Editor's Note:

The market's major averages ended the month of May on an up note. Today's move looks like a bullish breakout above the four-week trend of lower highs. I am suggesting an early exit for a couple of our put plays. One put play was stopped out. Meanwhile our new AVB call trade has been opened.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 347.83 change: +10.42

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

Comments:
05/31 update: AAPL was a big winner today with +3% rally and a breakout past its 50 and 100-dma. Shares are moving on news of a new iCloud service. Shares actually gapped open higher this morning and closed at their highs for the day, which would suggest a strong open for tomorrow. The breakout higher would suggesting our buy-the-dip strategy is now wishful thinking, at least with a dip near $320. Yet I wouldn't want to chase today's move and tomorrow will likely see a rally to $350 or higher.

I'm going to focus on another buy-the-dip entry point but after we see if shares produce any follow through higher tomorrow. Hypothetically, if AAPL rallies to $350 and stalls then we might look to buy a dip near $345 or near $340. So for tonight we have not trigger as we wait and see how shares perform tomorrow.

Entry Point to be determined. More details to follow tomorrow.

- Suggested Positions -

To be determined.

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


Alliance Data Systems - ADS - close: 93.93 change: +0.21

Stop Loss: 87.99
Target(s): 96.50, 99.75
Current Option Gain/Loss: +12.5% & + 6.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: ADS spiked past $95 this morning but couldn't hold it and spent the day churning sideways under the $94 level. There is no change from my weekend comments. Readers might want to consider waiting for a dip near $92 before considering new positions.

Earlier Comments:
This is an aggressive trade. We want to keep our position size small to limit our risk. FYI: The most recent data listed short interest at more than 26% of the float. This elevated short interest significantly raises the risk of a short squeeze.

- Suggested (SMALL) Positions -

Long June $95 call (ADS1118F95) Entry @ $1.20

- or -

Long July $95 call (ADS1116G95) Entry @ $2.45

Entry on May 27th at $92.23
Earnings Date 07/18/11 (unconfirmed)
Average Daily Volume = 999 thousand
Listed on May 26th, 2011


Avalonbay Communities - AVB - close: 133.07 change: +3.07

Stop Loss: 127.75
Target(s): 134.90, 139.50
Current Option Gain/Loss: +120.0% & +40.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/31 update: Our new play on AVB is off to a good start. Shares opened at $130.55. Our trigger to buy calls was at $130.51 so the trade was opened first thing this morning. There was a brief dip to $129.88 and then AVB rallied to new relative highs, closing up +2.3%. I would look for a dip in the $132.00-131.00 area as a new entry point if you missed the entry this morning. We have two targets at $134.90 and $139.50.

- Suggested Positions -

Long June $135 call (AVB1118F135) Entry @ $0.50

- or -

Long July $135 call (AVB1116G135) Entry @ $1.50

Chart:

Entry on May 31st at $130.55
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume = 571 thousand
Listed on May 28th, 2011


Boeing Co - BA - close: 78.03 change: +1.04

Stop Loss: 74.85
Target(s): 79.95, 84.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/31 update: Given the market's breakout today we're adjusting our entry point strategy on BA. We'll move our buy-the-dip trigger to $76.50 and move our stop loss to $74.85, just under support at $75.00. If triggered our targets are $79.95 and $84.50.

Trigger @ $76.50

- Suggested Positions -

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

05/31 New trigger @ 76.50, New stop @ 74.85

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: 73.93 change: +0.47

Stop Loss: 68.40
Target(s): 79.00
Current Option Gain/Loss: -13.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: Energy stocks rallied this morning but trimmed their gains by the close. BHI seems to be struggling with resistance in the $75.00-75.50 area. There is no change from my weekend comments. Look for a dip back toward the $72.00 or $71.00 levels, which we can use as a new entry point to buy calls. 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: 86.08 change: +0.34

Stop Loss: 82.20
Target(s): 89.75
Current Option Gain/Loss: + 4.4% & +13.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: DE witnessed some volatility today. Shares opened higher above $87 and then quickly sold off. Yet traders bought the dip near round-number support at $85.00 and DE was rebounding higher into the closing bell. If you are looking for a new entry point then today's afternoon bounce could be your chance. Although you might want to use a higher stop loss.

Earlier Comments:
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: 59.56 change: +1.08

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: -51.6% & -24.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/31 update: Whew! After Friday's ugly reversal pattern it was nice to see that ESRX did not produce any follow through lower. That doesn't mean the stock is "out of the woods" and I remain somewhat wary here. Readers may want to wait for a new close over $61.00 before considering new bullish positions.

- 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


Fossil Inc. - FOSL - close: 105.84 change: +0.56

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: -20.2% & -20.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/31 update: FOSL saw traders buy the dip this morning and the stock ended up +0.5%. I would still consider new positions now at current levels. We do want to keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

Long June $110 call (FOSL1118F110) Entry @ $1.38

- or -

Long July $110 call (FOSL1116G110) Entry @ $3.00

Entry on May 27th at $104.96
Earnings Date 08/09/11 (unconfirmed)
Average Daily Volume = 842 thousand
Listed on May 26th, 2011


Forest Labs Inc. - FRX - close: 36.02 change: +0.24

Stop Loss: 33.75
Target(s): 39.00, 42.50
Current Option Gain/Loss: -46.1% & -17.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/31 update: The DRG drug index soared to a new two-year high (almost three years) today. FRX also rallied to a new multi-year high. At this point we may want to wait for a dip, probably near $35, before considering new bullish positions. Our target is the $39.00 level and the $42.50 mark but I'm starting to worry that FRX just doesn't move fast enough. If you do launch new positions I'd buy the July or August calls.

- Suggested Positions -

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

- or -

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

05/28 New stop loss @ 33.75

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: 140.73 change: +2.07

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:
05/31 update: GS added another two points today thanks to an upgrade from JPM. I remain very wary here. We'll leave our buy-the-dip trigger at $130.25 for now but we'll keep our eyes open if we see GS bounce from the $135 level again.

Earlier 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: 57.10 change: +1.09

Stop Loss: 53.75
Target(s): 59.50
Current Option Gain/Loss: +51.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/31 update: It was a strong day for JOSB with the stock rising +1.9%. Shares closed at new all-time highs. Our target is $59.50. I'm 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

05/28 new stop loss @ 53.75
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: 104.97 change: +1.44

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: +10.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/31 update: Tuesday proved to be a strong day for the railroad stocks. UNP has closed above resistance at the $104 level. Today's move can be used as a new entry point to buy calls.

- 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: 87.77 change: +1.44

Stop Loss: 84.75
Target(s): 89.50, 94.75
Current Option Gain/Loss: -25.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/31 update: UTX was a strong performer with a +1.6% gain. The initial gap open/spike higher failed but once UTX had filled the gap shares rebounded back toward its highs for the session.

Please note that I am raising our stop loss to $84.75.

- Suggested Positions -

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

05/31 New stop loss @ 84.75
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: 146.52 change: +0.12

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:
05/31 update: It was a disappointing session for WYNN. The early morning strength faded and WYNN almost failed to close in positive territory. Currently our plan is to buy calls at $152.00.

Trigger @ $152.00

- Suggested Positions -

Buy the June $160 calls (WYNN1118F160)

- or -

Buy the July $160 calls (WYNN1116G160)

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: 84.05 change: +0.43

Stop Loss: 85.35
Target(s): 80.50, 77.00
Current Option Gain/Loss: -35.4% & -75.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: Warning! The market's bullish breakout over its trend of lower highs today is going to make bearish trades tough to play. More conservative traders may want to abandon our DVA put play right now. I am not suggesting new positions at this time.

On a positive note DVA really didn't react to Tuesday's rally.

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


Stericycle Inc. - SRCL - close: 89.09 change: +0.75

Stop Loss: 91.55
Target(s): 84.00, 80.50
Current Option Gain/Loss: -20.0% & -20.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: SRCL produced a bounce at $88 and closed up +0.8%. Shares look poised to bounce toward $90 and its 50-dma soon. Overall little has changed. I would expect a bounce but SRCL still has a bearish trend of lower highs and lower lows (from its peak). I am NOT suggesting new positions today. Let's wait for SRCL to bounce toward $90 or $91 before we consider new positions.

Earlier Comments:
FYI: The Point & Figure chart for SRCL is bearish with a $82 target.

- Suggested Positions -

Long June $85 PUT (SRCL1118R85) Entry @ $0.50

- or -

Long July $85 PUT (SRCL1116S85) Entry @ $1.50

Entry on May 31st at $88.78
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 502 thousand
Listed on May 28th, 2011


CLOSED BEARISH PLAYS

Perrigo Co. - PRGO - close: 85.56 change: +0.56

Stop Loss: 86.15
Target(s): 78.00
Current Option Gain/Loss: -75.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: I'm throwing in the towel on our PRGO put play. The stock really didn't move much on today's market rally but shares do look poised to move higher. Today's bullish breakout for the market's major indices could be a turning point. I'm suggesting an early exit from our PRGO trade. Our plan was to keep our position size small to limit our risk.

Small Positions!

June $80 PUT (PRGO1118R80) Entry @ $1.00, Exit 0.15 (-85%)

05/31 Exit early. PRGO @ 85.56. Option @ 0.15 (-85%)
05/25 Gap down entry @ 81.74

chart:

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: 91.82 change: +0.68

Stop Loss: 93.05
Target(s): 85.25
Current Option Gain/Loss: -56.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/31 update: We have been concerned with our PXD position due to the recent strength of energy stocks. That's why we recently lowered our stop loss to $93.05. PXD gapped open higher at $92.96 and quickly hit our stop loss at $93.05 today.

Earlier Comments:
We want to keep our position size small to limit our risk because oil and oil stocks have been increasingly volatile lately.

-Small Bearish-

June $90 PUT (PXD1118R90) Entry @ $3.30, Exit @ 1.45 (-56.0%)

05/31 Stopped out @ 93.05, Option @ -56.0%
05/25 Energy stocks look ready to rally. Consider an early exit from this trade now. New stop loss @ 93.05.

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


Roper Industries - ROP - close: 83.47 change: +0.48

Stop Loss: 84.05
Target(s): 78.00, 75.50
Current Option Gain/Loss: -62.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/31 update: I am giving up on our ROP put play. Shares did not trade above resistance at $84.00. The stock came close but failed at $83.96 this morning. Unfortunately the market's bullish breakout today and the intraday bounce in ROP doesn't bode well for put options. I am suggesting an early exit now.

Earlier Comments:
I would keep our position size small to limit our risk.

(small positions) Suggested Positions -

June $80 PUT (ROP1118R80) Entry @ $1.20, Exit @ 0.45 (-62.5%)

05/31 Exit Early. ROP @ 83.47. Option @ -62.5%

chart:

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