with targets at $82.95 and $84.50. Our stop will be $76.90.

Suggested Position: Buy October $80.00 CALL, current ask $3.60

Annotated chart:

Entry on August XX
Earnings Date 10/27/10
Average Daily Volume 562,000
Listed on August 21, 2010


Rackspace Hosting, Inc - RAX - close 10.87 change +1.53 stop 17.95

Target(s): 20.75(hit), 21.30, 23.00
Key Support/Resistance Areas: 23.50, 21.40, 20.00, 19.00, 18.00
Current Gain/Loss: +32%
Time Frame: 3 to 5 weeks
New Positions: Yes, preferably on a pullback

Comments:
8/27: Wow! RAX surged nearly +8% higher on Friday and is approaching our 2nd target. I think this stock has the potential of reaching its 52-week highs near our final target of $23.00. RAX is also being talked about as a potential takeover target in the cloud computing space which is why I have suggested the December options, i.e. to give this time to work. Readers may want to consider taking some profits off of the table and keeping the remainder of your position open to see if RAX rewards us.

8/26: RAX printed highs not seen since April and briefly broke out of its ascending triangle. My comments from the play release remain the same. Let's stick with the plan. Readers might want to consider new positions if RAX prints $19.00.

8/25: M&A activity is heating up in the tech sector. Dell and Hewlett-Packard are in a bidding war over a 3Par at a huge 160% premium over its closing price just a couple of weeks ago. Whoever loses the bid will most likely be looking for a similar firm to acquire and there seems to be none better than RAX. Regardless of whether RAX fits the bill for an acquisition they are in the red hot cloud computing industry which is outperforming the broader market. I suggest we take advantage of the momentum and initiate long positions now. Technically, RAX is above all of its moving averages and is forming an ascending triangle. Our stop will be $17.95 and I have three targets with the most aggressive being the YTD highs near $23.00. I envision this trade lasting several weeks or more but if the stock surges we won't hesitate to book profits.

Current Position: Buy December $21.00 CALL, entry was at $1.40

Annotated chart:

Entry on August 25, 2010
Earnings 11/9/2010 (unconfirmed)
Average Daily Volume: 1.75 million
Listed on August 25, 2010


PUT Play Updates

Abercrombie & Fitch - ANF - close 35.99 change +0.74 stop 38.40

Target(s): 33.25, 31.50
Key Support/Resistance Areas: 38.20, 37.25, 32.75, 34.00, 30.50
Current Gain/Loss: -24%
Time Frame: Several weeks
New Positions: Yes

Comments:
8/28: ANF is hanging on to its 50-day SMA and the broader market looks ready for a bounce. We may need to exhibit some patience with this play to see how far the bounce goes. There is lot of overhead resistance to keep things in check. A bounce up into the 200-day SMA and primary downtrend line could be a great entry point with a tight stop.

8/26: ANF traded in a tight range today so there is not much to report. Our plan remains the same except I have raised the first target to $33.25.

8/25: We are short ANF and I am expecting a move down to $33.00 and eventually $31.50. The broader market needs to cooperate and I think any bounces will be will be short lived. ANF has a lot of overhead resistance to keep bounces in check. My comments below remain valid.

8/24: We are back with a consumer name in the retail space. Retailers are weak and ANF looks ready for a drop if the broader market cooperates. This company is one of the more bloated retail names out there and trades at high PE ratio of 26. Technically the stock has broken out of a bear flag that formed in July and August off of the decline from its April highs. ANF is also consolidating below its broken trend line from the 11/08 lows (see dashed line) and volume is picking up which indicates sellers are overwhelming buyers. I suggest we initiate short positions now or on any strength in the stock. We'll use stop of $38.40. Our targets are $33.00 and $31.50.

Current Position: Long October $34.00 PUT, entry was at $2.10

Annotated chart:

Entry on August 25, 2010
Earnings: 11/11/10 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on August 24, 2010


Apple, Inc - AAPL - close 241.62 change +1.34 stop 256.50

Target(s): 240.00 (hit), 237.50, 233.00, 226.00
Key Support/Resistance Areas: 266, 258, 256, 246, 240, 231, 235
Current Gain/Loss: -2%
Time Frame: Several weeks
New Positions: Yes

Comments:
8/28: AAPL underperformed again Friday gaining a meager +0.56% compared to broader market gains of +1.6% across the board. However, the market appears ready for a bounce so readers should consider keeping a tight leash on this trade. I am adding a target of $237.50 which is a $4 dip from current levels. This is support on the intraday charts and is the area readers should take profits or tighten stops to protect them. I still believe AAPL has a date with destiny at its 200-day SMA but I would rather not sit through bounce. If the broader market breaks down first though AAPL should easily hit our $233 target.

8/26: AAPL gapped higher at the open today and filled its gap lower from Tuesday as I suspected in yesterday's updates. The stock was immediately sold the entire day and closed more than $5 off of its high. Sellers are clearly overwhelming the buyers right now. Our targets are in the right place and AAPL could hit them fast if we get a sell off in the broader market. Be ready to take profits or tighten stops to protect them.

8/25: If the broader market bounces here AAPL will most likely rally up to fill the gap down from yesterday. But I think bounces will be short lived so I suggest we be patient and be ready to take profits when AAPL approaches our targets.

Current Position: Long October $230.00 PUT, entry was at $6.90

Annotated chart:

Entry on August xx
Earnings: 10/21/10 (unconfirmed)
Average Daily Volume: 23 million
Listed on August 14, 2010


NUCOR Corp. - NUE - close 37.25 change +0.87 stop 40.55

Target(s): 36.05 (hit), 35.25, 31.90
Key Support/Resistance Areas: 43.00, 40.30, 37.00, 35.00
Option Current Gain/Loss: +2%
Time Frame: 4 to 6 weeks
New Positions: Yes

Comments:
8/28: It looks like NUE could be headed higher before resuming its downtrend. The chart looks terrible but the stock is oversold and it needs to work off some of the oversold conditions. Our stop is above 20 and 50-day SMA's and a downtrend line. Any move into this area could create a good short entry with a tight stop.

8/26: Yet another stock that gapped higher and was sold into the entire day. NUE traded to $35.71 on Tuesday and if the stock heads down to this level it could be viewed as a double bottom and bounce. Readers may want to consider taking profits at this level or tightening stops to protect them.

8/25: NUE opened lower and quickly traded to our $36.05 target. Positions could have been closed at $1.55 which would have been a +60% gain. NUE printed another 52-week low and continues to look vulnerable so I stick with the plan and give this some time to work, but we may have to be patient.

8/24: NUE closed at a new 52-week low today and looks vulnerable. We now have a +33% gain so protecting profits is suggested. Ultimately NUE looks headed towards our $35.25 target but taking profits on the way is a good idea. I'm going to add $36.05 as an immediate target.

Current Position: Long October $35.00 PUT, entry was at $0.96

Annotated chart:

Entry on August 20, 2010
Earnings Date 10/21/10
Average Daily Volume = 2.9 million
Listed on August 19, 2010


Occidental Petrol. - OXY - close: 75.42 change: +3.19 stop: 78.51

Target(s): 72.25, 71.60, 70.25, 67.50
Key Support/Resistance Areas: 75-74.00, 70.00, 65.00
Current Gain/Loss: -22%
Time Frame: Several Weeks
New Positions: Yes, on strength

Comments:
8/28: The rally in OXY on Friday may have been short covering, but regardless we are caught in the middle of it. It would be nice to see the stock turn lower at its 20-day SMA which is just overhead. If it does there is a good chance we will see a retest of last week's lows so I have added $72.25 as a near term target. OXY's chart looks weak but the broader market may have put inn a short term bottom and OXY could bounce along with it. Readers need to decide whether or not $72.25 is good area to consider closing positions or tightening stops if OXY gets there. Otherwise a tighter could be considered above last week's highs at $76.75.

8/26: OXY looks weak but it also looks oversold. $71.60 is prior resistance level from June 2009 and a prior support level from August 2009. That's why I have this target. Exiting positions at this level should produce a +20% gain. I've also added $70.25 as a target which is a support area from August 2008 and also happens to be the stock's 100-week SMA. I'm cautious on squeezing too much out of an oversold stock and suggest readers be defensive to protect gains.

8/25: Finally, OXY triggered our entry. I suggest we keep our target relatively tight on this trade and exit positions or tighten stops to protect profits if OXY hits our first target of $71.60. This is just above the 52-week low and the stock could bounce. I have also heard many of the talking heads on TV mention OXY as a buy, however, the sellers are in control right now. But the lower the stock goes it may interest buyers and I don't want to caught shorting a potential bottom.

Current Position: Long OXY November $70.00 PUT, entry was at $3.45

Annotated chart:

Entry on August 25, 2010
Earnings Date 10/21/10 (unconfirmed)
Average Daily Volume 4.4 million
Listed on August 7th, 2010


CLOSED BULLISH PLAYS


UnitedHealth Group Inc - UNH - close 32.37 change +0.52 stop 31.33

Target(s): 31.90 (hit), 32.25 (hit), 32.80, 33.15
Key Support/Resistance Areas: 35.00, 34.40, 33.50, 31.50
Final Gain/Loss: -24%
Time Frame: 1 to 2 weeks
New Positions: No

Comments:
8/18: It looked like we made the right call to exit positions at the open on Friday as UNH was headed much lower. But things reversed and UNH now looks like it could be headed back up towards the $33.00 area. Current levels look like good entry points but with later dated options. Time decay will start to hurt September options so I suggest selling and keeping tight stops, especially on strength 8/26: UNH came within 6 cents of reaching our $32.45 target so it has been lowered to $32.25. Regardless of the target I think the best strategy with UNH is to exit at the open tomorrow. I am cautious of holding this position through the weekend and would rather preserve capital. If you are a more nimble trader who can monitor the position, I suggest keeping a tight stop to see if UNH moves higher tomorrow.

8/25: UNH made a comeback today gaining nearly +3%. I'm still looking for an exit and have tightened the stop to $31.33. I've also narrowed our next target to $32.45 and would be inclined to exit if it is hit. This should get us to breakeven or better on the trade.

Closed Position: Long September $32.00 CALL at $0.95, entry was at $1.25

Annotated chart:

Entry on August 17, 2010
Earnings Date 10/19/2010 (unconfirmed)
Average Daily Volume: 8.5 million
Listed on August 16, 2010


CLOSED BEARISH PLAYS

FASTENAL Co. - FAST - close: 45.96 change: +0.47 stop: 50.40

Target(s): 44.80 (hit), 43.50
Key Support/Resistance Areas: 50.00, 48-47, 200-dma, 40.00
Current Gain/Loss: +22%
Time Frame: 3 to 4 weeks
New Positions: Closed

Comments:
8/28: FAST traded down to our $44.80 target in early trading and this is where I suggested taking profits so we are flat the position for a small +22% gain. Friday's broader market reversal was quite impressive and looks ready for a more meaningful bounce which I would rather not sit through. FAST can probably be shorted again in the $47 to $48 area.

8/26: FAST gapped higher today as well but the strength was sold into the entire day. Our first two targets are the primary targets where I suggest taking profits, or tightening stops to protect them, especially if the stock heads lower prior to bouncing.

8/25: FAST closed down despite a rally off of the lows in the broader market. This is relative weakness and when things turn back down FAST should approach our targets quickly.

8/24: Our short positions were triggered at $46.50 in FAST this morning. The stock is well below its 200-day SMA and may bounce to retest it from below. This may provide another entry point. I've added $44.80 as a near term target and is an area to consider taking profits or tightening stops to protect them.

Closed Position: Long November $45.00 PUT at $3.05, entry was at $2.50

Annotated chart:

Entry on August 24, 2010
Earnings Date 10/12/10
Average Daily Volume = 839,000
Listed on August 19, 2010


Procter & Gamble - PG - close: 59.80 change: +0.26 stop: 63.26

Target(s): 59.50 (hit), 59.20, 58.75, 58.05
Key Support/Resistance Areas: 59.00, 61.00
Final Gain/Loss: -38%
Time Frame: 2 to 3 weeks
New Positions: Yes, with November options

Comments:
8/28: We got the sell-off early Friday but it stopped 5 cents short of our $59.20 target. PG simply refuses to breakdown and with options expiring in September it was time to close the position to prevent further time decay per Thursday's updates. I believe the market could bounce here so I think it was the right move. I do like the strategy of rolling current/or opening new positions in the November strikes to give this time to work. For now, we've taken the loss and are moving on.

8/26: Nothing much has changed with PG. The stock refuses to breakdown. We are near breakeven on the trade and I still suggest looking for an exit to prevent accelerating time decay. If we get a sell-off tomorrow that will be our opportunity. Otherwise, I suggest we close this position at the close. I've added $58.75 as a target on sell-off. This is near prior resistance from September and October 2009.

8/24 & 8/25: My comments from below remain the same. I suggest readers begin exit PG to prevent time decay from accelerating. Another strategy would be to roll current positions into the November strikes and give this time to work.

8/23: PG has a lot of support at $59.00 and our options will begin to suffer from time decay. PG looks like it has further room to the downside but time is not on our side. As such, I suggest readers begin to look for an exit using the targets listed above. Another strategy would be to roll current positions into the November strikes and give this time to work.

8/19: Shares of PG have been forming a top for over eight months now. If the stock breaks down under support near $59.00 it would forecast a drop toward $54.00. Readers can choose to open positions near $61-62 but I would prefer to see a breakdown under $59.00. Please note I have adjusted our exit targets to $58.05 and $55.25. FYI: If you launch new positions I would buy the Novembers.

Closed Position: Long September $57.50 PUT at $0.22, entry was at $0.36

Annotated chart:

Entry on August 10, 2010
Earnings Date 10/28/10 (unconfirmed)
Average Daily Volume 2.5 million
Listed on August 7th, 2010