Editor's Note:

The market's major indices recover from their morning lows. Energy stocks are some of the best performers today. Readers may want to consider an early exit out of our put trade in the oil sector. ILMN and TIF both hit our stops this morning. DVA hit our trigger to buy puts.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 336.78 change: +4.59

Stop Loss: 317.00
Target(s): 339.00, 359.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/25 update: AAPL outperformed the major indices with a +1.3% gain thanks to some bullish analyst comments this morning. Shares are nearing potential resistance at the $340 level.

We have a buy-the-dip entry point at $321.00 with a stop loss at $317. We might switch to a breakout entry point if AAPL can rally past $345.

Buy-the-Dip Trigger @ $321.00

- Suggested Positions -

Buy the June $330 calls (AAPL1118F330)

- or -

Buy the July $330 calls (AAPL1116G330)

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: 76.32 change: +0.75

Stop Loss: 71.45
Target(s): 79.75, 84.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/25 update: Readers may want to consider buying this bounce in BA today. Shares dipped to $75.00 and its 50-dma this morning but BA quickly recovered and rallied to a +0.99% gain. I've been expecting BA to overcorrect and dip to $74 but a bounce from $75 could work. My concerns right now are that BA still has a short-term bearish trend of lower highs and lower lows and the bounce stalled at its 30-dma. We will leave our buy-the-dip entry point at $74.00 for now. If triggered our targets are $79.75 and $84.50. The Point & Figure chart for BA is bullish with an $87 target.

Trigger @ $74.00

- Suggested Positions -

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

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


Express Scripts - ESRX - close: 60.01 change: +0.73

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: -21.5% & -10.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/25 update: The market's morning weakness pushed ESRX to $58.58 this morning but shares quickly bounced. The close back above the $60.00 level is bullish. I would be tempted to buy calls again here but keep your position size small. Readers may want to raise their stops toward the $58.00 level. 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

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


Forest Labs Inc. - FRX - close: 35.32 change: +0.36

Stop Loss: 33.25
Target(s): 39.00, 42.50
Current Option Gain/Loss: -53.8% & -25.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/25 update: FRX rallied off its 10-dma this morning and closed up +1%. Volume was light but shares are on the verge of new two-year highs. Readers may want to consider this a new entry point but keep your position size small. Our target is the $39.00 level and the $42.50 mark.

- Suggested Positions -

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

- or -

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

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


Goldman Sachs - GS - close: 136.24 change: -0.10

Stop Loss: 128.45
Target(s): 134.00, 137.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
05/25 update: GS tried to rally on Wednesday but shares lost momentum this afternoon and closed in negative territory. I don't see any changes from my prior comments. The 2010 lows are near $130. I am suggesting we launch very small bullish positions on a dip at $130.25. This is a very aggressive, higher-risk trade.

Trigger @ 130.25 (very small positions)

- Suggested Positions -

buy the June $135 call (GS1118F135)

Entry on May xxth at $ xx.xx
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 6.5 million
Listed on May 21st, 2011


International Business Machines - IBM - close: 167.75 change: -0.24

Stop Loss: 165.90
Target(s): 174.75, 179.50
Current Option Gain/Loss: - 40.3%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/25 update: Uh-oh! The action in IBM today does not inspire any confidence. Shares did not participate in the market's bounce. Instead IBM spent the session churning sideways in a narrow range. I am not suggesting new positions at this time. If the market continues to sink this week we could see IBM hit our stop at $165.90 soon. I am not suggesting new positions at this time.

- 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

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


Jos. A Bank Clothiers - JOSB - close: 54.51 change: -0.39

Stop Loss: 52.90
Target(s): 59.50
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/25 update: Retailers suffered another round of disappointing earnings releases. The RLX retail index barely closed in positive territory today. Meanwhile JOSB lost -0.7%. I am repeating my comments from yesterday. Readers might want to consider a higher stop loss near $53.50. A breakdown under $54.00 might signal a correction toward the $51-50 zone (with its short-term head-and-shoulders pattern). I am not suggesting new positions at this time.

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

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


Union Pacific - UNP - close: 102.58 change: +1.00

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -45.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/25 update: UNP recovered from its morning weakness to close up +1%. Shares are still in the middle of the $100-104 trading range. Readers may want to wait for a breakout past $104 before launching new positions.

- Suggested Positions -

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

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: 86.26 change: +0.64

Stop Loss: 83.49
Target(s): 89.50, 94.75
Current Option Gain/Loss: -45.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/25 update: UTX dipped to $85.21 before rebounding this morning. Technically the move today has produced a bullish engulfing (reversal) candlestick pattern but I will point out shares still have a short-term trend of lower highs and lower lows. If you launch positions now I would keep our position size small to limit our risk. More conservative traders may want to use a stop closer to $85 instead of ours at $83.49.

- Suggested Positions -

Long the June $90 calls (UTX1118F90) Entry @ 0.40

Entry on May 23rd at $86.41
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011


Wynn Resorts Ltd. - WYNN - close: 143.15 change: +1.40

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:
05/25 update: WYNN bounced from its simple 40-dma again. That's the third time in a row. Readers might want to consider new positions now but I would consider this an aggressive, higher-risk entry point (use a stop just under $140). Officially the newsletter has a breakout trigger at $152.00 to buy calls. Yet if we don't see WYNN rally past $145 soon I'm going to drop this stock as a candidate.

Trigger @ $152.00

- Suggested Positions -

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

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

DaVita Inc. - DVA - close: 83.45 change: -0.20

Stop Loss: 85.35
Target(s): 80.50, 77.00
Current Option Gain/Loss: -10.4% & -50%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/25 update: Well that didn't take long. Our new play on DVA is already open. We set a trigger to buy puts at $83.30 and shares opened at $83.38 and fell to $83.21 this morning. Our trade is open with a stop loss at $85.35.

Our first target is $80.50 (near the 100-dma). The $80 area will probably be short-term support so we can expect a bounce there. Our secondary target is $77.00.

We want to keep our position size small to limit our risk. The wide spreads on the June $80 puts definitely put us at a disadvantage.

(small positions) - Suggested Positions -

Long Jun $85 PUT (DVA1118R85) Entry @ $2.40

- or -

Long Jun $80 PUT (DVA1118R80) Entry @ $0.60

Entry on May 25th at $83.30
Earnings Date 08/02/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on May 24th, 2011


Perrigo Co. - PRGO - close: 83.10 change: +0.20

Stop Loss: 86.15
Target(s): 78.00
Current Option Gain/Loss: -25.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/25 update: The action in PRGO today did not provide a very good entry point. The market's weakness weighed on PRGO and the stock gapped open lower at $81.74 (our entry). Shares dipped to $80.83 and then rocketed higher to fill the gap down. At this point I'd wait for a failed rally pattern before launching new positions. We can look for a likely failed rally near $84 or near $$85. Our plan was to keep our position size small to limit our risk. Our first target is the $78.00 level (or the 100-dma).

Small Positions!

Long June $80 PUT (PRGO1118R80) Entry @ $1.00

05/25 Gap down entry @ 81.74

Entry on May 25th at $81.74
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume = 654 thousand
Listed on May 24th, 2011


Pioneer Natural Resources - PXD - close: 91.30 change: +0.57

Stop Loss: 96.15
Target(s): 85.25
Current Option Gain/Loss: -31.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/25 update: Warning! The oil and energy sector has been showing relative strength the last couple of days. Currently oil stocks look ready to rally from their recent consolidation. If that occurs it will be a negative for our bearish play on PXD. Bigger picture PXD still looks bearish but shares could easily rally back toward $95 or even their 50-dma before rolling over again. I am taking a defensive approach to this trade. More conservative traders may want to exit early now. I am lowering our stop loss to $93.05. I am not suggesting new positions at this time.

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. FYI: The Point & Figure chart for PXD is bearish with a $72 target.

-Small Bearish-

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

05/25 Energy stocks look ready to rally. Consider an early exit from this trade now.

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


Roper Industries - ROP - close: 82.09 change: +1.13

Stop Loss: 84.05
Target(s): 78.00, 75.50
Current Option Gain/Loss: -37.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/25 update: Warning! ROP could be trying to reverse higher. Shares opened lower and spiked down to $79.79 before bouncing sharply back toward $82. The rally stalled near its 100-dma. ROP still has a bearish trend of lower highs and lower lows but another bounce like today could break that trend. Currently we have a stop at $84.05. More conservative traders may want to consider a stop closer to the $83 level instead. I am not suggesting new positions at this time.

Our targets are $78.00 and $75.50. The $80 level might offer a little support so don't be surprised to see a bounce. I would keep our position size small to limit our risk. Currently the Point & Figure chart is bearish with a $75 target.

(small positions) Suggested Positions -

Long the June $80 PUT (ROP1118R80) Entry @ $1.20

Entry on May 23rd at $81.75
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 570 thousand
Listed on May 21st, 2011


CLOSED BULLISH PLAYS

Illumina Inc. - ILMN - close: 72.23 change: +1.03

Stop Loss: 69.90
Target(s): 79.50, 84.00
Current Option Gain/Loss: -87.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/25 update: After almost two weeks of consolidating lower shares of ILMN have finally produced a bullish reversal. Today's bullish engulfing candlestick pattern needs to see confirmation but it's certainly improvement. Unfortunately the gap open lower at $69.70 this morning was under our stop loss at $69.90. Our trade has been closed. Nimble traders may want to reconsider and relaunch bullish positions now. For the newsletter, this trade is over.

- Suggested Positions -

June $75 call (ILMN1118F75) Entry @ $2.75, exit @ 0.35

05/25 Stopped out, gap down exit @ 69.70. Option @ -87.2%

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


Tiffany & Co. - TIF - close: 70.04 change: +1.18

Stop Loss: 67.90
Target(s): 74.50
Current Option Gain/Loss: -52.7%
Time Frame: about five days
New Positions: see below

Comments:
05/25 update: A couple of days ago we raised our stop loss to $67.90 in an effort to lower our risk. Unfortunately the market's weakness this morning pushed TIF to a low of $67.57. Thus our play was stopped out before TIF produced a sharp rebound back toward its highs. The company is due to report earnings tomorrow morning and we were planning to exit today at the closing bell.

- Suggested Positions -

June $72.50 call (TIF1118F72.5) Entry @ $1.48, exit @ 0.70 (-52.7%)

05/25 Stopped out @ 67.90, Option @ -52.7%
05/24 Prepare to exit tomorrow at the closing bell.
05/23 new stop @ 67.90

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