Editor's Note:

The market's early morning rally quickly faded and stocks settled near their lows for the session.

Our new EXXI trade was triggered today.

-James

Current Portfolio:


CALL Play Updates

Cabot Oil & Gas - COG - close: 66.11 change: -0.48

Stop Loss: 57.00
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
08/22 update: Monday was a volatile day for COG. Shares opened above $69.00, plunged to under $65.00 only to bounce and close down about 50 cents. I do not see any changes from my weekend comments.

I am suggesting we use a buy-the-dip entry point at $63.00 to buy calls. If triggered we'll use a stop loss at $57.00. Cautious traders may want to wait for a dip into the $61.50-60.00 zone instead as their entry point. COG bounced near its 100-dma two weeks ago. The 100-dma has risen to $60.62.

We'll set our first target at $69.50.

Buy-the-Dip @ $63.00

- Suggested Positions -

buy the OCT $70 call (COG1122J70)

Entry on August xx at $ xx.xx
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 2.22 million
Listed on August 20, 2011


Deckers Outdoor - DECK - close: 74.21 change: +0.93

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: -85.1%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/22 update: DECK gapped open higher and spent the day chopping sideways in the $77-74 zone. I am not suggesting new bullish positions at this time but nimble traders could look for a dip toward potential support in the $72-71 zone as a potential entry point.

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 SEP $90 call (DECK1117I90) Entry $4.70

08/20 Remainder of our August $90 call position expires at $0.00 (-100%), We took profits on these on the 12th at +232%
08/18 DECK is down nearly 20 points in three days
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


Dow Jones Industrial (ETF) - DIA - close: 108.30 change: +0.39

Stop Loss: 105.70
Target(s): 114.50,
Current Option Gain/Loss: - 9.8% & -15.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/22 update: The markets opened higher this morning and the DIA gapped open near $110. Unfortunately the rally didn't stick and stocks spent the day paring their gains. Readers may want to consider waiting for a close over $110 or a dip near $106.00 as alternative entry points.

Earlier Comments:
We will need to use our position size to limit risk.

- Suggested (small) Positions -

Long SEP $110 call (DIA1117I110) Entry $3.15

- or -

Long SEP $112 call (DIA1117I112) Entry $2.20

08/20 add a stop loss at $105.70

Entry on August 19 at $108.00
Earnings Date --/--/--
Average Daily Volume = 15 million
Listed on August 18, 2011


Energy XXI Ltd. - EXXI - close: 22.04 change: -1.46

Stop Loss: 19.90
Target(s): 27.50
Current Option Gain/Loss: - 11.5%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
08/22 update: It was another rocky day for EXXI. Shares gapped open higher at $24.29, rallied to $24.66, and then plunged -10%. Shares hit our buy-the-dip entry point at $22.00. We have a stop loss at $19.90. The August 9th low was $21.04. Nimble traders may want try and buy calls on a dip near $21.00 instead. Cautious traders will want to wait and buy the bounce. Our first multi-month target is $27.50.

- Suggested Positions -

Long DEC $25 call (EXXI1117L25) Entry $2.60

Entry on August 22 at $22.00
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on August 20, 2011


Green Mountain Coffee Roasters - GMCR - close: 85.42 change: + 1.34

Stop Loss: n/a
Target(s): 99.50, 107.50
Current Option Gain/Loss: ---.-- & (-65.7%)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/22 update: GMCR tried more than once to rally higher this morning but couldn't get past resistance near $90. The stock spent the rest of the day hugging support near $85.00. I am not suggesting new positions at this time.

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

08/18 if you're bearish on the market, then exit now! Sep.bid @$2.29
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


O'Reilly Automotive - ORLY - close: 61.84 change: +0.77

Stop Loss: 57.80
Target(s): 63.75, 66.00
Current Option Gain/Loss: + 52.6%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/22 update: Trading in ORLY was relatively quiet. The stock opened near $62 and spent the rest of the session oscillating on either side of this level and its 50-dma. Conservative traders may want to consider a higher stop loss. I'm not suggesting new positions at this time but readers can keep their eyes open for another bounce from the 200-dma as a potential entry point.

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

- Suggested (small) Positions -

Long SEP $60 call (ORLY1117I60) entry $1.90

08/20 new stop loss @ 57.80
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: 112.73 change: +0.09

Stop Loss: n/a
Target(s): 119.75, 122.50
Current Option Gain/Loss: Sep.$120call (-56.8%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/22 update: The SPY's early morning gap open higher and rally failed near $115 and shares formed a new lower high. The SPY hit $112.41 this afternoon as it drifted toward support near $112.00.

There is a growing chance that we'll see the SPY retest the $110 (or 1100 on the S&P500 index). Nimble traders may want to consider buying calls again in the $110.50-110.00 zone on the SPY but the newsletter is not adding new 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

08/20 Trigger to add positions at $112.00 was NOT hit. We are removing the entry point. Do not add to positions at this time.
08/18 adding a new entry point to buy the Sep.$118call at $112.00
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.

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


U.S. Oil Fund - USO - close: 32.72 change: +0.60

Stop Loss: n/a
Target(s): $37.50, 40.00
Current Option Gain/Loss: + 0.7%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/22 update: There was some confusion over the price of oil today. Many thought oil might drop given the progress the rebels are making in Libya. Once Ghaddifi is gone and the civil war ends, then Libya's oil should be one step closer to coming back online (although it will probably take months to happen). Instead of oil dropping on expectation for Liby'a supply returning, the price of oil actually rallied, at least WTI oil did. One explanation for the bounce in oil was expectation that Bernanke would announce some sort of stimulus on Friday.

I do not see any changes from my weekend comments. We want to buy the dip at $30.50. The low on August 9th was $30.31. Please see below for further details on this new entry point.

Earlier Comments:
We're not using a stop loss on our original trade (Nov. $34 call entered on Aug. 9th) so keep your position size small!

This is a lottery-ticket style of play.

- Suggested Positions -

Long NOV $34 call (USO1119K34) Entry $2.05

New Entry Point: Buy calls if USO hits $30.50 (again)

Buy the NOV $34 call (USO1119K34)
If triggered, use a stop at $29.00 for this position.

08/20 Adding a new buy-the-dip entry at $30.50, stop @ 29.00

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: 67.68 change: +0.23

Stop Loss: n/a
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 79.2%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/22 update: UTX is still bouncing along support in the $67.50-67.00 zone. If the S&P500 breaks down under 1120 then there is a good chance we'll see UTX breakdown to new lows. I am suggesting a new entry point to buy calls at the $65.00 level. We still want to keep our position size very small to limit our risk.

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

Buy the dip at $65.00

buy the SEP $67.50 call (UTX1117I67.5)

08/20 New entry point to buy calls on dip at $65.00
08/20 Our aggressive, higher-risk trade with August options has expired. Entry price on Aug. $75 call (UTX1120H75) was $0.29. exit 0.00 (-100%)

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: 56.77 change: -0.06

Stop Loss: n/a
Target(s): 63.50
Current Option Gain/Loss: - 33.4%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/22 update: WFM spent most of the day churning sideways inside the $58.00-56.50 zone. Shares look headed for potential support in the $56.00-54.00 area. I'd probably wait for a dip into the $55-54 zone before buying calls again.

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

Alexander & Baldwin, Inc. - ALEX - close: 37.35 change: -0.01

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: Sep: -10.0%, DEC: -22.7%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
08/22 update: ALEX is off to a quiet start. Shares did gap open higher at $38.33, which provides a slightly better entry point. Volume was pretty light today. Overall I don't see any changes from my weekend comments.

I am suggesting put option positions now. We'll start the play with a stop loss at $40.75. More conservative traders may want to consider a stop a little bit closer to the 10-dma (currently at $39.12). We'll set our target at $32.50.

- Suggested Positions -

Long SEP $35 PUT (ALEX1117U35) Entry $1.00*

- or -

Long DEC $30 PUT (ALEX1117X30) Entry $1.10*

08/22 ALEX gapped open higher at $38.33
* options did not trade on Monday. These entries are estimates.

Entry on August 22 at $38.33
Earnings Date 11/10/11 (unconfirmed)
Average Daily Volume = 279 thousand
Listed on August 20, 2011


Teekay Corp. - TK - close: 23.18 change: +0.26

Stop Loss: 24.55
Target(s): 20.25, 17.50
Current Option Gain/Loss: SEP: +11.7%, OCT: + 0.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/22 update: The gap open higher this morning provided a better entry point. Shares spent the rest of the day consolidating sideways. I would still consider new positions now at current levels.

- Suggested Positions -

Long SEP $22.50 PUT (TK1117U22.5) Entry $0.85

- or -

Long OCT $20.00 PUT (TK1122V20) Entry $0.75*

08/22 *option did not trade, this is an estimate.

Entry on August 22 at $23.44
Earnings Date 11/03/11 (unconfirmed)
Average Daily Volume = 531 thousand
Listed on August 20, 2011


CBOE Volatility Index - VIX - close: 42.43 change: - 0.61

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -95.0%
Second Position Gain/Loss: - 92.0%
Third Position Gain/Loss: -76.3%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/22 update: The stock market's gap open higher this morning prompted the VIX to gap open lower at $38.80. Yet as stocks retreated the VIX recouped its losses. By the closing bell today the VIX was down to a -1.4% drop. I do not see any changes from my prior comments.

The VIX might actually see a new relative high over 48 if the S&P500 trades below the 1100 level. I would be tempted to buy puts again on a spike into the 48-50 area but I would keep positions very small.

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.

- Suggested Positions -

Long SEP $25.00 PUT (VIX1121U25) Entry $4.00

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

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