Editor's Note:

The market's oversold bounce from this morning quickly faded lower late this afternoon. Our new put play on NKE has been triggered.

-James

Current Portfolio:


CALL Play Updates

Baker Hughes Inc. - BHI - close: 72.58 change: +0.35

Stop Loss: 69.90
Target(s): 79.00
Current Option Gain/Loss: -53.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/07 update: Oil stocks popped higher this morning but the rally didn't get very far. BHI was trimming its gains late in the day as the market rolled over. The bulls are at risk here as BHI flirts with support near $72.00. If this level breaks it will be a quick drop toward the next level of support near $70.00. More aggressive traders may want to move their stop loss so it's under the 100-dma or under the $68.00 level. I am not suggesting new positions at this time. A breakdown under $68.00 would look like BHI had produced a bearish H&S pattern.

Earlier Comments:
We wanted to keep our position size small to limit our risk.

-Small Positions - Suggested Positions -

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

06/04 new stop loss @ 69.90

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


Fossil Inc. - FOSL - close: 101.79 change: +1.72

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: -100.0% & -60.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/07 update: FOSL displayed relative strength today with traders buying the dip near $100 this morning. The stock closed up +1.7%. Normally I would be tempted to buy calls on this bounce from support but the action in the market's major averages this afternoon is ominous. I am not suggesting new positions at this time.

Earlier Comments:
We wanted 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: 37.00 change: +0.69

Stop Loss: 34.45
Target(s): 39.00, 42.50
Current Option Gain/Loss: - 7.6% & +21.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/07 update: FRX continues to outperform the market. Shares rallied off their morning lows to close up +1.9% and set a new two-year high. While the rally is very encouraging I wouldn't chase it.

Our targets are 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

06/04 new stop loss @ 34.45
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: 132.99 change: -0.91

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:
06/07 update: Financial stocks continue to underperform. GS spent most of the day churning sideways but the stock looks poised to drop. We are speculating that GS will bounce at the $130 level but this is a very aggressive and high-risk trade.

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: 100.67 change: +0.54

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -83.3%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
06/07 update: UNP is trying to bounce from support near $100 and its 50-dma but it didn't get very far with a +0.5% gain. I am concerned that if the market continues to slide lower we'll see UNP break support near $100. We are definitely running out of time for our June calls. I am not suggesting new positions at this time.

- 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


PUT Play Updates

Amazon.com Inc. - AMZN - close: 187.55 change: +1.86

Stop Loss: 195.15
Target(s): 180.25, 175.00
Current Option Gain/Loss: - 8.5% & - 4.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/07 update: AMZN produced an oversold bounce this morning but the rebound attempt failed twice at resistance near the $190 level and its 50-dma. This move can be used as a new entry point to buy puts. I am adjusting our stop loss down to $195.15. More conservative traders may want to use a lower stop loss just remember that AMZN can be a volatile equity.

Earlier Comments:
The plan was to keep our position size small. Our first target is $180.25. Our second target is $175.00 (or the simple 200-dma, whichever one AMZN hits first).

- small bearish positions -

Long June $185 PUT (AMZN1118R185) Entry @ $2.89

- or -

Long July $180 PUT (AMZN1116S180) Entry @ $4.40

06/07 New stop loss @ 195.15.

Entry on June 6th at $188.01
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 4.5 million
Listed on June 4th, 2011


Nike Inc. - NKE - close: 79.77 change: -0.59

Stop Loss: 84.05
Target(s): 75.50
Current Option Gain/Loss: - 7.5%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
06/07 update: Bingo! We didn't have to wait very long for NKE's oversold bounce. Shares rallied to resistance near $82 and its 200-dma and stalled. Our trigger to buy puts was hit at $81.75. I would still consider new positions now. Our target is $75.50 but we'll adjust the target as the trade progresses. NKE is due to report earnings on June 27th and we do not want to hold over the announcement.

- Suggested Positions -

Long July $80 PUT (NKE1116G80) Entry @ $2.00

chart:

Entry on June 7th at $81.75
Earnings Date 06/27/11 (confirmed)
Average Daily Volume = 2.3 million
Listed on June 6th, 2011


SanDisk Corp. - SNDK - close: 43.05 change: -0.19

Stop Loss: 47.70
Target(s): 40.50, 36.00
Current Option Gain/Loss: +35.4% & +23.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/07 update: Positive analyst comments from Goldman Sachs sent SNDK higher this morning but the rally stalled near $44. Shares closed on their lows for the session. I don't see any changes from my prior comments. You can open positions now or wait for a failed rally closer to $45 and its 200-dma.

Our targets are $40.50 and $36.00, given enough time. FYI: The P&F chart for SNDK is bearish with a $30 target.

- Suggested Positions -

Long July $42.00 PUT (SNDK1116S42) Entry @ $1.10

- or -

Long July $40.00 PUT (SNDK1116S40) Entry @ $0.69

Entry on June 6th at $44.31
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 5.8 million
Listed on June 4th, 2011


Stericycle Inc. - SRCL - close: 85.70 change: +0.15

Stop Loss: 90.05
Target(s): 84.00, 80.50
Current Option Gain/Loss: + 60.0% & +26.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/07 update: SRCL spent the day slowly climbing from its morning lows only to roll over late in the session. Cautious traders may want to take profits early, especially if you're holding June options. I am not suggesting new bearish positions at current levels.

- Suggested Positions -

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

- or -

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

06/04 new stop loss @ 90.05

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: 56.99 change: +1.04

Stop Loss: 60.15
Target(s): 55.10, 52.00
Current Option Gain/Loss: +45.4% & +33.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/07 update: WFM saw an oversold bounce from $56 to almost $58 before rolling over this afternoon. Nimble traders could use this as a new entry point. Officially I'm not suggesting new positions at this time. We have a target at $55.10 and our secondary, more aggressive target is $52.00.

- Suggested Positions -

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

- or -

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

06/06 new stop loss @ 60.15
06/04 new stop loss @ 60.65

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