Editor's Note:

There is still no debt ceiling deal in Washington. In spite of Wednesday's sell-off stocks are holding up very well considering the situation.

I am suggesting new positions in ADS and the QQQs. Please see the play for specific details.

Our new market neutral plays are open and I would still consider new positions at current levels. If this type of trade suits you then I believe you want to have positions open before Friday's closing bell.

-James

Current Portfolio:


CALL Play Updates

Alliance Data Systems - ADS - close: 98.60 change: -0.58

Stop Loss: 95.75
Target(s): 104.50. 107.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/28 update: ADS continues to hold up pretty well. The pull back has been mild and shares are testing short-term support at the rising 10-dma. There is a chance that the market sell-offs again tomorrow (Friday) since lawmakers still don't have a debt ceiling deal. I anticipate a market rebound on Monday but that assuming we do see a debt deal over the weekend.

I am suggesting new call positions on ADS but only if ADS and the S&P 500 open in positive territory on Friday morning. More conservative trades will want to wait and try this strategy on Monday morning instead. We will adjust the stop loss to $95.75.

- Suggested Positions -

buy the AUG $105 call (ADS1120H105)

- or -

buy the SEP $105 call (ADS1117I105)

07/27 Try again. buy calls if ADS and S&P 500 open positive on Friday. New stop loss at $95.75
07/27 Our trade was not opened. I am removing our entry point (no trade) until Thursday night and we'll re-evaluate.

Entry on July xx at $ xx.xx
Earnings Date 07/21/11
Average Daily Volume = 825 thousand
Listed on July 26, 2011


Agrium Inc. - AGU - close: 88.59 change: -0.34

Stop Loss: 87.75
Target(s): 94.00, 98.00
Current Option Gain/Loss: -24.0% & -36.1%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
07/28 update: Shares of AGU were downgraded to a neutral this morning but the news didn't have much affect on the stock. Shares tried to rally but kept running into new short-term resistance at $89.00. It looks like shares are headed for the 200-dma near $87.60. Aggressive traders may want to adjust their stop loss lower so that it's under the 200-dma. Currently our stop loss is at $87.75. Another down day in the market tomorrow and we could get stopped out. I am not suggesting new bullish positions at this time.

- 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

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


Open Text Corp. - OTEX - close: 68.22 change: +0.19

Stop Loss: 67.45
Target(s): 74.50
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
07/28 update: OTEX is still flirting with a breakdown at the bottom of its current trading range. The MACD indicator on the daily chart has turned bearish. I still don't want to launch positions with the market uncertainty and OTEX developing a bearish trend of lower highs and lower lows over the last few days. We'll wait one more day and see where OTEX closes on Friday. Then we'll determine if we want to keep OTEX on the play list.

In summary, we're still waiting. There is no official entry point for tomorrow. Nimble traders, should the market and OTEX see a sell-off, might want to consider buying calls on a dip near $65.00 with a relatively tight stop.

Earlier Comments:
A breakout over $70.00 could produce another short squeeze. The most recent data listed short interest at more than 10% of the 55.9 million-share float. We do not want to hold over the August earnings report.

No Entry for Friday. We are Waiting.

- Suggested Positions -


07/28 We are in a wait and see mode with OTEX
07/27 trade is still not open. We are temporarily removing our entry point for tomorrow. We will re-evaluate this play on Thursday night.

Entry on July xx at $ xx.xx
Earnings Date 08/10/11 (unconfirmed)
Average Daily Volume = 300 thousand
Listed on July 23, 2011


PowerShares QQQ - QQQ - close: 58.19 change: +0.10

Stop Loss: 57.75
Target(s): 62.50, 64.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/28 update: The QQQ gave up its early morning gains and rolled over under short-term resistance at $59.00. Shares of this ETF still look like they are headed for support near $57.00. I still have hope that lawmakers will get a deal done over the weekend. Therefore we'll take an aggressive approach to new positions here.

I am suggesting we launch new call positions tomorrow (Friday) at the closing bell. If lawmakers do agree on a deal by Sunday night then the market should rally on Monday morning. I consider this a very aggressive trade so we want to keep our position size very small. If there is no debt deal then the market is likely to gap down on Monday morning. I'm not listing a stop loss tonight. We'll add a stop loss once we see what our entry point is.

Aggressive Trade: Buy calls on Friday @ the Close!

- Suggested Positions - (SMALL POSITIONS)

buy the AUG $60 call (QQQ1120H60)

- or -

buy the AUG $62 call (QQQ1120H62)

07/28 New strategy: buy calls on Friday at the closing bell
07/27 We are removing our entry point for Thursday. We'll re-evaluate our strategy on Thursday night.

Entry on July xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 61.7 million
Listed on July 23, 2011


Market Neutral Play Updates

SPDR Dow Jones Industrial Average (ETF) - DIA - cls: 122.28 chg: -0.56

Stop Loss: n/a
Target(s): -----
Option Straddle Gain/Loss: - 4.4%
Option Strangle Gain/Loss: -14.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/28 update: Fortunately the markets did not see a big gap open this morning. The DIA opened at $122.82 and hovered in this area for a little while. Eventually the DIA slipped to new four-week lows. I would still consider new positions at these levels.

Earlier Comments:
I'm listing both a straddle and a strangle. We're using August options that expire in less than four weeks. Readers may want to consider September options instead.

Trade #1. Option Straddle (cost: $4.49, current: $4.29)

Long AUG $123 call (DIA1120H123) Entry @ $2.33, current bid $1.85
- and also buy -
Long AUG $122 put (DIA1120T122) Entry @ $2.16, current bid $2.44

- or -

Trade #2. Option Strangle (cost: $1.64, current: $1.41)

Long AUG $127 call (DIA1120H127) Entry @ $0.64, current bid $0.38
- and also buy -
Long AUG $117 PUT (DIA1120T117) Entry @ $1.00*, current bid $1.03

07/28 we got much better prices than expected on the entry this morning.
07/28 *entry price is an estimate. option did not trade today
07/27 NOTE: you may want to buy three calls for every two puts if you're trading the strangle due to the price difference.

Entry on July 28 at $122.82
Earnings Date --/--/--
Average Daily Volume = 6.6 million
Listed on July 27, 2011


iShares Russell 2000 Index - IWM - close: 79.84 change: -0.13

Stop Loss: n/a
Target(s): --
Option Straddle Gain/Loss: + 5.5%
Option Strangle Gain/Loss: - 9.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/28 update: The midday rebound in the small caps faded and the IWM is inching close to technical support at the 200-dma. The IWM opened at $79.96. I would still consider new positions now at these levels.

Readers may want to consider September options instead.

Trade #1. Option Straddle (cost: $2.89, current: $3.05)

Long AUG $80 call (IWM1120H80) Entry @ $1.60, current bid $1.42
- and also buy -
Long AUG $80 put (IWM1120T80) Entry @ $1.29, current bid $1.63

- or -

Trade #2. Option Strangle (cost: $0.66, current: $0.60)

Long AUG $84 call (IWM1120H84) Entry @ $0.28, current bid $0.15
- and also buy -
Long AUG $76 PUT (IWM1120T76) Entry @ $0.38, current bid $0.45

07/28 we got much better prices than expected on the entry this morning.
07/27 NOTE: you may want to buy three calls for every two puts if you're trading the strangle due to the price difference.

Entry on July 28 at $79.96
Earnings Date --/--/--
Average Daily Volume = 60 million
Listed on July 27, 2011


SPDR S&P 500 ETF - SPY - close: 130.22 change: -0.38

Stop Loss: n/a
Target(s): --
Option Straddle Gain/Loss: - 1.5%
Option Strangle Gain/Loss: + 4.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/28 update: Thankfully the S&P 500 and the SPY did not see a big gap open this morning. Shares of this ETF opened at $130.60 and then hovered there for a while before we saw the midday ups and downs. I would still consider new positions now with the SPY near $130.

Trade #1. Option Straddle (cost: $3.91, current: $3.85)

Long AUG $130 call (SPY1120H130) Entry @ $2.35, current bid $2.03
- and also buy -
Long AUG $130 put (SPY1120T130) Entry @ $1.56, current bid $1.82

- or -

Trade #2. Option Strangle (cost: $1.31, current: $1.37)

Long AUG $134 call (SPY1120H134) Entry @ $0.52, current bid $0.40
- and also buy -
Long AUG $127 PUT (SPY1120T127) Entry @ $0.79, current bid $0.97

07/28 we got much better prices than expected on the entry this morning.
07/28 NOTE: you may want to buy three calls for every two puts if you're trading the strangle due to the price difference.

Entry on July 28 at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = xxx million
Listed on July 27, 2011


PUT Play Updates

FactSet Research - FDS - close: 92.79 change: +0.76

Stop Loss: 97.05
Target(s): 90.50, 86.00
Current Option Gain/Loss: - 8.5% & - 8.3%
2nd Position Gain/Loss: +10.3% Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
07/28 update: Conservative traders may want to close their positions tomorrow (Friday) at the closing bell. I anticipate that lawmakers will come together over the weekend with a new deal on the debt ceiling. This should spark a new market rally. If there is no deal then stocks should plummet on Monday morning.

The newsletter will keep this position open but I'm not suggesting new positions at this time.

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

- 2nd Position, listed 7/26 -

Long Aug $95 PUT (FDS1120T95) Entry @ $2.90*

07/27 new stop loss @ 97.05
07/27 entry on the 2nd position (Aug.95 put) is an estimate
07/26 New stop loss @ 98.25, Adding positions

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


Toro Co. - TTC - close: 54.07 change: -1.00

Stop Loss: 58.55
Target(s): --.--, 52.50
Current Option Gain/Loss: +15.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/28 update: TTC continues to underperform. Shares lost another -1.8%. The $54.00 level might offer some short-term support so don't be surprised to see a bounce here. I am not suggesting new positions at this time.

- Suggested Positions -

Long SEP $55 PUT (TTC1117U55) Entry @ $1.90*

07/27 1st Target Hit @ 55.25, Option @ $2.00 (+5%)
07/27 entry price is an estimate. Option did not trade today

Entry on July 27 at $56.82
Earnings Date 08/18/11 (unconfirmed)
Average Daily Volume = 167 thousand
Listed on July 26, 2011


CLOSED BULLISH PLAYS

Helmerich & Payne Inc. - HP - close: 71.76 change: +1.37

Stop Loss: 69.75
Target(s): 76.50
Current Option Gain/Loss: +16.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/28 update: We were lucky that HP rallied off support near $70.00 this morning. Shares outperformed with a +1.9% gain. Our plan was to exit tonight at the closing bell to avoid holding over the earnings report tomorrow morning.

- Suggested Positions -

AUG $75 call (HP1120H75) Entry @ $1.25, exit $1.45 (+16%)

07/28 planned exit at the close
07/26 new stop loss @ 69.75
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