Editor's Note:

May's option expiration was a disappointing one. The major indices settled lower. Stocks look vulnerable here. Our plan was to close our FAST trade on Friday. Meanwhile our ORLY trade was stopped out.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 340.53 change: +0.66

Stop Loss: 339.40
Target(s): 374.00, 395.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/21 update: The bounce in AAPL appears to be fading. Shares lost -1.5% and closed on their lows for the day this Friday. News that AAPL had its price target upgraded to $460 was overshadowed by headlines that a manufacturing plant in China suffered an explosion. This plant makes AAPL's iPads and other devices. There is no word yet if the incident will affect production of AAPL's products.

Overall there is no change from my prior comments. If AAPL sinks there is support near $330 and $320. I'd rather buy calls at $320. If AAPL rallies then we want to see a breakout and we already have a triggered listed to buy calls at $352.50.

Aggressive and nimble traders may want to consider buying puts with a stop loss above this week's high and target a drop toward the $320 area.

Buy-the-breakout Trigger @ $352.50

- Suggested Positions -

Buy the June $370 calls (AAPL1118F370)

- or -

Buy the July $380 calls (AAPL1116G380)

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume = 16.6 million
Listed on May 2nd, 2011


Boeing Co - BA - close: 77.52 change: -0.50

Stop Loss: 73.60
Target(s): 79.75, 84.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/21 update: The bounce in BA has also stalled. Prior support near $78.00 is acting as new resistance. There is no change from my previous comments. We do not want to open positions at current levels. Our buy-the-dip entry point is at $75.00. If triggered our targets are $79.75 and $84.50. The Point & Figure chart for BA is bullish with an $87 target.

Trigger @ $75.00

- Suggested Positions -

Buy the June $80 call (BA1118F80) current ask $0.80

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 4.8 million
Listed on May 17th, 2011


Estee Lauder Companies - EL - close: 100.65 change: -1.15

Stop Loss: 98.75
Target(s): 107.00, 109.95
Current Option Gain/Loss: -46.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/21 update: Hmm... lack of follow through on Wednesday's breakout higher is worrisome. EL looks headed for the $100 level again and possibly short-term support near $99.00. I would wait for a dip to these levels or better yet wait for a bounce from these levels before considering new bullish positions. Our targets are $107.00 and $109.95.

- Suggested Positions -

Long the June $105 call (EL1118F105) Entry @ $1.95

chart:

Entry on May 19th at $102.10
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on May 18th, 2011


Express Scripts - ESRX - close: 59.98 change: -0.68

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: - 7.1% & - 4.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21 update: After hitting new all-time highs on Thursday the stock was downgraded on Friday morning. ESRX opened lower and dipped toward its rising 10-dma. The trend is still up but if the pull back continues we can look for additional support in the $59-58 zone. Considering the market's weakness on Friday I'd take a step back and wait before launching new bullish positions. Our targets are $64.00 and $68.50. FYI: The Point & Figure chart for ESRX is bullish with a $72 target.

- Suggested Positions -

Long the June $60 call (ESRX1118F60) Entry @ $1.53

- or -

Long the August $60 call (ESRX1120H60) Entry @ 3.15

chart:

Entry on May 10th at $59.21
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on May 9th, 2011


Freeport McMoran - FCX - close: 48.38 change: +0.41

Stop Loss: 45.99
Target(s): 53.50
Current Option Gain/Loss: - 12.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/21 update: I was ready to drop FCX for not performing but shares outperformed the major indices on Friday. A bounce in the U.S. dollar was not enough to stop a rally in copper and gold on Friday. FCX delivered a +0.8% gain. We do need to keep a wary eye on the dollar. If the dollar continues to rise it will put more pressure on commodities and FCX will likely fall.

This has always been a higher-risk trade. I am not suggesting new positions at this time. A close over resistance at $50.00 and the 200-dma could inspire new buying interest. Earlier comments:
I consider this a very aggressive and higher-risk trade. We want to keep our position size very small.

- Very Small Positions -

Long the June $50 call (FCX1118F50) Entry @ $1.52

chart:

Entry on May 19th at $48.72
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 21.8 million
Listed on May 18th, 2011


Forest Labs Inc. - FRX - close: 35.37 change: +0.09

Stop Loss: 33.25
Target(s): 39.00, 42.50
Current Option Gain/Loss: -15.3% & -10.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21 update: Friday proved to be a very quiet day for FRX. The stock drifted sideways in a narrow range but did manage a gain. Investors are looking for safe haven stocks and the healthcare and drug sectors used to be traditional safe-haven trades. I don't see any changes from the Thursday night updates. We can buy calls now or wait for a dip into the $34.50-34.00 area. Our target is the $39.00 level and the $42.50 mark. We'll start with a stop loss at $33.25. FRX's point & figure chart has a triple-top breakout buy signal with a $53 target.

- Suggested Positions -

Long the June $37 call (FRX1118F37) Entry @ $0.65

- or -

Long the August $37 call (FRX1120H37) Entry @ $1.40

chart:

Entry on May 20th at $35.29
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on May 19th, 2011


International Business Machines - IBM - close: 170.16 change: -0.43

Stop Loss: 165.90
Target(s): 174.75, 179.50
Current Option Gain/Loss: + 15.3%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/21 update: I'm glad that May's option expiration is over. IBM has been pinned to the $170 strike price for three days in a row. Maybe now it will see some movement. Readers might want to consider waiting for a rise past $171.50 before initiating new positions.

Our first target is $174.75. Our second and final target remains $179.50. FYI: The Point & Figure chart for IBM is bullish with a $208 target.

- Suggested Positions -

Long the June $170 calls (IBM1118F170) Entry @ $2.60

05/12 Adjusted first target to $174.75
05/10 New stop loss @ 165.90

chart:

Entry on May 5th at $167.50
Earnings Date 04/19/11
Average Daily Volume = 4.8 million
Listed on April 27th, 2011


Illumina Inc. - ILMN - close: 72.86 change: -0.03

Stop Loss: 69.90
Target(s): 79.50, 84.00
Current Option Gain/Loss: -49.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21 update: ILMN recovered off its intraday lows on Friday but shares are developing a short-term bearish trend of lower lows. I am still expecting a drop toward the $71-70 zone. Wait for that dip before considering new bullish positions.

Our targets are $79.50 and $84.00. The Point & Figure chart for ILMN is bullish with a $90 target.

FYI: The most recent data listed short interest in ILMN at 22% of the 121 million-share float.

- Suggested Positions -

Long the June $75 call (ILMN1118F75) Entry @ $2.75

chart:

Entry on May 11th at $74.50
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 10th, 2011


Jos. A Bank Clothiers - JOSB - close: 54.98 change: -1.53

Stop Loss: 52.90
Target(s): 59.50
Current Option Gain/Loss: +22.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21 update: Another day of disappointing earnings releases elsewhere in the retail sector sent the group lower. Shares of JOSB suffered some profit taking with a -2.6% drop. Traders bought the dip at short-term support near $54.00. While the trend is up the action this past week has formed what might be a topping pattern on the weekly chart. I am not suggesting new positions at this time. More conservative traders might want their stop closer to the $54.00 level.

FYI: The most recent data listed short interest in JOSB at more than 21% of the small 27.3 million-share float. The risk of a short squeeze is pretty high.

- Suggested Positions -

Long the June $55 calls (JOSB1118F55) entry @ $1.75

05/18 new stop loss @ 52.90
05/14 Exit the May calls. May $55 call @ 0.90 (+28.5%)
05/12 New stop loss at $51.75

chart:

Entry on April 26th at $52.75
Earnings Date 06/02/11 (unconfirmed)
Average Daily Volume = 510 thousand
Listed on April 25th, 2011


NetApp, Inc. - NTAP - close: 53.70 change: -0.75

Stop Loss: 51.75
Target(s): 58.00
Current Option Gain/Loss: -18.9%
Time Frame: about 3 weeks
New Positions: see below

Comments:
05/21 update: We only have three days left for this NTAP trade. Earnings are due on May 25th after the closing bell. We'll plan on exiting on Wednesday at the close to avoid holding over the report. More conservative traders may want to exit right now. NTAP looks like it's ready to dip back toward the $53-52 area. I am not suggesting new positions tonight.

- Suggested Positions -

Long the June $55 calls (NTAP1118F55) Entry @ $1.90

05/19 Plan on exiting May 25th at the close
05/18 New stop loss @ 51.75

chart:

Entry on May 9th at $53.33
Earnings Date 05/25/11 (confirmed)
Average Daily Volume = 5.8 million
Listed on May 7th, 2011


Sherwin-Williams Company - SHW - close: 85.79 change: -0.72

Stop Loss: 83.95
Target(s): 92.25, 98.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see Trigger

Comments:
05/21 update: Little has changed for SHW. The stock is consolidating sideways under resistance. Friday's session did produce a bearish engulfing candlestick pattern but these patterns need to see confirmation. Our plan is unchanged. We're waiting for a breakout higher. I'm suggesting a trigger at $87.00. If triggered our first target is $92.25. Our second, much more aggressive target is $98.50. I would not be surprised to see some resistance near the $90 and $95 levels. The Point & Figure chart for SHW is bullish with a $99 target. If the stock can rally past $87 it will produce yet another buy signal.

Trigger @ $87.00

- Suggested Positions -

buy the June $90 call (SHW1118F90) current ask $0.65

- or -

buy the Sept. $90 call (SHW1117I90) current ask $2.50

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on May 14th, 2011


ProShares Ultra(long) S&P 500 - SSO - close: 53.98 change: -0.84

Stop Loss: 52.75
Target(s): 59.00
Current Option Gain/Loss: -58.1% and -37.5%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/21 update: Warning! The bounce has failed. The SSO has rolled over under its short-term trend of lower highs. This would suggest the stock will see a new lower low soon. I would expect a dip toward the rising 100-dma. Yet until the SSO breaks down under this past week's low the intermediate trend is still higher (even though the short-term trend is lower). More conservative traders may want to abandon ship. I am not suggesting new positions at this time.

The SSO is twice as volatile as the market so we want to keep our position size small. Our multi-week target is the $59.00 level.

Small Positions Only - Suggested Positions -

Long the June $56 call (SSO1118F56) Entry @ $1.60

- or -

Long the September $60 call (SSO1117I60) Entry @ $2.00

chart:

Entry on May 5th at $54.39
Earnings Date --/--/--
Average Daily Volume = 11.3 million
Listed on May 4th, 2011


Tiffany & Co. - TIF - close: 69.24 change: -1.02

Stop Loss: 67.70
Target(s): 74.50
Current Option Gain/Loss: -28.3%
Time Frame: about five days
New Positions: see below

Comments:
05/21 update: TIF suffered some profit taking on Friday with a -1.4% decline. The close under $70 is disappointing but shares still have a bullish trend of higher lows. Keep in mind that we only have three days left! We want to exit ahead of the May 26th earnings report. I'm suggesting a target at $74.50.

- Suggested Positions -

Long the June $72.50 call (TIF1118F72.5) Entry @ $1.48

chart:

Entry on May 19th at $70.45
Earnings Date 05/26/11 (unconfirmed)
Average Daily Volume = 1.49 million
Listed on May 18th, 2011


Union Pacific - UNP - close: 101.99 change: -0.80

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -35.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/21 update: Friday's drop in UNP erased Thursday's gain. After Thursday's failed rally at $104 I am still expecting a dip into the $101-100 zone. Wait for the dip or a bounce from that area before considering new positions.

- Suggested Positions -

Long the June $105 call (UNP1118F105) Entry @ $1.62

chart:

Entry on May 9th at $102.19
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on May 7th, 2011


United Technologies Corp. - UTX - close: 87.50 change: -0.60

Stop Loss: 83.49
Target(s): 89.50, 94.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/21 update: Little has changed for shares of UTX. The stock is consolidating sideways under previous support and now new resistance at $88. I am expecting a dip near $86.00, which is why we have a buy-the-dip entry point to buy calls at $86.50. More conservative traders could wait for a dip near $85 and its 50-dma instead. If UTX hits $86.50 first then our targets are $89.50 and $94.75.

Buy-the-dip Trigger @ $86.50

- Suggested Positions -

Buy the June $90 calls (UTX1118F90)

chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011


Wynn Resorts Ltd. - WYNN - close: 144.98 change: -2.03

Stop Loss: 146.40
Target(s): 159.75, 169.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/21 update: There is no change from my prior comments on WYNN. The stock is chopping around the $140-152 trading range. Nimble traders could buy dips near $140 with a tight stop. Actually we might consider that idea if we see WYNN bounce from $140 again. However, at the moment our plan is to buy calls on a breakout with a trigger at $152.00. If triggered at $152.00 our targets are $159.75 and $169.00. The $160 and $170 levels look like potential resistance.

Trigger @ $152.00

- Suggested Positions -

Buy the June $160 calls (WYNN1118F160) current ask $2.15

chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on May 11th, 2011


PUT Play Updates

Pioneer Natural Resources - PXD - close: 90.94 change: -0.04

Stop Loss: 96.15
Target(s): 85.25
Current Option Gain/Loss: -13.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21 update: PXD did not see much movement on Friday. A bounce in the dollar did not stop oil from rebounding too. Yet oil stocks were mixed. PXD recovered from its morning lows but closed virtually unchanged on Friday. Shares have a short-term trend of lower highs but I'm hesitant to launch new positions here. Hopefully we'll have more clarity this week.

Earlier Comments:
We want to keep our position size small to limit our risk because oil and oil stocks have been increasingly volatile lately. Our target is $85.25. More aggressive traders could aim for the rising 200-dma instead. FYI: The Point & Figure chart for PXD is bearish with a $72 target.

-Small Bearish-

Long the June $90 PUT (PXD1118R90) Entry @ $3.30

chart:

Entry on May 16th at $91.64
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 14th, 2011


CLOSED BULLISH PLAYS

Fastenal Co. - FAST - close: 65.71 change: -0.63

Stop Loss: 64.75
Target(s): 69.50, 74.00
Current Option Gain/Loss: -73.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/21 update: FAST has been a big disappointment. The stock has gone nowhere the last three or four weeks. Yet the long-term trend is still higher. It will be interesting to see if FAST rallies or breaks down at its 50-dma near $65.00 next week. Of course it won't be $65 it will be $32.50 as FAST splits 2-for-1 on Monday. It was our plan to exit our call positions on Friday at the closing bell.

- Suggested Positions -

June $70.00 calls (FAST1118F70) Entry @ $0.75, exit 0.20 (-73.3%)

05/20 Exit. FAST @ 65.71. Option @ -73.3%
05/18 Plan on exiting Friday at the close.
05/17 New stop loss @ 64.75
05/16 Exit May $65 calls ASAP. Bid @ 1.40 (-36.3%)

chart:

Entry on April 26th at $66.25
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 23rd, 2011


O'Reilly Automotive - ORLY - close: 57.89 change: -0.70

Stop Loss: 57.75
Target(s): 62.75, 67.25
Current Option Gain/Loss: -69.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/21 update: Thursday's sell-off continued on Friday morning. Shares traded below support near $58 and its 50-dma. Our stop loss was hit at $57.75 closing this trade. The stock has erased about three weeks of gains with this week's decline.

The plan was to keep our position size small to limit our risk.

- Suggested (Small) Positions -

June $60 calls (ORLY1118F60) Entry @ $1.65, exit 0.50 (-69.6%)

05/20 Stopped out. June call @ -69.6%
05/19 Scheduled exit May calls. Closed @ $0.00 (-100%)
05/18 Prepare to exit May calls tomorrow
05/14 Consider exiting the May calls now!

chart:

Entry on May 4th at $60.15
Earnings Date 04/27/11
Average Daily Volume = 1.1 million
Listed on April 30th, 2011