Editor's Note:

Friday's session was a mixed bag for us. We're trimming a couple of plays that have earnings coming up soon. Lack of a debt ceiling deal in Washington is bearish but I have a hard time imagining that lawmakers are really going to let us reach the Aug. 2nd deadline without some sort of agreement.

Our DMND and TDC trades continue to disappoint. I'm removing MJN and SBUX since they have earnings coming up in a few days.

-James

Current Portfolio:


CALL Play Updates

Agrium Inc. - AGU - close: 92.56 change: +0.74

Stop Loss: 87.75
Target(s): 94.00, 98.00
Current Option Gain/Loss: +59.2% & +75.5%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
07/23 update: It ended up being a pretty good week for AGU with the stock rising the last four days in a row. Shares are now at ten-week highs and appear to have broken out past potential resistance near $92.50. However, I would be reluctant to chase it here. I'd prefer to look for a dip back into the $91.00-90.00 zone before launching new positions. Currently our stop loss is at $87.75 but I'm tempted to raise it into the $88.50-89.00 zone.

- Suggested Positions -

Long AUG $90 call (AGU1120H90) Entry @ $2.70

- or -

Long AUG $95 call (AGU1120H95) Entry @ $0.94

07/21 New stop @ 87.75
07/19 Breakout past $90.00 is a new entry point.
07/19 new stop @ 86.90

chart:

Entry on July 11 at $88.54
Earnings Date 08/03/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on July 9, 2011


Diamond Foods Inc. - DMND - close: 75.36 change: +0.12

Stop Loss: 73.60
Target(s): 79.50, 83.00
Current Option Gain/Loss: -17.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/23 update: I remain very concerned about our DMND trade. The stock has been underperforming the market for the last three days in a row. Yes so far shares have not broken key support at the rising 30-dma. This has been support for weeks. At the same time DMND has a two-week trend of lower highs. The last two days shares have gone nowhere with a narrow sideways consolidation. Cautious traders may want to just abandon ship and exit now since DMND has not been performing. You could jump back in later.

At this point I'd rather see a rally past $77.00 before initiating new positions. If that happens I'd add a secondary target at $83.00. Currently the 30-dma is at $74.54. I am suggesting we keep our stop below last week's low of $73.77. More conservative traders may want to raise their stop instead.

- Suggested (small) Positions -

Long AUG $75 call (DMND1120H75) Entry @ $2.25

07/23 Cautious traders may want to exit early now
07/19 new stop loss @ 73.60
07/15 triggered at $74.25
07/14 Adjusted entry point to $74.25 and stop to $72.75

chart:

Entry on July 15 at $74.25
Earnings Date 10/05/11 (unconfirmed)
Average Daily Volume = 237 thousand
Listed on July 11, 2011


Helmerich & Payne Inc. - HP - close: 72.56 change: +0.70

Stop Loss: 68.45
Target(s): 76.50
Current Option Gain/Loss: +28.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/23 update: HP added another +0.9% on Friday. The stock closed at two-year highs. The trend is up and the breakout past $70.00 is very bullish. However, I want to warn you that we only have four days left. HP reports earnings on Friday morning (July 29th). We will plan to exit on Thursday at the closing bell if we don't see an exit or get stopped before then. I am raising our stop loss to $68.45. More conservative traders may want a stop closer to $70.00 instead. If you're nimble enough I'd look for a dip near the $70.50-70.00 zone before initiating new positions.

- Suggested Positions -

Long AUG $75 call (HP1120H75) Entry @ $1.25

07/23 new stop loss @ 68.45
07/23 Plan to exit on July 28th at the close

chart:

Entry on July 20 at $71.49
Earnings Date 07/29/11 (confirmed)
Average Daily Volume = 1.3 million
Listed on July 19, 2011


Joy Global - JOYG - close: 99.85 change: -0.47

Stop Loss: 96.45
Target(s): 104.50, 107.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
07/23 update: JOYG gapped open lower on Friday morning as investors reacted to earnings guidance from CAT. Shares of JOYG opened at $98.00, dipped toward $97.50 intraday and then rebounded back to $101 by Friday afternoon only to settle inside Thursday's trading range.

The fact that JOYG's morning gap and dip on Friday was pretty much inline with Thursday's low is a positive. The failure to close back above $100 is negative. The general trend of higher lows and higher highs over the past few weeks is bullish. The fact that JOYG is close to resistance in the $102-104 area is a concern. In summary I am still bullish on JOYG but this remains a very aggressive, higher-risk trade. Our plan on Thursday night was to buy calls on Friday morning if both the S&P 500 and JOYG were both positive at the open. That didn't happen with JOYG's gap down. I am suggesting we try again. If both the S&P 500 and JOYG are positive on Monday morning buy calls but keep positions very small to limit our risk.

Open SMALL positions if JOYG and S&P 500 are positive at the open on Monday.

- Suggested Positions - Buy the Aug $100 call (JOYG1120H100)

07/23 Open positions if JOYG and market are positive on Monday morning
07/21 New entry point. Buy calls, small positions only, if the stock and the S&P 500 are positive at the open.
07/21 New stop loss @ 96.45. New targets are $104.50 and $107.50
...please see earlier updates for previous notes here...

chart:

Entry on July xx at $ xx.xx
Earnings Date 08/31/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on June 30, 2011


Nu Skin Enterprises - NUS - close: 40.40 change: +0.40

Stop Loss: 38.90
Target(s): 44.00
Current Option Gain/Loss: - 7.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/23 update: NUS rallied off its intraday lows on Friday morning to post a +1% gain. Shares closed less than half a point from all-time highs set on Tuesday. I am encouraged that short-term technical support at the 10-dma has not been broken. Yet I remain concerned that NUS is overbought. I am raising our stop loss to $38.90.

Earlier Comments:
Our target is the $44.00 mark but we will plan to exit ahead of the early August earnings report. FYI: The Point & Figure chart for NUS is bullish with a $62 target. Investors should note that the most recent data did list short interest at 14.4% of the 53.4 million-share float. That does provide some fuel for a short squeeze.

- Suggested Positions -

Long AUG $40 call (NUS1120H40) Entry @ $2.10
07/23 new stop loss @ 38.90
07/20 Entered at $40.80
07/19 buy calls tomorrow if NUS and S&P 500 are both up at the open.
07/19 new stop loss @ 38.40
07/18 Our play has not been opened yet. We're going to wait 24 hours and reconsider.

chart:

Entry on July 20 at $40.80
Earnings Date 08/02/11 (confirmed)
Average Daily Volume = 700 thousand
Listed on July 16, 2011


Potash Corp. - POT - close: 61.64 change: +0.93

Stop Loss: 58.95
Target(s): 63.75, 68.00
Current Option Gain/Loss: +29.1%
Time Frame: exit prior to July 28th
New Positions: see below

Comments:
07/23 update: POT extended its gains with a +1.5% rally on Friday. Shares hit $62.04 at its best levels. The $62 area has a lot of congestion from resistance back in February and March this year. This could be a tough area for POT to power through but it is possible. More importantly we only have three days left. POT is due to report earnings on Thursday morning (July 28th). We will plan to exit on Wednesday at the closing bell assuming shares have not hit our target or stop before then. I am not suggesting new bullish positions at this time. Please note that I am raising our stop loss to $58.95. More conservative traders may want to take profits now instead.

- Suggested Positions -

Long AUG $60 call (POT1120H60) entry @ $2.40
07/23 New stop loss @ 58.95
07/23 Time is running out. Prepare to exit on Wednesday
07/19 Play is opened. POT gapped open at $59.98
07/18 We are still unopened. Try again. Both POT and S&P 500 need to open higher on July 19th to buy calls.
07/18 new stop @ 56.70

chart:

Entry on July 19 at $59.98
Earnings Date 07/28/11 (confirmed)
Average Daily Volume = 7.4 million
Listed on July 16, 2011


Teradata Corp. - TDC - close: 57.27 change: +0.44

Stop Loss: 55.40
Target(s): 62.00
Current Option Gain/Loss: -35.4%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
07/23 update: Nothing has changed for us with TDC. The stock managed to outperform on Friday with a +0.7% gain but shares still look vulnerable here. The rally failed on Friday morning at its 10-dma near short-term resistance at $58.00. This is not very inspiring. While the long-term trend of higher lows and technical support at the 50-dma is still intact I am reluctant to launch new positions here. I am tempted to raise our stop loss closer to the $56.00 level but we'll leave it at $55.40 for the moment. I am not suggesting new positions at this time. FYI: The Point & Figure chart for TDC is bullish with a $79 target.

- Suggested Positions -

Long AUG $60 call (TDC1120H60) Entry @ $1.55

07/21 TDC is underperforming. Cautious traders may want to exit
07/19 new stop @ 55.40
07/19 Trade is open. TDC gaps up at $57.69.

chart:

Entry on July 19 at $57.69
Earnings Date 08/04/11 (confirmed)
Average Daily Volume = 1.5 million
Listed on July 18, 2011


PUT Play Updates

FactSet Research - FDS - close: 96.10 change: -0.22

Stop Loss: 100.25
Target(s): 90.50, 86.00
Current Option Gain/Loss: -50.0% & -43.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
07/23 update: The stock market is surging toward its 2011 highs while FDS is trading near six-month lows. The oversold bounce seems to have stalled but that does not mean we're not in jeopardy. It is encouraging to see that the rebound has pretty much stalled under the $96.50 level but I would rather see a failed rally near resistance at $98.00 or the 200-dma before we consider launching new bearish put positions.

Earlier Comments:
Our targets are $90.50 and $86.00 but the $90.00 level is support and FDS will probably see a bounce from this level. The Point & Figure chart for FDS is bearish with a $64 target.

- Suggested (SMALL) Positions -

Long AUG $95 PUT (FDS1120T95) Entry @ $3.50

- or -

Long SEP $90 PUT (FDS1117U90) Entry @ $2.40

chart:

Entry on July 18 at $94.48
Earnings Date 09/21/11 (unconfirmed)
Average Daily Volume = 363 thousand
Listed on July 16, 2011


CLOSED BULLISH PLAYS

Mead Johnson Nutrition Co. - MJN - close: 69.08 change: -0.69

Stop Loss: 67.99
Target(s): 74.75
Current Option Gain/Loss: Unopened
Time Frame: up to July 27th.
New Positions: Yes, see below

Comments:
07/23 update: I am giving up on MJN. For the second time in three days this stock has recoiled from resistance near the $70.00 level. While the larger, longer-term trend is higher, we are running out of time. MJN is due to report earnings on Thursday morning (July 28th). We do not want to hold over the announcement. I am removing MJN from the play list. Our trade never opened.

Our Trade Never Opened.

chart:

Entry on July xx at $ xx.xx
Earnings Date 07/28/11 (confirmed)
Average Daily Volume = 1.1 million
Listed on July 19, 2011


Starbucks Corp. - SBUX - close: 40.38 change: +0.55

Stop Loss: 38.85
Target(s): 44.00
Current Option Gain/Loss: unopened
Time Frame: up to its earnings report in late July
New Positions: see below

Comments:
07/23 update: I am giving up on SBUX. The plan on Thursday night was to buy calls if both the stock and the S&P 500 opened higher on Friday morning. SBUX opened higher but the S&P 500 opened unchanged at 1,343.80 and then ticked lower. I've decided to drop SBUX as a candidate. We're running out of time. Now if you did choose to buy calls on Friday morning you're not in bad shape with the stock above resistance at $40.00 but keep in mind I would exit prior to earnings. I can't find a confirmed date yet but it looks like SBUX is expected to report earnings on Thursday (July 28th). We do not want to hold over the announcement even though I suspect it will be better than expected. More conservative traders may want to raise their stop loss. The 20-dma has risen to $39.69 so the $39.60 area might work as a new stop.

- Suggested (Small) Positions -

Our Trade Never Opened.

07/21 Try again. Buy calls tomorrow if SBUX and S&P 500 are positive at the open
07/20 Trade was not opened. Wait for a close over $40.00
07/19 buy calls tomorrow if both SBUX and S&P 500 open positive
07/19 new stop loss @ 38.85
07/12 adjust trigger to $38.50
07/11 Our first attempt at a call play on SBUX did not pan out. Shares opened lower at $39.98 and then hit our relatively tight stop loss at $39.45. The option opened at $1.49 (ask) and we were stopped out at $1.22 (bid)for an -18% loss.
We are reloading this trade with a buy-the-dip trigger at $38.75.

chart:

Entry on July xx at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 6.8 million
Listed on July 9, 2011