Editor's Note:

Tuesday saw the U.S. markets stage a sharp rebound with very widespread gains. DECK, GMCR, and EXXI were all up very strong today. Our new play on SRCL has been opened. We are removing COG as a candidate.

-James

Current Portfolio:


CALL Play Updates

Deckers Outdoor - DECK - close: 80.50 change: +6.29

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: -71.2%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/23 update: DECK took a big chunk out of its recent losses with a +8.4% rally today. Shares managed to rally back above the $80 level but still faces technical resistance at the simple and exponential 200-dma overhead. The oversold bounce is tempting but I would not buy this rebound.

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: 111.37 change: +3.07

Stop Loss: 105.70
Target(s): 114.50,
Current Option Gain/Loss: Sep $110: +30.1% & Sep $112: +29.5%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/23 update: Tuesday's widespread market bounce produced big gains for the indices. The Dow Industrials rallied +2.9% and the DIA was close on its heels with a +2.8% gain. If you believe that stocks are forming a bullish double bottom, then you can use this as a new entry point. I did mention a close over $110 as an alternative entry point. Personally, I'm cautious on the market here and would rather wait and see what Bernanke has to say on Friday.

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: 24.46 change: +2.42

Stop Loss: 19.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 26.9%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
08/23 update: EXXI was a very strong performer on Tuesday. The stock was upgraded to a "strong buy" this morning. Shares rallied to a +10.9% gain by the closing bell, which helped erase a good portion of its recent declines. Our first multi-month target is $27.50. I'm adding a secondary target at $29.75.

- 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: 95.05 change: + 9.63

Stop Loss: n/a
Target(s): 99.50, 107.50
Current Option Gain/Loss: ---.-- & (-10.9%)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/23 update: GMCR produced a very big bounce today. Shares rallied from $85 to $95 for a +11.2% gain. This helped erase a significant portion of our losses and the Sep. $100 call is almost in positive territory again. Cautious traders will want to seriously consider an early exit now to recoup your capital. The newsletter has decided to hold on to this position and see if shares can breakout past $100. 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

08/23 Cautious traders may want to exit now with the bid on our Sep. $100 call at $3.25 (-10.9%)
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: 63.19 change: +1.35

Stop Loss: 59.40
Target(s): 63.75, 66.00
Current Option Gain/Loss: + 89.4%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/23 update: ORLY continues the slow and steady march higher. The stock added +2.1% and closed above the 50-dma. Volume was very strong on today's rally. The intraday high was $63.64 and our first target is $63.75. More conservative traders may want to go ahead and take profits now. Please note our new stop loss at $59.40. I'm not suggesting new positions at this time.

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

- Suggested (small) Positions -

Long SEP $60 call (ORLY1117I60) entry $1.90

08/23 new stop loss @ 59.40
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: 116.44 change: +3.71

Stop Loss: n/a
Target(s): 119.75, 122.50
Current Option Gain/Loss: Sep.$120call (-30.1%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/23 update: Stocks delivered pretty strong gains on Tuesday. Gains were very widespread. The SPY managed to close above short-term technical resistance at its 10-dma. Today's bounce will fuel hopes the market has found a bottom but many traders are staying cautious and consider this just an oversold bounce.

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


Stericycle Inc. - SRCL - close: 83.65 change: +2.53

Stop Loss: 77.75
Target(s): 84.90. 88.50
Current Option Gain/Loss: +22.8%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/23 update: Our new trade on SRCL is off to a strong start. Both the stock and the S&P500 opened positive so the trade was activated this morning. SRCL opened at $81.29 and rallied past its 200-ema and closed with a +3.1% gain. If you do not feel like chasing it here then look for a dip back toward the $82.00 area as an entry point.

- Suggested (small) Positions -

Long SEP $85 call (SRCL1117I85) Entry $1.75

Entry on August 23 at $81.29
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 858 thousand
Listed on August 22, 2011


U.S. Oil Fund - USO - close: 33.42 change: +0.70

Stop Loss: n/a
Target(s): $37.50, 40.00
Current Option Gain/Loss: +19.5%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/23 update: Oil was showing some strength today and the USO rallied +2.1%. Volume has been elevated the last few days and today was no exception with volume at 17.4 million shares.

The $34.00 level could be very short-term support. I am not suggesting new positions at these levels.

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: 69.93 change: +2.25

Stop Loss: n/a
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 72.1%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/23 update: Hmm... is UTX forming a bullish double bottom pattern? The stock saw a sharp rebound (+3.3%) as it followed the market higher. The Dow Industrials rallied +2.9%. Yet UTX failed to close above round-number resistance at $70.00.

This certainly looks like a new entry point but readers may want to add a stop loss at $66.99, under the recent lows.

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

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: 58.92 change: +2.15

Stop Loss: n/a
Target(s): 63.50
Current Option Gain/Loss: - 13.8%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/23 update: The big bounce in WFM today (+3.7%) has left the stock back above its 200-dma and back above our entry point. Readers could use this bounce as a new entry point but you may want to consider adding a stop loss near the $56.00 level.

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: 38.58 change: +1.23

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: Sep: -60.0%, DEC: -18.1%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
08/23 update: I am surprised that ALEX did not see a strong bounce. Today's +3.2% gain was in-line with the market's gain. Considering all the short interest in the shipping stocks we need to be prepared for big bounces but these should eventually roll over as reality reasserts itself.

A failed rally near $40 could be used as a new entry point to buy puts.

- 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: 23.80 change: +0.62

Stop Loss: 24.55
Target(s): 20.25, 17.50
Current Option Gain/Loss: SEP: -35.2%, OCT: -26.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/23 update: TK saw a +2.6% bounce but that failed to keep up with the S&P500's gain. My comments on our ALEX play apply here as well. Readers may want to wait for a failed rally near $24.00 before initiating new positions.

- 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: 36.27 change: - 6.17

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -93.7%
Second Position Gain/Loss: - 90.0%
Third Position Gain/Loss: -72.8%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/23 update: The VIX gave up -14.5% thanks to the market's big rebound today. Yet that leaves the VIX where it opened about four days ago. It remains elevated. I am not suggesting new positions at this time.

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


CLOSED BULLISH PLAYS

Cabot Oil & Gas - COG - close: 70.21 change: +4.10

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:
08/23 update: COG produced a very big bounce today with a +6.2% gain and a close over potential round-number resistance at $70.00. The move is bullish but we do not want to chase it. Our buy-the-dip trigger at $63.00 has not been hit.

We are dropping COG as a candidate but I would keep this stock on your watch list.

Buy-the-Dip @ $63.00 was not hit

Trade did not open

chart:

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