Editor's Note:

The market has put together back to back gains and a decent sized bounce. It could be due to investor hopes that Ben Bernanke will issue positive comments and hint at more stimulus on Friday. Even if he does the market could see a sell-the-news event since we've already rallied.

I am suggesting that traders stay cautious. Readers may want to consider adjusting their stop loss placement or paring back positions by the closing bell on Thursday. The truly cautious may want to exit positions instead.

-James

Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 90.23 change: +0.39

Stop Loss: 86.25
Target(s): 94.75, 98.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/24 update: A rocky day for stocks muted gains in BCR. Shares opened lower this morning before rebounding. The stock saw a spike down to $88.20 prior to lunch and then slowly drifted higher to a +0.4% gain on the session. Volume was pretty strong today.

BCR's open lower negated our entry point this morning. We will try again tomorrow with the same plan - to buy calls on BCR if both BCR and the S&P500 index both open higher. However, I want to warn you that we're facing the strong potential for a sell-the-news event on Friday (see my editor's note at the beginning of this section).

If triggered we'll use a stop below today's low at $86.25. Our targets are $94.75 and $98.25, just under the simple 200-dma.

NOTE: Readers may want to consider buying a breakout past $90.75 even if our conditions to launch positions are not met tomorrow.

buy calls if BCR and the S&P500 both open positive tomorrow

- Suggested (small) Positions -

buy the SEP $90 call (BCR1117I90) current ask $3.30

- or -

buy the OCT $95 call (BCR1122J95) current ask $2.60

Entry on August xx at $ xx.xx
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.25 million
Listed on August 23, 2011


Caterpillar Inc. - CAT - close: 85.40 change: +2.42

Stop Loss: 78.75
Target(s): 87.00, 94.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/24 update: We have been trading with defensive entry points. Today our conditional modifier backfired on us. CAT opened higher but the S&P500 did not. The index actually ticked lower at the open so our CAT trade was not triggered. Yet CAT opened higher at $83.24 and rallied +2.9% to close over short-term resistance at $85.00.

I do not want to chase it here. We are facing the possibility of a sell-the-news event on Friday with Bernanke's speech. We will adjust our strategy and use a buy-the-dip entry point in CAT at $80.50 just in case we do see a market sell-off on Friday. We'll move our stop loss down to $78.75. If there is no sell-off on Friday then we'll have to re-evaluate.

buy the dip at $80.50 - new strategy -

- Suggested Positions -

buy the SEP $85 call (CAT1117I85)

- or -

buy the OCT $85 call (CAT1122J90)

08/24 play was not triggered. New strategy to buy the dip at $80.50 with a stop at $78.75.

Entry on August xx at $ xx.xx
Earnings Date 10/24/11 (unconfirmed)
Average Daily Volume = 13.9 million
Listed on August 23, 2011


Deckers Outdoor - DECK - close: 83.40 change: +2.90

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: -51.0%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/24 update: It was another strong day for DECK. The stock added +3.6% and is up more than nine points in the last two days. I do want to urge caution here. The morning rally failed at resistance near $85.00 and its 200-dma. Plus the stock closed near the top of its gap down from the prior week. I would not buy this bounce yet.

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: 112.95 change: +1.58

Stop Loss: 105.70
Target(s): 114.50,
Current Option Gain/Loss: Sep $110: +53.9% & Sep $112: +59.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/24 update: The DIA has seen a strong two-day bounce. Our exit target is $114.50. Yet readers may want to consider an early exit in the $114.15-114.20 area since the top of the gap down from last week could be overhead resistance. Readers may want to just go ahead and take some money off the table now since both options are up more than +50%.

I am not suggesting new positions at current levels.

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: 24.53 change: +0.07

Stop Loss: 19.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 30.7%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
08/24 update: After yesterday's +10% rally I wasn't surprised to see EXXI pause today. The stock actually saw a morning spike higher toward the $26.00 level before fading. I am not suggesting new positions at this time.

- 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: 93.40 change: - 1.65

Stop Loss: n/a
Target(s): 99.50, 107.50
Current Option Gain/Loss: ---.-- & (-21.1%)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/24 update: GMCR encountered some profit taking after yesterday's huge +11% rally. Traders bought the dip on a decline towards $90 and GMCR pared its losses to a -1.7% drop. Aggressive traders could buy this intraday bounce with a stop loss under $90 but it's a high-risk bet. I'm concerned the market could see another decline on Friday. Officially the newsletter is not suggesting new positions at this time.

NOTE: Conservative traders still in the original trade will want to consider an exit early some time tomorrow to cut losses.

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: 63.96 change: +0.77

Stop Loss: 61.75
Target(s): 63.75, 66.00
Current Option Gain/Loss: +121.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/24 update: Target achieved. ORLY continues to show relative strength. The stock saw an early spike toward the $64 level and later this afternoon saw another run higher and hit $64.80 intraday. Our first target at $63.75 was hit this morning. Please note that I am raising our stop loss to $61.75 since the $62 area and the 50-dma should offer some short-term support. We still have a final target at $66.00.

NOTE: Cautious traders may want to exit completely before Thursday's closing bell to avoid any headline risk on Friday.

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

08/24 new stop loss @ 61.75
08/24 1st target hit @ 63.75, option @ $4.00 (+110.5%)
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.

chart:

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: 118.08 change: +1.64

Stop Loss: n/a
Target(s): 119.75, 122.50
Current Option Gain/Loss: Sep.$120call (- 9.4%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/24 update: The S&P 500 index is up two big days in a row. Yet the SPY has yet to fill the gap from last week. The $119.00-120.00 zone is the next level of overhead resistance. I am concerned Friday could be a tough day for the markets. We're not suggesting new positions at this time. Cautious traders may want to add a stop loss or pare back positions prior to Friday.

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: 84.41 change: +0.76

Stop Loss: 77.75
Target(s): 84.90. 88.50
Current Option Gain/Loss: +42.8%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/24 update: The rally continues for SRCL and the stock is now up four days in a row. Shares add +0.9% and managed to close above possible technical resistance at the 30-dma and the 200-dma. Although in reality I would not consider this a close "above" the 200-dma but more like a close on the 200-dma (currently at $84.40).

The high today was $84.67 and our first target is $84.90. Cautious traders may want to take profits early ahead of Bernanke's speech on Friday to avoid any headline risk. I am not suggesting new positions tonight. We might get a better entry point on a dip near the $81-80 zone.

- 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: 33.08 change: -0.34

Stop Loss: n/a
Target(s): $37.50, 40.00
Current Option Gain/Loss: + 9.2%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/24 update: The oil inventory report this morning showed an unexpected drawdown, which should be bullish for oil prices. Yet oil and the USO retreated. This may have been due to the bounce in the dollar. Overall I don't see any changes from my prior comments, except that yesterday I said $34.00 could be short-term support when I meant was short-term resistance. 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: 71.41 change: +1.48

Stop Loss: n/a
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 53.5%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/24 update: UTX continues to bounce with the major indices. Shares outperformed today with a +2.1% gain. The stock is testing short-term resistance in the $71.50-72.00 zone, which is the top of its gap down from last week. Thus I would not open new positions now at current levels. Cautious traders may want to pare back positions ahead of Friday (see my Editor's note above).

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: 59.55 change: +0.63

Stop Loss: n/a
Target(s): 63.50
Current Option Gain/Loss: - 4.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/24 update: WFM rallied toward round-number resistance at $60.00 and stalled. Volume has been fading lower this week. I am still tempted to buy calls on WFM but please see my editor's note (above) about Friday. Cautious traders may want to add 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: 38.78 change: +0.15

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: Sep: -50.0%, DEC: -22.7%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
08/24 update: The early morning rally in ALEX reversed near $39.30. Shares were unable to close above its 10-dma. Yesterday I suggested waiting for a failed rally near $40.00 as a new entry point. Readers may want to go ahead and consider new bearish positions now.

- 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: 24.13 change: +0.33

Stop Loss: 24.55
Target(s): 20.25, 17.50
Current Option Gain/Loss: SEP: -41.1%, OCT: -40.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/24 update: The bounce in TK was a bit stronger with a +1.3% gain. Yet shares failed to make new relative highs. Readers could use today's move as a new bearish entry point. However, the close over $24.00 might be considered bullish. If the market rallies again tomorrow we are at risk of seeing TK hit our stop loss at $24.55. Cautious traders may want to wait for a new drop under $23.50 before initiating new bearish 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: 35.90 change: - 0.37

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -92.5%
Second Position Gain/Loss: - 88.0%
Third Position Gain/Loss: -66.6%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/24 update: VIX is still retreating, albeit slowly. I would not open new positions here. The market could see more volatility on Friday, which would send the VIX higher again.

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