Editor's Note:

The morning rally was strong enough to lift SRCL to our target. Unfortunately the early morning gain in stocks faded.

Now equities look poised to drop and retest recent lows. Market direction will depend on what Ben Bernanke has to say in Jackson Hole tomorrow and how the market chooses to interpret his comments. There is no doubt about it - Friday could be a volatile session with big moves either way but I fear most of the risk is to the downside.

-James

Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 89.46 change: -0.77

Stop Loss: 84.85
Target(s): 94.75, 98.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/25 update: Wow! I am surprised. Believe it or not our trade in BCR is still not open. The stock market surged higher this morning on strength in the financial sector. Yet the opening print for the S&P500 was actually down. Conditions to open our BCR trade have not been met.

The rally faded and both BCR and the S&P500 eventually closed with losses. Now we face a lot of uncertainty over what Bernanke might say tomorrow in Jackson Hole, Wyoming. Tuesday's low in BCR was near $86.40. I am suggesting a buy-the-dip entry point at $86.50 and we'll set our stop loss at $84.85, which is under the August 9th low near $85.00.

NOTE: I've adjusted the October strike to the $90 strike.

New Entry Point: Buy a Dip at $86.50

- Suggested (small) Positions -

buy the SEP $90 call (BCR1117I90)

- or -

buy the OCT $90 call (BCR1122J90)

08/25 New strategy. Buy the dip at $86.50, new stop 84.85

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: 83.25 change: -2.15

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:
08/25 update: The early morning rally failed. CAT eventually succumbed to profit taking and closed down -2.5%. We had just changed our entry point strategy to buy the dip at $80.50 with a stop loss at $78.75. More conservative traders may want to use a tighter stop loss but keep in mind that Friday could be volatile.

buy the dip at $80.50

- 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: 80.74 change: -2.66

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: -67.0%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/25 update: It was a bearish day for DECK. The rally failed at resistance near $85.00 (near its 200-dma) for the second day in a row. DECK ended the session headed for round-number support at $80.00. I am concerned that if Bernanke disappoints the market we could see DECK retesting its lows near $73 again. 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 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: 111.26 change: -1.69

Stop Loss: 105.70
Target(s): 114.50,
Current Option Gain/Loss: Sep $110: +33.3% & Sep $112: +40.9%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/25 update: The failed rally this morning was a widespread pattern. The DIA hit $113.78 before reversing and shares completely erased Wednesday's gain. Thursday's move also looks like a bearish engulfing candlestick reversal pattern but these patterns need to see follow through.

I hope cautious traders took my suggestion to take profits early with our options up this morning.

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: 23.88 change: -0.65

Stop Loss: 19.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 19.2%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
08/25 update: Energy stocks were underperformers on Thursday. EXXI gave up -2.6% albeit on low volume compared to volume over the last few weeks. The stock looks poised to retest the $22 level soon but that will depend on the market's reaction to Bernanke tomorrow. 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: 92.10 change: - 1.30

Stop Loss: n/a
Target(s): 99.50, 107.50
Current Option Gain/Loss: ---.-- & (-36.4%)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/25 update: The action in GMCR today looks short-term bearish. Shares failed at resistance in the $95-96 zone again for the third time in three days. Shares look poised to test $90 soon and if Bernanke disappoints the market we could see GMCR retest $85 again. Yesterday I suggested cautious traders exit early. 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: 62.93 change: -1.03

Stop Loss: 61.75
Target(s): 63.75, 66.00
Current Option Gain/Loss: + 89.4%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/25 update: ORLY hit some profit taking but this follows several days of gains. The pull back today looks pretty normal. The stock should see some short-term support at $62.00, which is why we moved the stop loss to $61.75. If the market drops big on any Bernanke news tomorrow we will probably see ORLY get stopped out. We still have a final target at $66.00.

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.

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: 116.28 change: -1.80

Stop Loss: n/a
Target(s): 119.75, 122.50
Current Option Gain/Loss: Sep.$120call (-16.8%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/25 update: The stock market appears to have formed a bearish reversal today. The early rally failed after filling the gap down from August 18th. The SPY erased yesterday's gain completely. If the sell-off continues tomorrow we could see the SPY retest support near $112 soon. I am not suggesting 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


Stericycle Inc. - SRCL - close: 83.15 change: -1.26

Stop Loss: 77.75
Target(s): 84.90. 88.50
Current Option Gain/Loss: +17.1%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/25 update: Target achieved. SRCL opened higher at $84.82 and rallied to $85.26 before reversing course. This looks like a failed rally at resistance near 485 and its 200-dma. Cautious traders may want to exit completely. Our first target to take profits was hit at $84.90 this morning. The Sept. $85 call would have been trading with a bid near $2.75 (+57.1%).

If the market sells off tomorrow we could see SRCL retest the $80 level. please note that I am raising our stop loss to $79.75. I am not suggesting new positions tonight.

- Suggested (small) Positions -

Long SEP $85 call (SRCL1117I85) Entry $1.75

08/25 new stop loss @ 79.75
08/25 1st target hit @ 84.90, option @ $2.75* (+57.1%)
*this is an estimate. the option did not trade today.

chart:

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: 32.97 change: -0.11

Stop Loss: n/a
Target(s): $37.50, 40.00
Current Option Gain/Loss: + 9.7%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/25 update: The USO saw a volatile morning but shares pared their losses off the lunchtime lows. I do not see any big changes from my prior comments. I'd rather wait for a dip back into the $31-30 zone before initiating new bullish positions.

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: 70.75 change: -0.66

Stop Loss: n/a
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 56.2%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/25 update: UTX filled the gap down from August 18th only to reverse after hitting its 20-dma. The move looks like a bearish reversal and a new lower high. If the market is unhappy with the Fed chairman's comments tomorrow we could see UTX plunge back toward its lows near $67.00. I am not suggesting new positions at this time.

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: 58.43 change: -1.12

Stop Loss: n/a
Target(s): 63.50
Current Option Gain/Loss: - 20.4%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/25 update: It was a troubling day for shares of WFM. The stock failed at overhead resistance near $60.00 for the second day in a row. Traders did buy the dip near $58 (actually 58.24) but the move today looks like a bearish engulfing candlestick reversal pattern. Cautious traders may want to add a stop loss. I would be tempted to put a stop just under the $56 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: 37.73 change: -1.00

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: Sep: -35.0%, DEC: -13.6%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
08/25 update: The bounce in ALEX rolled over as expected. Shares have now produced a very short-term double top near $39.25. Today's move looks like 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: 23.94 change: -0.19

Stop Loss: 24.55
Target(s): 20.25, 17.50
Current Option Gain/Loss: SEP: -41.1%, OCT: -26.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/25 update: We had a close call today. TK spiked up to $24.47 this morning before quickly reversing lower. Our stop is at $24.55. Shares are hovering near the $24.00 level, which has been resistance the last two and a half weeks. I would consider today's failed rally as a new entry point to buy puts.

- 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: 39.76 change: + 3.86

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -91.2%
Second Position Gain/Loss: - 86.0%
Third Position Gain/Loss: -70.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/25 update: The VIX surged off its morning lows as stocks reversed lower. At the end of the day the VIX had gained +10.7%. If investors are unhappy with Bernanke's speech tomorrow we could see the VIX spiked back toward the 48.00 area. 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