Editor's Note:

Wednesday's sell-off did not see much follow through as investors wait for the jobs data on Friday. Even if we see a bounce on the economic data tomorrow I would be very cautious on launching new bullish positions.

-James

Current Portfolio:


CALL Play Updates

Alliance Data Systems - ADS - close: 91.46 change: -1.33

Stop Loss: 88.65
Target(s): 96.50, 99.75
Current Option Gain/Loss: -66.6% & -38.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/02 update: ADS was an underperformer on Thursday with a -1.4% decline. Shares have fallen to their 30-dma. It seems like ADS is headed for round-number support and technical support near $90.00. I'd wait for a dip or a bounce near $90 before considering new bullish positions. The simple 50-dma has risen to $88.77. We will raise our stop loss to $88.65.

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

06/02 New stop loss @ 88.65

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: 128.76 change: -0.96

Stop Loss: 127.75
Target(s): 134.90, 139.50
Current Option Gain/Loss: - 50.0% & -36.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: I am repeating my prior comments. It looks like AVB has produced a bull-trap and bearish reversal pattern. If we do not see some sort of bounce tomorrow I will drop AVB as a candidate. Then again if AVB doesn't bounce tomorrow we might get stopped out. I am not suggesting new positions at this time. Given the close under the $130.00 level, which should have been support, more conservative traders may want to exit early immediately.

- Suggested Positions -

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

- or -

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

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: 75.69 change: +0.34

Stop Loss: 74.85
Target(s): 79.95, 84.50
Current Option Gain/Loss: -57.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: BA did not see any follow through on yesterday's sell-off but shares still look vulnerable here under their 50-dma. I am not suggesting new positions at this time.

- Suggested Positions -

Long June $80 call (BA1118F80) Entry @ $0.35

06/01 Triggered @ 76.50
05/31 New trigger @ 76.50, New stop @ 74.85

Entry on June 1st at $76.50
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 4.8 million
Listed on May 17th, 2011


Baker Hughes Inc. - BHI - close: 73.60 change: +1.63

Stop Loss: 68.40
Target(s): 79.00
Current Option Gain/Loss: -20.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/02 update: Energy stocks were mixed on Thursday but BHI delivered a nice bounce (+2.2%) as traders bought the dip near $72 and a few key moving averages. I remain cautious here and would hesitate to launch new positions. We wanted to keep our position size small to limit our risk.

-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: 84.23 change: +1.47

Stop Loss: 82.20
Target(s): 89.75
Current Option Gain/Loss: -42.2% & -34.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/02 update: DE saw a nice bounce with a +1.7% gain. Shares are now back above their 200-dma. Unfortunately the stock market still looks very vulnerable. I am not suggesting new bullish positions at this time.

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: 58.04 change: -1.01

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: -83.0% & -45.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: Warning! Shares of ESRX are getting weaker. The stock closed under its 30-dma and looks poised to break down under the $58.00 level soon. More conservative traders may want to exit now. I am raising our stop just a little to $56.95. The 50-dma should offer some support near $57.20. If we do not see ESRX bounce tomorrow I will seriously consider dropping it. I am not suggesting new positions at this time.

- 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: 102.26 change: +0.20

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: -78.2% & -46.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: After yesterday's painful sell-off FOSL produced a bounce today but it wasn't very convincing. It looks like traders are just waiting for the jobs data tomorrow. I'd rather wait and look for a bounce near the $100 level before considering new positions. 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: 35.57 change: +0.07

Stop Loss: 33.75
Target(s): 39.00, 42.50
Current Option Gain/Loss: -69.2% & -28.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: FRX produced a minor bounce near its rising 10-dma. I don't see any changes from my prior comments. If you're looking for a new entry point you have to decide if you want to buy a dip near $35 or wait for a dip closer to $34.00. If you do launch new positions I'd buy the July or August calls.

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.

- 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: 134.38 change: -1.79

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:
06/02 update: GS underperformed today thanks to headlines that the company had been served an subpoena by the Manhattan District Attorney's office. Authorities are still looking into the company's role during the U.S. credit crisis. The stock spiked down to a new multi-month low at $131.50 but pared its losses by the close. I will reiterate that our buy-the-dip at support is a very risky bet given all the negative headlines swimming around GS.

There is no change from my earlier comments.

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


Union Pacific - UNP - close: 102.22 change: +1.36

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -51.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
06/02 update: UNP produced a decent bounce (+1.3%) on Thursday but shares still look vulnerable here. There is still a good chance UNP will test support near the $100.00 mark in the next few days. I'd hesitate to launch new positions. If we do see anther entry point I'd buy July or August 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


Wynn Resorts Ltd. - WYNN - close: 146.26 change: +0.40

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:
06/02 update: WYNN is still chopping sideways. If we don't see a distinct move one way or the other tomorrow I'll drop WYNN as a candidate. 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

Stericycle Inc. - SRCL - close: 87.61 change: +0.29

Stop Loss: 91.55
Target(s): 84.00, 80.50
Current Option Gain/Loss: +20.0% & + 3.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/02 update: Be careful here! SRCL has dipped to technical support at its 100-dma. If the market rallies on Friday due to the jobs report we could easily see SRCL challenging the $90 level and its 50-dma. I am not suggesting new positions at this time.

- 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


Whole Foods Market - WFM - close: 58.69 change: -0.89

Stop Loss: 61.55
Target(s): 55.10, 52.00
Current Option Gain/Loss: - 4.5% & - 4.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: Our new play on WFM is already open. Shares underperformed today with a drop to $57.45. WFM managed to trim its losses but it remains under technical support and now resistance at its 100-dma. I would still consider new positions now. However, there is a good chance stocks could see a bounce on the economic data out on Friday. You may want to wait until Friday afternoon before considering new bearish positions. Our targets are $55.10 and $52.00.

- Suggested Positions -

Long June $60 PUT (WFM1118R60) Entry @ $2.20

- or -

Long July $55 PUT (WFM1116S55) Entry @ $1.05

Entry on June 2 at $58.70
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on June 1st, 2011


CLOSED BULLISH PLAYS

Praxair Inc. - PX - close: 103.15 change: -0.24

Stop Loss: 102.95
Target(s): 109.75, 112.25
Current Option Gain/Loss: -70.5% & -60.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: Our new call play in PX didn't last very long. After yesterday's drop to the 50-dma the stock continued to fall this morning and hit $102.22 intraday. Our stop loss was hit at $102.95.

- Suggested Positions -

June $105 call (PX1118F105) Entry @ $1.70, Exit $0.50 (-70.5%)

- or -

July $110 call (PX1116G110) Entry @ $0.75, Exit $0.30 (-60%)

06/02 stopped out @ 102.95, Options @ -70.5% & -60%

chart:

Entry on June 1st at $105.46
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on May 31st, 2011


Sherwin-Williams Co. - SHW - close: 85.36 change: -0.70

Stop Loss: 84.90
Target(s): 92.25. 97.50
Current Option Gain/Loss: -66.6% & -60.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/02 update: The sell-off in SHW continued and shares hit an intraday low of $84.80. Our stop loss was hit at $84.90 so the play is closed. Tuesday's move definitely looks like a bull-trap pattern.

- Suggested Positions -

June $90 call (SHW1118F90) Entry @ $0.30, exit $0.10 (-66.6%)

- or -

July $90 call (SHW1116G90) Entry @ $1.25, exit $0.50 (-60%)

06/02 stopped out @ 84.90, options @ -66.6% & -60%

chart:

Entry on June 1st at $87.73
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 911 thousand
Listed on May 31st, 2011


CLOSED BEARISH PLAYS

DaVita Inc. - DVA - close: 84.42 change: +0.52

Stop Loss: 85.35
Target(s): 80.50, 77.00
Current Option Gain/Loss: -45.8% & -91.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/02 update: I'm giving up on DVA. Looking at the last few weeks the pattern is bearish but short-term DVA has been resistant to any profit taking and the stock outperformed the market today. I am suggesting an early exit now. (If you're holding the June $80 puts you might as well hold them at this point with a bid down to 5 cents. It's a rough trade when an $83 stock moves $1.10 and the option is down -90%. Part of our challenge was the wide spread on some of these options.)

We wanted to keep our position size small to limit our risk.

(small positions) - Suggested Positions -

Jun $85 PUT (DVA1118R85) Entry @ $2.40, exit $1.30 (-45.8%)

- or -

Jun $80 PUT (DVA1118R80) Entry @ $0.60, exit $0.05 (-91.6%)

06/02 Exit early. Options @ -45.8% $ -91.6%

chart:

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