Editor's Note:

The market's indices are stalling at the 38.2% Fibonacci retracement of the July-August sell-off. One TV pundit suggested it was a matter of trader exhaustion. The morning strength was enough to trigger both our MJN and TDC trades.

-James

Current Portfolio:


CALL Play Updates

Deckers Outdoor - DECK - close: 83.37 change: -6.13

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: - 93.4% & -43.6%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/17 update: What is going on with DECK? The stock has underperformed two days in a row on no news. After yesterday's nearly -5 point drop the stock dropped another -6 points today. Volume was above average on today's decline with a plunge to technical support near its 200-dma. I warned readers that yesterday looked like the third candle on a three-day bearish reversal. Coincidentally the oversold bounce from the August lows stalled almost perfectly at the 61.8% Fib retracement of the August sell-off.

This $11 plunge in two days has pushed the Aug. $90 call to almost zero and the Sep. $90 call has been cut in half. We only have two days left before August options expire. With the bid at 10 cents on our Aug. $90 calls it seems too late to exit now. However, unless DECK suddenly sees a surge back above $90.00, these Aug. $90 calls will probably see the bid drop to 5 cents or 0 (zero) cents tomorrow. We have four weeks left on our Sept. $90 calls but cautious traders may want to exit now anyway.

I am not suggesting new positions at this time.

Earlier Comments:
I do consider this an aggressive trade. DECK can be a volatile normally and in this market the moves get a little crazy. We definitely want to keep our position size small. I am not listing a stop loss on this trade.

- Suggested (SMALL) Positions -

Long AUG $90 call (DECK1120H90) Entry $1.52

- or -

Long SEP $90 call (DECK1117I90) Entry $4.70

08/12 1st target hit @ 93.50
bid on Aug. $90 call @ $5.05 (+232.2%)
bid on Sep. $90 call @ $8.45 (+79.7%)

Entry on August 11 at $83.53
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on August 9, 2011


Green Mountain Coffee Roasters - GMCR - close: 98.73 change: - 2.01

Stop Loss: n/a
Target(s): 99.50, 107.50
Current Option Gain/Loss: ---.-- & + 54.7%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/17 update: Today marks the fourth decline in a row for GMCR. Shares have seen a 50% pull back from the bounce off its August lows. It could be normal profit taking but today's drop of -1.99% could also be influenced by news last night. J.M. Smuckers Co. (SJM) announced they were lowering coffee prices. SJM owns the Folgers, Millstone, and Dunkin' Donuts brand of coffees. This move reflects a drop in coffee bean prices but it follows four price hikes in the last two years. Traders could be speculating that GMCR might feel pressure to lower prices.

I am not suggesting new bullish positions at this time. More conservative traders may want to take their profits and run or consider adding a stop loss.

Earlier Comments:
As a high-risk, speculative play we wanted to keep our position size very small. We are not using a stop loss on this play.

- Suggested (SMALL) Positions -

Long SEP $100 call (GMCR1117I100) Entry $3.65

08/15 exit August $95 calls immediately. Bid @ $7.95 (+190.1%)
08/10 Consider exiting all August options now
08/09 adjusting 2nd target to $107.50
08/09 1st target hit at $99.50.
Aug. $95 call bid $6.30 (+129.9%), Sep. $100 call bid $6.95 (+90.4%)
08/08 we are not using a stop loss on this trade

Entry on August 8 at $91.26
Earnings Date 12/08/11 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on August 6, 2011


Mead Johnson Nutrition Co. - MJN - close: 71.03 change: +0.46

Stop Loss: 66.99
Target(s): 74.50
Current Option Gain/Loss: + 1.5% & -13.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/17 update: Our new trade on MJN is open. Both the stock and the S&P500 opened positive this morning. MJN gapped open at $71.11 and spent most of the day drifting sideways. The weakness in the broader market is a concern and readers may want to hesitate on launching new positions here. You could choose to wait for a dip or a bounce near the $70 or $69 levels as an alternative entry point.

- Suggested Positions -

Long SEP $70 call (MJN1117I70) Entry $2.63

- or -

Long SEP $75 call (MJN1117I75) Entry $0.75

Entry on August 17 at $71.11
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on August 16, 2011


O'Reilly Automotive - ORLY - close: 61.06 change: +0.40

Stop Loss: n/a
Target(s): 63.75, 66.00
Current Option Gain/Loss: + 10.5%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/17 update: ORLY displayed some relative strength on Wednesday with a +0.6% gain. The morning rally faded but traders bought the dip twice near $60.25 this afternoon. ORLY is nearing potential resistance at the 50-dma. I would still consider new bullish positions here if both ORLY and the S&P500 index open positive tomorrow. Readers will want to keep their position size small.

Earlier Comments:
Use a small position size to limit your risk.

- Suggested (small) Positions -

Long SEP $60 call (ORLY1117I60) entry $1.90

08/15 trade opened
08/13 adjusted entry point. removed Aug. strike
08/10 new trigger at $55.00
08/09 adjusted targets to $63.75 and $66.00.

Entry on August 15 at $60.37
Earnings Date 10/26/11 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on August 6, 2011


SPDR S&P500 ETF - SPY - close: 119.67 change: +0.08

Stop Loss: n/a
Target(s): 119.75, 122.50
Current Option Gain/Loss: -.-% & +28.6%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/17 update: The S&P500 index managed to eke out a gain even though the morning rally failed. The index and the SPY are struggling at the 38.2% Fibonacci retracement of the July-August sell-off. I am neutral here and we're not suggesting new bullish positions at this time.

Earlier Comments:
We are not using a stop loss on this trade.

- Suggested (SMALL) Positions -

Long SEP $120 call (SPY1117I120) Entry $2.55

08/16 exit Aug. $118 call now. bid $2.26 (+5.1%)
08/15 1st target hit @ 119.75
bid on the Aug. $118 call @ $2.15 (+0.0%)
bid on the Sep. $120 call @ $3.32 (+30.1%)
08/08 trade opened at $115.00. We are not using a stop loss.

chart:

Entry on August 8 at $115.00
Earnings Date --/--/--
Average Daily Volume = 235 million
Listed on August 6, 2011


Teradata Corp. - TDC - close: 52.40 change: -2.18

Stop Loss: n/a
Target(s): 62.00
Current Option Gain/Loss: - 76.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/17 update: Unfortunately our bullish trade on TDC is now open. Both the S&P500 and the stock opened higher this morning, meeting our condition to launch positions. TDC opened at $54.76 but quickly reversed course and closed down with a -3.99% decline. Part of the problem was some negative commentary by analysts on the sector.

TDC was trying to find some support near $52 this afternoon but the above average volume on the sell-off is not a good sign. I am not suggesting new positions at this moment. We might get a better entry point on a dip or a bounce in the $51-50 zone so let's wait and see.

Use your position size to manage risk.

- Suggested Positions -

Long SEP $60 call (TDC1117I60) Entry $0.65

chart:

Entry on August 17 at $54.76
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 2.8 million
Listed on August 15, 2011


U.S. Oil Fund - USO - close: 34.01 change: +0.18

Stop Loss: n/a
Target(s): $37.50, 40.00
Current Option Gain/Loss: +26.8%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/17 update: Crude oil prices rallied this morning even though the inventory report showed an unexpected build up in crude supplies. Gains faded but the USO closed up +0.5%. I don't see any changes from my prior comments.

Readers may want to look for another dip into the $32-30 zone before initiating new positions. Our time frame for this trade is several weeks, which is why we are using November calls. We're not using a stop loss on this trade so keep your position size small!

Earlier Comments:
This is another lottery-ticket style of play.

- Suggested Positions -

Long NOV $34 call (USO1119K34) Entry $2.05

Entry on August 9 at $31.97
Earnings Date --/--/--
Average Daily Volume = 10.7 million
Listed on August 8, 2011


United Technologies Corp. - UTX - close: 72.05 change: -0.50

Stop Loss: n/a
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 34.9% & Aug. -89.6%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/17 update: UTX saw another day of profit taking with the market undecided on a direction. I do not see any changes from my prior comments. At this time I would wait for a dip into the $71.50-70.00 zone before considering new bullish positions. The newsletter will think about doubling down at those levels. I would not buy August options at this time. August options expire at the end of this week.

Earlier Comments:
We want to keep our position size small since I'm not listing a stop loss.

- Suggested Positions -

Long SEP $75 call (UTX1117I75) Entry $1.83

- or high-risk trade with August calls -

Long AUG $75 call (UTX1120H75) Entry $0.29

Entry on August 15 at $73.21
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on August 13, 2011


Whole Foods Market, Inc. - WFM - close: 62.04 change: +2.07

Stop Loss: n/a
Target(s): 63.50
Current Option Gain/Loss: + 53.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/17 update: WFM continues to outperform. Shares rallied past potential resistance at the 50-dma and the $62 level today. The stock closed up with a +3.4% gain. I would not chase it at these levels. Our target to exit is at $63.50. More aggressive traders may want to target a move toward the $67-68 level instead.

Earlier Comments:
We want to keep our position size small since we're not listing a stop loss.

- Suggested Positions -

Long SEP $60 call (WFM1117I60) Entry $2.45

Entry on August 15 at $58.68
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on August 13, 2011


PUT Play Updates

CBOE Volatility Index - VIX - close: 31.89 change: - 1.27

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -100.0% & -62.5%
Second Position Gain/Loss: -100.0% & - 40.0%
Third Position Gain/Loss: -15.7%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/17 update: The VIX is slowly contracting and the index lost another -3.8% today. Unfortunately we have run out of time with our August VIX options. I fear that the decline in the VIX is not happening fast enough. Readers will want to consider an early exit now from our remaining September put options.

I am not suggesting new positions here.

Earlier Comments:
I am not listing a stop loss on this trade. We should consider this a higher-risk, speculative trade. I'm setting our targets at 26.00 and 22.50. NOTE: August VIX options expire after the 17th of the month. You may want to buy Septembers instead.

- Suggested Positions -

AUG $25.00 PUT (VIX1117T25) Entry $2.50, exit $0.00 (-100%)

- or -

Long SEP $25.00 PUT (VIX1121U25) Entry $4.00

- Second Position, entered at the open on Monday, Aug. 8th -
(very small positions)

Long AUG $25.00 PUT (VIX1117T25) Entry $0.90, exit $0.00 (-100%)

- or -

Long SEP $25.00 PUT (VIX1121U25) Entry $2.50

- 3rd Position, listed Aug. 8th, Open Aug. 9th @ open. -

Long SEP $30.00 PUT (VXI1121U30) Entry $5.70

08/17 August VIX options expire
1st position Aug. $25 put @ $0.00 (-100%)
2nd position Aug. $25 put @ $0.00 (-100%)
08/08 3rd position listed to buy at the open on Aug. 9th
08/08 2nd position was filled the open.

Entry on August 5 at $28.48
Earnings Date --/--/--
Average Daily Volume = xxx
Listed on August 4, 2011