Editor's Note:

Stocks got off to a slow start on Thursday but eventually the major indices closed higher. Unfortunately IBM was showing relative weakness and hit our stop loss under its 50-dma.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 335.00 change: -1.78

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:
05/26 update: AAPL underperformed the market's major indices on Thursday. Shares appeared to fail at their simple 10-dma this morning. There is no change from my prior comments.

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: 76.66 change: +0.34

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:
05/26 update: BA produced another bounce but still couldn't make it past the $77 level or short-term resistance at its simple 30-dma. There is no change from my prior comments. More aggressive traders may want to buy this bounce from the $75.00 level. I'm still suggesting we wait for a dip to buy calls at $74.00. 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


Baker Hughes Inc. - BHI - close: 74.50 change: +0.72

Stop Loss: 68.40
Target(s): 79.00
Current Option Gain/Loss: +14.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/26 update: BHI was kind enough to open lower for us at $73.34. Shares spent the rest of the day churning higher and closed up +0.9%. There are no changes from my prior comments. If you don't feel like chasing it here readers could wait for a dip near $73.00 or the $72.00 levels as an alternative entry point.

Our first target is $79.00. We want to keep our position size small to limit our risk. Oil and oil stocks can be a volatile bunch.

-Small Positions - Suggested Positions -

Long June $75 call (BHI1118F75) Entry @ $1.61

Entry on May 26th at $73.34
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on May 25th, 2011


Deere & Co - DE - close: 84.94 change: +0.23

Stop Loss: 82.20
Target(s): 89.75
Current Option Gain/Loss: - 6.6% & - 4.9%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
05/26 update: Thursday was relatively quiet for DE. Shares opened at $84.61 and spent most of the day drifting sideways. Shares are trying to climb past round-number, psychological resistance at the $85.00 level. Remember, this is a higher-risk, aggressive trade as we look for an oversold bounce from technical support at the 200-dma.

Our exit target is $89.75. More nimble traders could aim for the 100-dma or 50-dma overhead. I would keep our position size small to limit our risk.

-Small Positions Only-

Long June $90 call (DE1118F90) Entry @ $0.45

- or -

Long June $87.50 call (DE1118F87.5) Entry @ $1.01

Entry on May 26th at $84.61
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 5.3 million
Listed on May 25th, 2011


Express Scripts - ESRX - close: 59.53 change: -0.48

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: -41.1% & -20.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/26 update: Lack of follow through on yesterday's rebound is a little bit worrisome for ESRX. I'm cautious again on new positions. 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: 35.51 change: +0.19

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:
05/26 update: FRX added +0.5% as it slowly inches to a new two-year high. FRX is still building on its bullish trend of higher lows. We can launch positions now or look for another dip near the simple 10-dma. 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: 136.26 change: +0.02

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:
05/26 update: GS is still underperforming the market's major indices but shares did close in the green today albeit by a very small margin. 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


Jos. A Bank Clothiers - JOSB - close: 55.45 change: +0.94

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:
05/26 update: Retailers were in rebound mode today. JOSB added +1.7% to outperform the major averages and outperform the RLX retail index. Hopefully today's rally has negated the short-term bearish H&S pattern this stock was forming. More conservative traders may want to consider a tighter stop loss. 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: 103.24 change: +1.14

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -24.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/26 update: UNP is still rebounding. Shares outperformed their peers with a +1.1% gain. The stock is nearing resistance at the $104.00 area. 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: 86.39 change: +0.13

Stop Loss: 83.80
Target(s): 89.50, 94.75
Current Option Gain/Loss: -52.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/26 update: UTX did not make much progress on Thursday but it was a gain suggesting that Wednesday's move is indeed a bullish reversal. Although I will still point out that UTX has not yet broken the short-term bearish trend of lower highs and lower lows. If you buy calls here I would use a very tight stop (close to the $85.00 level). Speaking of stops the 100-dma has risen to $83.87. I am raising our stop loss to $83.80.

- Suggested Positions -

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

05/26 New stop loss @ 83.80

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: 145.34 change: +2.19

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:
05/26 update: WYNN looks a little healthier today with a +1.5% gain and a close over the $145.00 level. We will hold on to it for another day to see what happens tomorrow. Currently our plan is to launch call positions at $152.00.

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: 83.94 change: +0.49

Stop Loss: 85.35
Target(s): 80.50, 77.00
Current Option Gain/Loss: -27.0% & -58.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/26 update: DVA dipped to new six-week lows this morning before bouncing back into positive territory. Readers may want to wait for a new failed rally type of move under the $85 level and/or its 50-dma before initiating new bearish positions.

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: 84.71 change: +1.61

Stop Loss: 86.15
Target(s): 78.00
Current Option Gain/Loss: -70.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/26 update: Our new play on PRGO isn't looking so healthy. Shares have put together two back-to-back gains and PRGO is back above is 50-dma. Granted the four-week trend is still a bearish one and PRGO is nearing what should be short-term resistance in the $85.50-86.00 area. I would definitely wait for this rebound to reverse before considering new positions. 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: 91.12 change: -0.18

Stop Loss: 93.05
Target(s): 85.25
Current Option Gain/Loss: -33.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/26 update: PXD is still underperforming its peers in the energy sector but I remain cautious here. Given the bullish turnaround for the oil indices I would seriously consider an early exit from this put play. If we don't see some follow through lower soon or if we see PXD close over $92.00 I'll probably close this trade early. Our new stop is $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. New stop loss @ 93.05.

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: 82.37 change: +0.28

Stop Loss: 84.05
Target(s): 78.00, 75.50
Current Option Gain/Loss: -29.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/26 update: ROP is trying to bounce but shares struggled with technical resistance at its 10 and 100-dma. I'd like to see a new lower high before we consider launching new positions. Watch for potential resistance in the $83.50-84.00 area.

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

International Business Machines - IBM - close: 167.18 change: -0.57

Stop Loss: 165.90
Target(s): 174.75, 179.50
Current Option Gain/Loss: - 65.3%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/26 update: Our recent concerns over IBM have come to fruition. The stock underperformed the market today and dipped toward the $166 level and its 50-dma. Shares hit an intraday low of $165.90 before paring its losses. Call it a coincidence but our stop loss happens to be $165.90 so our trade has been stopped out.

- Suggested Positions -

June $170 calls (IBM1118F170) Entry @ $2.60, Exit 0.90 (-65.3%)

05/26 Stopped out @ 165.90. Option @ -65.3%
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