Editor's Note:

The market's Friday sell-off has created a few new entry points in our bearish candidates. Meanwhile I'm suggesting an early exit for our BHI call play. Plus, we want to exit our June calls in the FRX trade.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 325.90 change: -5.59

Stop Loss: 317.45
Target(s): 337.50, 347.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
06/11 update: The stock market extended its declines to six weeks in a row. Friday's big drop pushed AAPL under support near $330. Shares look headed for the simple 200-dma currently near $323.83. I am adjusting our buy-the-dip trigger from $325.00 to $324.00, which should put it right on the 200-dma this Monday. More conservative traders will seriously want to consider waiting for a bounce in AAPL instead of trying to buy a dip given the market's recent weakness.

In summary, this is a very aggressive, higher-risk trade. We want to buy calls at $324.00 with a stop loss at $317.45. If the 200-dma fails then AAPL is headed for the next level of support at $320.00. Let's keep our position size small to limit our risk. We have two targets at $337.50 and $347.50.

Trigger @ $324.00 (SMALL POSITIONS)

- Suggested Positions -

buy the July $340 call (AAPL1116G340)

chart:

Entry on June xxth at $ xx.xx
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 12.9 million
Listed on June 8th, 2011


Fossil Inc. - FOSL - close: 105.48 change: -0.28

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: - 74.6% & -23.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/11 update: FOSL held up reasonably well on Friday only suffering a 0.2% loss. FOSL actually hit a new high on Friday morning before reversing. We want to exit our June calls immediately! If FOSL pulls back we'll be looking for another dip near support in the $100 area. 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 -

June $110 call (FOSL1118F110) Entry @ $1.38, exit 0.35 (-74.6%)

- or -

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

06/11 Exit June calls ASAP. Option @ 0.35 (-74.6%)

chart:

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: 37.95 change: +0.09

Stop Loss: 34.45
Target(s): 39.00, 42.50
Current Option Gain/Loss: +69.2% & +64.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/11 update: FRX just refuses to cave into profit taking. The stock posted another gain and hit another two-year high on Friday. FRX is up about 11 out of the last 12 weeks. Eventually FRX will see some profit taking. It was our plan to exit our June calls on Friday at the closing bell. We still have the August calls. Please note our new stop loss at $34.90. I am not suggesting new positions at this time.

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 -

June $37 call (FRX1118F37) Entry @ $0.65, exit $1.10 (+69.2%)

- or -

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

06/11 New stop loss @ 34.90
06/10 Planned exit of June $37 call. exit $1.10 (+69.2%)
06/09 Prepare to exit the June calls on June 10th at the close
06/04 new stop loss @ 34.45
05/28 New stop loss @ 33.75

chart:

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: 135.92 change: +2.39

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:
06/11 update: Some of the major banking stocks rallied today on news that the regulators may only require a 2.0-to-2.5% surcharge on capital requirements instead of 3%. GS surged to its 20-dma before trimming its gains. The stock closed up +1.7%. Overall the move has no change on our strategy. The trend is still down although the close over the 10-dma might be consider a very short-term bullish development. I don't see any changes 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 July $135 call (GS1116G135)

chart:

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: 99.60 change: -1.69

Stop Loss: n/a
Target(s): 109.00, 114.00
Current Option Gain/Loss: -94.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
06/11 update: If there was any value left in our call options I would suggest everyone exit now. As it stands, the June $105 call has a bid of 9 cents. We might as well risk holding on for the next five days to see what happens. Odds are this option is going to expire worthless. Since we're in this situation I am removing the stop loss.

- Suggested Positions -

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

06/11 option has deteriorated. Removing the stop loss.

chart:

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: 186.53 change: -3.15

Stop Loss: 192.55
Target(s): 180.25, 175.00
Current Option Gain/Loss: -23.1% & - 5.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/11 update: AMZN failed again at resistance near $190-191 and its 50-dma. Friday's move looks like a new entry point for bearish put positions. I am lowering our stop loss down to $192.55.

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

06/11 New stop loss @ 192.55
06/07 New stop loss @ 195.15.

chart:

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


Diamond Offshore Drilling, Inc. - DO - close: 68.22 change: -0.96

Stop Loss: 72.65
Target(s): 64.50, 62.50
Current Option Gain/Loss: - 3.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/11 update: The OSX oil service index fell -2.7%. I'm surprised that DO did not show more weakness on Friday. The stock was only down -1.3%. I would prefer to launch new positions on a bounce or failed rally near resistance at $70 and the 200-dma.

Earlier Comments:
Our targets are $64.50 and $62.50. FYI: Traders should note that the most recent data listed short interest at more than 14% of the float. That does raise the risk of a short squeeze should the stock suddenly find strength.

- Suggested Positions -

Long July $67.50 PUT (DO1116S67.5) entry @ $2.09

chart:

Entry on June 8th at $68.91
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on June 7th, 2011


General Dynamics Corp - GD - close: 69.37 change: -1.12

Stop Loss: 72.25
Target(s): 65.50
Current Option Gain/Loss: - 4.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/11 update: Our new put play on GD has been opened. The stock broke down through support near $70.00 and the 200-dma. Shares hit our trigger to buy puts at $69.75. The intraday bounce stalled at $70. I would still consider new positions now at current levels.

-Suggested Positions-

Long July $67.50 PUT (GD1116S67.5) Entry @ $1.25

chart:

Entry on June 10th at $69.75
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on June 9th, 2011


Nike Inc. - NKE - close: 79.66 change: -1.01

Stop Loss: 84.05
Target(s): 75.50
Current Option Gain/Loss: +44.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
06/11 update: NKE produced another failed rally move on Friday morning and then sank toward is lows for the week. I would still consider new positions now. Please note our new stop loss at $83.05.

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

06/11 New stop loss @ 83.05

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: 42.53 change: -0.00

Stop Loss: 46.25
Target(s): 40.50, 36.00
Current Option Gain/Loss: +36.3% & +15.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/11 update: The declines in SNDK have been slowing and shares produced a sharp rebound off its intraday lows on Friday. This is suggesting SNDK is trying to form a short-term bottom but is struggling under the market's decline. At this point I would prefer to wait for a bounce or failed rally near $44.00 or the 200-dma closer to $45.00 before initiating new positions.

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

06/08 New stop loss @ 46.25

chart:

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: 84.90 change: -1.18

Stop Loss: 90.05
Target(s): 84.00, 80.50
Current Option Gain/Loss: +50.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/11 update: After a week of holding support at $85.00 SRCL broke this level on Friday and closed at new two-month lows. I would consider new positions at this time (although if you launch positions now don't exit at $84.00). I am lowering our stop loss to $88.05. More conservative traders may want their stop even lower. Our first target is $84.00. Our second target is $80.50.

- Suggested Positions - Long July $85 PUT (SRCL1116S85) Entry @ $1.50

06/11 new stop loss @ 88.05
06/08 Exit June $85 puts. Bid @ $1.00 (+100%)
06/04 new stop loss @ 90.05

chart:

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: 54.23 change: -0.91

Stop Loss: 58.15
Target(s): 55.10, 52.00
Current Option Gain/Loss: +156.8% & +133.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/11 update: The oversold bounce has already rolled over and WFM closed at a new three-month low. I am lowering our stop loss down to $58.15. More conservative traders will want to seriously consider exiting our June puts immediately. Any bounce will have a very negative effect on these options. I'll be looking to exit these June puts in the next day or two. For our July puts we'll stick to the $52 target. I am not suggesting new positions at this time.

- Suggested Positions -

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

- or -

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

06/11 New stop loss @ 58.15.
06/11 Consider exiting our June puts early.
06/08 1st target hit @ 55.10. June $60 put @ 4.30 (+95.4%), July $55 put @ 1.92 (+82.8%)
06/06 new stop loss @ 60.15
06/04 new stop loss @ 60.65

chart:

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

Baker Hughes Inc. - BHI - close: 72.09 change: -2.61

Stop Loss: 69.90
Target(s): 79.00
Current Option Gain/Loss: -77.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/11 update: I am giving up on our BHI trade. Maybe if we had July calls instead of Junes I might consider holding on. BHI has not yet broken support at $72.00 and it should have additional support at $70.00 and its 100-dma. Unfortunately oil and oil service stocks were some of the worst performers on Friday. We want to exit early from this trade immediately.

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

-Small Positions - Suggested Positions -

June $75 call (BHI1118F75) Entry @ $1.61, exit 0.36 (-77.6%)

06/11 Exit early. BHI @ 72.09. Option @ 0.36 (-77.6%)
06/04 new stop loss @ 69.90

chart:

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