Editor's Note:

The market survived another speech by Bernanke and stocks are rebounding off their Friday morning lows.

We are updating our strategy on a lot of the candidates below. You'll see updated stop losses and targets for many of them.

Do not forget that September options expire in three weeks.

-James

Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 91.46 change: +2.00

Stop Loss: 87.40
Target(s): 94.75, 98.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/27 update: BCR fared much better than expected. The dip on Friday only hit $87.70. We had a buy-the-dip entry point at $86.50. Given the market's rebound off its lows this stock looks poised to rally. BCR closed at its high for the week. I am suggesting we launch new bullish call positions now but only if BCR and the S&P500 both open positive on Monday morning. We will adjust our stop loss to $87.40.

NOTE: I've adjusted both the September and October strikes to $95 each.

buy calls now if BCR & S&P500 index open positive on Monday

- Suggested (small) Positions -

buy the SEP $95 call (BCR1117I95)

- or -

buy the OCT $95 call (BCR1122J95)

08/27 Adjusted back to old strategy. Buy calls now if both BCR and S&P500 open positive on Monday.
08/27 move stop loss to $87.40 and adjusted strikes to $95
08/25 New strategy. Buy the dip at $86.50, new stop 84.85

chart:

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: 79.49
Target(s): 87.00, 94.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/27 update: CAT dipped to $81.05 on Friday. We had a trigger to buy the dip at $80.50 so our trade is not open yet. It looks like the market may have put in a bottom last week so we will switch back to our earlier entry point strategy. That means buying calls on CAT now but only if both CAT and the S&P500 both open positive on Monday morning. Last week's low was $79.56. I'll adjust our stop loss up to $79.49. That's a little bit wide so we want to keep our position size small.

Adjusted strikes to $90 strike for both Sept. and Oct.

buy calls now if CAT and S&P500 both open positive on Monday

- Suggested Positions -

buy the SEP $90 call (CAT1117I90)

- or -

buy the OCT $90 call (CAT1122J90)

08/27 buy-the-dip trigger not hit. We will switch back to buying calls now if both CAT and S&P500 open positive on Monday.
08/27 new stop loss at $79.49
08/24 play was not triggered. New strategy to buy the dip at $80.50 with a stop at $78.75.

chart:

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: 84.65 change: +3.91

Stop Loss: n/a
Target(s): 93.50, 97.00
Current Option Gain/Loss: -50.0%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
08/27 update: DECK experienced a sharp rebound off its Friday morning lows near support at $80.00. I say near but the low was really $79.26. Shares rallied right up to resistance near $85.00 and its 200-dma. The move looks like a bullish engulfing candlestick pattern. Nimble traders might want to consider buying calls on a new breakout above $85.00 but the newsletter is not suggesting new positions. Cautious traders might want to add a stop under Friday's low.

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%)

chart:

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: 112.70 change: +1.44

Stop Loss: 108.90
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:
08/27 update: The DIA dipped to $109.09 on Friday morning before soaring off its lows to post a +1.2% gain for the day. The index has been forming a neutral pattern of lower highs and higher lows. At least it is supposed to be neutral. Usually the previous trend resumes, which would be bearish. Thus we need to stay cautious and keep our position size small. The DIA still faces some resistance in the $113.50-115.00 area.

We have September options, which expire in three weeks so I am not suggesting new positions at this time. Currently our target to exit is $114.50. I am adding a secondary, more aggressive target at $117.50. Please note we will raise our stop loss to $108.90.

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

08/27 new stop loss at $108.90
08/27 added 2nd target at $117.50. We still want to take $$ off the table at $114.50
08/20 add a stop loss at $105.70

chart:

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: +0.58

Stop Loss: 20.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 30.7%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
08/27 update: Oil stocks saw a decent rebound on Friday. The OIX added +1.4% while the OSX oil services index was up +3%. EXXI managed to deliver a +2.4% gain but was up +6.5% off its Friday morning low. The action recently looks a lot like the major indices, although EXXI has been more volatile. You can still see that EXXI is trading in a neutral pattern of higher lows and lower highs. Fundamentally we're bullish on EXXI but readers may want to wait for another dip near $22.00 or a close over $26.00 before initiating positions.

Note our new stop loss at $20.90.

- Suggested Positions -

Long DEC $25 call (EXXI1117L25) Entry $2.60

08/27 new stop loss @ 20.90

chart:

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: 97.91 change: + 5.81

Stop Loss: 89.50
Target(s): 104.00
Current Option Gain/Loss: ---.-- & (+ 8.2%)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/27 update: It is amazing the difference a few days can make. A week ago we were hoping for a bounce so we could recoup some of our capital. In the last week GMCR has seen a significant bounce. Friday's +6.3% gain is a bullish breakout over resistance at $95.00 and its 50-dma. Our September calls are actually profitable. I will point out that GMCR closed right at the top of its gap down from August 18th, which means the stock closed just under resistance. Plus the $100 level could be round-number, psychological resistance. These two factors are bearish. Yet at the same time GMCR has broken the three-week trend of lower highs, which is bullish.

We are making changes to our exit strategy in GMCR. I am consolidating our two exit targets of $99.50 and $107.50 down to just one at $104.00. Cautious traders may still want to exit near $100 since the $100.00 mark could be round-number resistance. Aggressive traders may still want to aim for the August highs. The newsletter will plan on an exit at $104.00. Please note that we're also adding a stop loss at $89.50.

Earlier Comments:
As a high-risk, speculative play we wanted to keep our position size very small.

- Suggested (SMALL) Positions -

Long SEP $100 call (GMCR1117I100) Entry $3.65

08/27 Strategy Update: Stop loss @ 89.50. New target at $104.00.
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

chart:

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: 63.93 change: +1.00

Stop Loss: 61.75
Target(s): 63.75, 66.00
Current Option Gain/Loss: +115.7%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/27 update: Traders bought the dip at $62.22 on Friday morning. ORLY managed to recoup its Thursday losses. The stock looks poised to challenge resistance near $65.00 and its all-time highs near $66.50. Our final target to take profits is at $66.00. More aggressive traders may want to aim higher. Keep in mind we only have September calls.

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: 117.97 change: +1.69

Stop Loss: n/a
Target(s): ---.--, 122.50
Current Option Gain/Loss: Sep.$120call (- 5.8%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/27 update: The SPY reversed off its Friday morning lows but this index, like so many others, is trading in a neutral pattern of higher lows (bullish) and lower highs (bearish). The last couple of days has seen technical resistance near the 20-dma and the top of its gap down from August 18th.

We are not suggesting new positions at this time but nimble traders could try scalping positions between $121 and $126. Currently our final target is $122.50 but readers may want to aim for the $124-125 area. Just remember that we have September options, which expire in three weeks.

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.

chart:

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


Stericycle Inc. - SRCL - close: 84.34 change: +1.19

Stop Loss: 81.25
Target(s): --.--. 88.50
Current Option Gain/Loss: +25.7%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/27 update: Traders bought the dip in SRCL near its rising 10-dma on Friday morning. Shares rallied back toward its highs for the week. The stock now looks poised to breakout past resistance near $85.00 and its 200-dma.

We are not suggesting new positions at this time but nimble traders could use a breakout past $85.00 as a new entry point. Our second and final target remains the $88.50 mark. Please note our new stop loss at $81.25.

- Suggested (small) Positions -

Long SEP $85 call (SRCL1117I85) Entry $1.75

08/27 new stop loss @ 81.25
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: 33.15 change: +0.18

Stop Loss: 31.90
Target(s): $37.50, 40.00
Current Option Gain/Loss: + 9.2%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
08/27 update: The USO has also been trading in a neutral pattern of higher lows and lower highs. A new dip toward the August lows seems unlikely. We will remove the buy-the-dip entry point to add positions. Instead we're adding a new stop loss at $31.90.

Earlier Comments:
Keep your position size small! This is a lottery-ticket style of play.

- Suggested Positions -

Long NOV $34 call (USO1119K34) Entry $2.05

08/27 new stop loss @ $31.90
08/27 removing 2nd trigger to add another position.
08/20 Adding a new buy-the-dip entry at $30.50, stop @ 29.00

chart:

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: 71.56 change: +0.81

Stop Loss: 68.75
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 55.7%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/27 update: UTX is pretty much right back where it was on Wednesday. Granted shares look a bit stronger now. The low on Friday was $68.87. We are adding a stop loss at $68.75. Officially we're not suggesting new positions at this time but readers might want to consider a close over $72.00 as a potential entry point.

Earlier Comments:
We want to keep our position size small.

- Suggested Positions -

Long SEP $75 call (UTX1117I75) Entry $1.83

08/27 Adding a stop loss at $68.75
08/27 We have removed the buy-the-dip entry at $65.00
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%)

chart:

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: 61.08 change: +2.65

Stop Loss: 57.25
Target(s): 63.50
Current Option Gain/Loss: + 22.4%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
08/27 update: Friday proved to be a bullish day for WFM. Traders bought the dip near the stock's rising 200-dma. Shares rallied to a +4.6% gain. The breakout over $60.00 is bullish. We are adding a new stop loss at $57.25. I am adjusting our exit target to $64.00 (from 63.50). Aggressive traders could aim higher.

Earlier Comments:
We want to keep our position size small.

- Suggested Positions -

Long SEP $60 call (WFM1117I60) Entry $2.45

08/27 new stop loss @ 57.25

chart:

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: 38.85 change: +1.12

Stop Loss: 40.75
Target(s): 32.50
Current Option Gain/Loss: Sep: -60.0%, DEC: -36.3%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
08/27 update: The market's widespread rebound on Friday buoyed the shipping stocks too. ALEX rallied from $37.00 toward its highs for the week. We are not suggesting new bearish positions at this time.

- 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.

chart:

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


CBOE Volatility Index - VIX - close: 35.59 change: - 4.17

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: -70.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
08/27 update: The VIX saw a big spike to 43.84 on the Friday morning dip. Yet the index reversed as stocks rallied. By the closing bell on Friday the VIX was down -10.4% and off -18.8% from its Friday morning high.

We are not suggesting new positions at this time but aggressive traders may want to take a second look at bearish positions on the VIX.

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.

chart:

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


CLOSED BEARISH PLAYS

Teekay Corp. - TK - close: 24.58 change: +0.64

Stop Loss: 24.55
Target(s): 20.25, 17.50
Current Option Gain/Loss: SEP: -64.7%, OCT: -46.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/27 update: The bounce in TK was just a little too strong. Shares hit our stop loss at $24.55. I suspect most of this is just short covering but I can't blame them with the market in rally mode. Friday's close is technically bullish. We will keep TK on our watch list for a new entry point down the road. The stock could see a big oversold bounce if the short covering continues.

- Suggested Positions -

SEP $22.50 PUT (TK1117U22.5) Entry $0.85, exit $0.30 (-64.7%)

- or -

OCT $20.00 PUT (TK1122V20) Entry $0.75*, exit $0.40 (-46.6%)

08/26 stopped out at $24.55
08/22 *option did not trade, this is an estimate.

chart:

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