Editor's Note:

For the most part Friday's option expiration played out as expected but there were a few surprises. Relative weakness in AAPL and DE and relative strength in SRCL and WFM were all surprises. Our GS and ANF candidates have been removed. UNP has been closed and GD was stopped out.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 320.26 change: -4.90

Stop Loss: 318.25
Target(s): 337.50, 347.50
Current Option Gain/Loss: - 12.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/18 update: Terrible news at rival RIMM should have been good news for AAPL. RIMM's struggles would suggest that AAPL's iPhone and GOOG's Android phones are gaining market share in the corporate world. Yet AAPL's spike higher this Friday quickly failed. Shares plunged toward support near $320 near its March lows and near its exponential 200-dma. Volume was above average on the drop. This move today is very bearish and clearly breaks technical support at the 200-dma. Bloomberg ran an article today suggesting that AAPL's breakdown under $325 opens the door for a correction down to the $280 area. I will point out that AAPL has not yet broken support at $320 nor has it broken support at its long-term trendline of higher lows that dates back to the March 2009 low (you can see this as the dashed blue line on the daily chart below).

I am not suggesting new call positions at this time. If AAPL does break down further it would look like a bearish entry point. We'll add AAPL as a potential put play this weekend. If the stock hits our stop on this call trade at $318.25 we'll switch directions and buy puts instead.

This has always been a very aggressive, higher-risk trade.

(SMALL POSITIONS)- Suggested Positions -

Long July $340 call (AAPL1116G340) entry @ $3.05

06/16 new stop loss @ 318.25

chart:

Entry on June 15th at $325.00
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 12.9 million
Listed on June 8th, 2011


Fossil Inc. - FOSL - close: 106.68 change: -0.85

Stop Loss: 99.39
Target(s): 109.75, 114.00
Current Option Gain/Loss: -15.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/18 update: FOSL spent this past week churning between resistance near $110 and support near $105. Short-term technicals are mixed but the long-term trend is still up. If the market continues to sink there is a good chance FOSL will retest support near $100 and its 50-dma. I am not suggesting new bullish positions at this time. More conservative traders may want to consider an early exit right now you can always jump back in if we see FOSL bounce from $100 again. Our final target is $114.00.

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

- Suggested (SMALL) Positions -

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

06/18 Cautious traders may want to exit early now.
06/14 1st target hit @ 109.75, July option @ 3.20 (+6.6%)
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: 38.68 change: +0.15

Stop Loss: 34.90
Target(s): 39.00, 42.50
Current Option Gain/Loss: + 96.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/18 update: FRX just spent the last week churning sideways in the $38.50-39.00 area. At the same time the market's major indices hit new relative lows. The relative strength in FRX is encouraging but shares remain overbought and due for some profit taking. I don't see any changes from my prior comments.

I'm expecting a dip toward $36.00 or even its 50-dma. If you don't want to endure that sort of pull back, which would significantly hurt our options then exit now! We do have August calls but we will not hold over the July earnings report. I am not suggesting new positions at this time.

- Suggested Positions -

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

06/13 1st target hit @ $39.00. August $37 call @ $2.85 (+103.5%)
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


PUT Play Updates

Amazon.com Inc. - AMZN - close: 186.37 change: +2.72

Stop Loss: 192.55
Target(s): 180.25, 175.00
Current Option Gain/Loss: -12.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/18 update: AMZN bounced back above prior support at $185 on Friday, just in time for option expiration. There was not any follow through on the rebound and shares quickly drifted sideways the rest of the session. This looks like a bounce from technical support at the 100-dma but at the same time AMZN has a bearish trend of lower highs over the last few weeks. I am not suggesting new bearish positions at this time.

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 July $180 PUT (AMZN1116S180) Entry @ $4.40

06/16 planned exit, June $185 put @ -27.3%
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


Becton, Dickinson and Company - BDX - close: 85.13 change: +0.25

Stop Loss: 87.15
Target(s): 80.50
Current Option Gain/Loss: -30.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/18 update: BDX closed near the $85.00 strike price for June expiration. Maybe now that option expiration is over the correction will continue. BDX still has a short-term trend of lower highs but readers may want to wait for a drop under $84.45 before initiating new positions. More conservative traders might want to use a lower stop loss.

Our target is $80.50. We'll try and keep our target just above the 200-dma.

- Suggested (SMALL) Positions -

Long July $80 put (BDX1116S80) Entry @ $0.50

chart:

Entry on June 13th at $84.95
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on June 11th, 2011


Deere & Co - DE - close: 78.53 change: -0.74

Stop Loss: 82.75
Target(s): 75.25, 71.00
Current Option Gain/Loss: - 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/18 update: The weakness in DE continues. I would have expected DE to close on the $80.00 level for June option expiration but that didn't happen. Shares instead closed at their lowest level in months. I would still consider new bearish positions now. Our first target is $75.25. Our second, more aggressive target would be $71. FYI: The Point & Figure chart for DE is bearish with a $71 target.

- Suggested Positions -

Long July $75 PUT (DE1116S75) Entry @ $1.52

chart:

Entry on June 16th at $79.25
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 5.7 million
Listed on June 15th, 2011


Diamond Offshore Drilling, Inc. - DO - close: 67.34 change: +0.40

Stop Loss: 70.55
Target(s): 64.50, 62.50
Current Option Gain/Loss: + 6.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/18 update: DO has been short-term oversold for a few days now and shares look ready to bounce. I would wait for a bounce near resistance at $70 and its 200-dma before considering new bearish positions.

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

06/15 new stop loss @ 70.55
06/13 new stop loss @ 71.55

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


Nike Inc. - NKE - close: 81.11 change: +0.82

Stop Loss: 83.05
Target(s): 75.50
Current Option Gain/Loss: +12.5%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
06/18 update: NKE bounced back into the middle of its $80-82 trading range. Look for another failed rally in the $82.00-82.50 zone near the 200-dma as our next entry point. Keep in mind that we only have about five trading days left. NKE is due to report earnings on June 27th and we do not want to hold over the report.

Earlier Comments:
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


Transocean Ltd. - RIG - close: 61.27 change: -0.48

Stop Loss: 66.15
Target(s): 58.00, 55.25
Current Option Gain/Loss: +37.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/18 update: Bearish analyst comments on Friday morning helped push RIG toward its multi-month lows set on Thursday. The trend is down but RIG is starting to look a little oversold again. I'm not suggesting new positions at this time.

More conservative traders may want to take profits early near $60.00 since the $60 level might be support but I'm setting our targets at $58.00 and $55.25.

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

- Suggested (SMALL) Positions -

Long July $60 puts (RIG1116S60) Entry @ $1.32

chart:

Entry on June 13th at $63.32
Earnings Date 08/04/11 (unconfirmed)
Average Daily Volume = 4.3 million
Listed on June 11th, 2011


SanDisk Corp. - SNDK - close: 40.94 change: -1.30

Stop Loss: 45.05
Target(s): 40.50, 36.00
Current Option Gain/Loss: +111.8% & + 95.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/18 update: Good news! SNDK displayed relative weakness again and broke down under its March lows. Shares closed near their lows for the session on Friday, which doesn't bode well for Monday. I wouldn't be surprised to see SNDK hit our first target at $40.50 on Monday. More conservative traders may want to go ahead and plan on exiting early at the open to lock in some gains. I am adjusting our stop loss down to $45.05. More conservative traders may want to use a stop closer to $44.00 instead. I am not suggesting new positions at this time.

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

06/18 new stop loss @ 45.05
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: 86.41 change: +0.73

Stop Loss: 88.05
Target(s): 84.00, 81.00
Current Option Gain/Loss: - 6.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/18 update: Uh-oh! The bounce in SRCL on Friday was unexpected. The stock has essentially broken out above its two-week trading range in the $85-86 area. Suddenly Wednesday's drop under $85.00 looks like a potential bear-trap type of move. Friday's rally did stall at technical resistance near the 100-dma but I am not suggesting new positions at this time.

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

06/15 adjusted 2nd target to $81.00.
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


T.Rowe Price Associates - TROW - close: 57.23 change: +0.44

Stop Loss: 61.75
Target(s): 55.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see Trigger

Comments:
06/18 update: TROW is still hovering in the $56-58 area. Overall little has changed for us. I'm still willing to wait for TROW to bounce back toward the $60.00 level. We want to buy puts at $59.50. If triggered we'll use a stop loss at $61.75 (new stop). Our target is $55.25. FYI: The Point & Figure chart for TROW is bullish with a $51 target.

Trigger @ 59.50

- Suggested Positions -

buy the July $60 PUT (TROW1116S60)

chart:

Entry on June xxth at $ xx.xx
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on June 13th, 2011


Whole Foods Market - WFM - close: 55.69 change: +0.42

Stop Loss: 58.15
Target(s): 55.10, 52.00
Current Option Gain/Loss: + 52.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
06/18 update: Caution! WFM was showing some unexpected relative strength on Friday. If you're looking at the intraday chart it appears WFM may have found support near the $54.00 level. More conservative traders may want to abandon ship. I am not suggesting new positions at this time. Our final target remains $52.00 for now.

- Suggested Positions -

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

06/13 Exit June $60 puts. Bid @ $5.20 (+136.3%)
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

Goldman Sachs - GS - close: 137.23 change: +1.14

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:
06/18 update: I am throwing in the towel on our GS trade. The stock never hit our planned entry point at $130.25. Shares do look like they're trying to form a bottom in the $133-140 area. Aggressive traders might want to consider bullish positions if GS can close over $140. I am dropping GS as a trading candidate and we'll look elsewhere.

Our Trade Never Opened!

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: 100.01 change: +1.22

Stop Loss: n/a
Target(s): 109.00, 114.00
Current Option Gain/Loss: - 100%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
06/18 update: After the early June drop shares of UNP were dead money. The stock very slowly drifted lower and broke support at its 50-dma. The stock managed a bounce back to the $100 mark in time for the June options expiration. Our June $105 call has expired. The larger, long-term trend for UNP is still bullish but I would not launch positions at this time.

- Suggested Positions -

June $105 call (UNP1118F105) Entry @ $1.62, exit 0.00 (-100%)

06/18 option has expired -100%
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


CLOSED BEARISH PLAYS

Abercrombie & Fitch Co. - ANF - close: 65.48 change: +1.60

Stop Loss: 72.05
Target(s): 65.50, 62.75(100-dma)
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/18 update: I am removing ANF as a bearish candidate. A few days ago it looked like shares might bounce back toward what should be new resistance at $70.00. Yet the bounce never fully materialized. Now ANF is testing and bouncing from technical support near its 100-dma. I am dropping this stock as a bearish candidate. Nimble traders may want to consider buying calls on this bounce since ANF has rallied from the 100-dma multiple times in the past, although I would consider a call trade today pretty aggressive.

Our Entry Was Never Hit.

chart:

Entry on June xxth at $ xx.xx
Earnings Date 08/17/11 (unconfirmed)
Average Daily Volume = 2.8 million
Listed on June 14th, 2011


General Dynamics Corp - GD - close: 71.67 change: +0.39

Stop Loss: 72.25
Target(s): 65.50
Current Option Gain/Loss: -60.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/18 update: I warned readers that GD looked ready to rebound, especially after the close over resistance at $71.00. Sure enough GD spiked higher on Friday morning. The stock rallied past technical resistance at its 30, 40, and 50-dma and hit $72.55 before paring its gains and reversing. Our stop loss was hit at $72.25 closing this trade. I'd keep GD on your watch list. A new close under $70.00 might be another entry point to buy puts.

-Suggested Positions-

July $67.50 PUT (GD1116S67.5) Entry @ $1.25, exit $0.50 (-60.0%)

06/17 Stopped out @ 72.25. Option @ -60.0%

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