Editor's Note:

It is one of the biggest economic reports of the month. A disappointing nonfarm payroll jobs number could spark some profit taking.

Nearly everything retreated from their morning highs on Thursday. Now after two weeks of significant gains the markets could see a sell-off on the Friday morning jobs number. Traders will want to play defensively and expect volatility tomorrow.

Don't forget that the U.S. markets are closed on Monday for the Labor Day holiday. That means we only have ten trading days left before September options expire.

-James

Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 94.79 change: -0.47

Stop Loss: 91.75
Target(s): 94.75, 98.25
Current Option Gain/Loss: Sep.$85: + 8.1% & Oct. $95: +14.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01 update: It's starting to look like a short-term top in BCR. Shares rallied to $96.71 intraday before reversing and closing in the red. I would expect a pull back on Friday. The question is how deep of a dip will BCR see? The answer depends on the market's reaction to the jobs data.

No new positions at this time.

- Suggested (small) Positions -

Long SEP $95 call (BCR1117I95) Entry $1.85*

- or -

Long OCT $95 call (BCR1122J95) Entry $3.40*

08/31 new stop loss @ 91.75
08/30 new stop loss @ 89.90
08/30 1st target hit at $94.75
Sep. $95 call bid at $2.25* (+21.6%)
Oct. $95 call bid at $4.00* (+17.6%)
*these are estimates. options did not trade today
08/29 play opened. BCR gap open entry at $92.11
* these are estimates. options did not trade today
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

Entry on August 29 at $92.11
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 1.25 million
Listed on August 23, 2011


Caterpillar Inc. - CAT - close: 88.55 change: -2.45

Stop Loss: 85.75
Target(s): --.--, 94.50
Current Option Gain/Loss: Sep.$90: --.-% & Oct. $90: + 8.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01 update: CAT also appears to be topping out. Yesterday's pull back from its intraday highs was followed with a -2.6% decline today. If stocks sell-off on the jobs data tomorrow then CAT will most likely hit our stop loss at $85.75.

I am not suggesting new positions at this time.

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

- Suggested Positions -

Long OCT $90 call (CAT1122J90) Entry $4.35

08/31 new stop loss @ 85.75. Exit Sep. calls now!
08/31 exit early Sep. $90 call (bid) @ $3.75 (+63%)
08/30 new stop loss @ 84.75, consider taking profits early now.
08/29 trade opened. CAT gapped open at $87.11
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.

Entry on August 29 at $87.11
Earnings Date 10/24/11 (unconfirmed)
Average Daily Volume = 13.9 million
Listed on August 23, 2011


Cabot Oil & Gas - COG - close: 75.30 change: -0.56

Stop Loss: 71.45
Target(s): --.--, 79.90
Current Option Gain/Loss: Sep.$75: +14.2% & Oct.$75: +20.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01 update: COG has failed near the $78.50 level for the second day in a row! The move is definitely short-term bearish. Our call options are in danger here, especially the Septembers. I cautioned readers yesterday to exit the Septembers early. Now COG is likely to gap open one way or the other tomorrow on the jobs data.

If COG does breakout past resistance at $78.50 then it's probably headed for $80.00 or higher. We will adjust our final target from $78.85 to $79.90.

You may want to raise your stop loss higher!

No new positions at this time.

- Suggested Positions -

Long SEP $75 call (COG1117I75) Entry $2.80

- or -

Long OCT $75 call (COG1122J75) Entry $4.80

08/31 new stop loss @ 71.45. Consider an early exit now!
08/30 new stop loss @ 69.75, adjust final target to $78.85
08/30 1st target hit at $75.85.
Sep. $75 call bid @ 3.70 (+32.1%)
Oct. $75 call bid @ 6.20*(+29.1%)
*option did not trade today. this is an estimate. 08/29 COG gapped open higher at $72.79

Entry on August 29 at $72.79
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on August 27, 2011


Deckers Outdoor - DECK - close: 89.13 change: +0.17

Stop Loss: 84.40
Target(s): 93.50, 97.00
Current Option Gain/Loss: -27.6%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
09/01 update: It was a disappointing session for DECK. The stock was upgraded to a buy this morning. Yet the stock failed near $92.50 for the second day in a row. We can expect DECK to gap open one way or the other tomorrow morning as investors react to the jobs data. I've been suggesting cautious traders exit early. Now it's too late to avoid the jobs report.

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.

- Suggested (SMALL) Positions -

Long SEP $90 call (DECK1117I90) Entry $4.70

08/30 Readers may want to cut losses now (at -23.4%).
New stop loss @ $84.40
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


Energy XXI Ltd. - EXXI - close: 26.30 change: -0.51

Stop Loss: 23.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 57.6%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
09/01 update: EXXI did not make any progress. Shares merely erased yesterday's 50-cent gain. We could see EXXI testing support near $24 or $22 or breaking out past resistance at $28 depending on the jobs report tomorrow.

No new positions at this time.

- Suggested Positions -

Long DEC $25 call (EXXI1117L25) Entry $2.60

08/31 new stop loss @ 23.90
08/30 new stop loss @ 23.40
08/29 new stop loss @ 21.90
08/27 new stop loss @ 20.90

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


F5 Networks Inc - FFIV - close: 79.13 change: -2.44

Stop Loss: 76.25
Target(s): 84.50, 89.00
Current Option Gain/Loss: Sep.$85: -39.8% & Oct.$85: -20.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01 update: Bearish analyst comments on FFIV helped stall its upward movement. Shares could not get past their 30-dma and reversed lower. By the closing bell FFIV was down -2.99%, erasing yesterday's gains. I would wait for a new bounce from the $77-78 zone before considering new bullish positions. If the jobs number disappoints we could get stopped out.

Earlier Comments:
This is an aggressive trade. Any big dip is going to crush the September calls since they expire in just over two weeks. Readers may want to play the Octobers instead.

- Suggested Positions -

Long SEP $85 call (FFIV1117I85) Entry $2.16

- or -

Long OCT $85 call (FFIV1122J85) Entry $5.05

Entry on August 31 at $80.00
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on August 30, 2011


Lululemon Athletica - LULU - close: 54.53 change: -0.20

Stop Loss: 51.40
Target(s): 56.00, 59.50
Current Option Gain/Loss: - 3.1%
Time Frame: up to September 9th
New Positions: see below

Comments:
09/01 update: August same-store sales numbers were generally better than expected. The RLX retail index lost -1.1%, which mirrored the drop in the S&P500 index. LULU did not report any numbers today so the news seemed to have little effect. Shares of LULU only fell -0.3% instead.

I am concerned about LULU's failure yesterday, which looks like a new lower high under its trend of lower highs. Plus, I remain concerned about the jobs data tomorrow. A poor reaction to the report could send LULU back toward the $50.00 level, which would stop us out.

No new positions at this time.

NOTE: This is a short-term trade. We do not want to hold over the Sept. 9th earnings report.

- Suggested Positions -

Long SEP $55 call (LULU1117I55) Entry $3.20

08/31 new stop loss @ 51.40
08/30 new stop loss at $49.75
08/30 1st target hit @ $56.00, option bid @ $4.05 (+26.5%)

Entry on August 29 at $54.05
Earnings Date 09/09/11 (confirmed)
Average Daily Volume = 4.2 million
Listed on August 27, 2011


Tractor Supply Co. - TSCO - close: 61.18 change: -0.19

Stop Loss: 58.75
Target(s): 64.75
Current Option Gain/Loss: Sep.$65: -42.8% & Oct.$65: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01 update: TSCO tried to rally intraday but could not get past its 40-dma and 100-dma. The move looks like a short-term top. I would expect a dip back toward the $60-59 area. Wait for a bounce from this area before considering new positions.

Earlier Comments:
The September options expire in about two weeks. If TSCO does not see any follow through higher these will evaporate fast. The spread is a larger percentage of the overall trade with the Septembers.

- Suggested Positions -

Long SEP $65 call (TSCO1117I65) Entry $0.70

- or -

Long OCT $65 call (TSCO1122J65) Entry $2.00

Entry on August 31 at $61.15
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 858 thousand
Listed on August 29, 2011


U.S. Oil Fund - USO - close: 34.47 change: -0.04

Stop Loss: 31.90
Target(s): $37.50, 40.00
Current Option Gain/Loss: +31.2%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
09/01 update: It was another sleepy day for the USO. This ETF has been trading sideways for almost three full days. If the market declines on the jobs data we could see the USO dip toward the $32 area, which might provide a new entry point next week.

I am not suggesting new bullish positions at this time.

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

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: 73.05 change: -1.20

Stop Loss: 71.75
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 49.1%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/01 update: Warning! It looks like the bounce in UTX has reversed near resistance at $75.00. Shares failed near this level for the second day in a row. We're facing a familiar story here. If the market drops on the jobs data we will probably see UTX hit our stop loss.

I am not suggesting new positions at this time.

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

- Suggested Positions -

Long SEP $75 call (UTX1117I75) Entry $1.83

08/31 new stop @ 71.75, consider an early exit now (-18.0%)
08/30 consider cutting your losses now (-30%)
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%)

Entry on August 15 at $73.21
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on August 13, 2011


PUT Play Updates

CBOE Volatility Index - VIX - close: 31.82 change: + 0.20

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -96.2%
Second Position Gain/Loss: - 94.0%
Third Position Gain/Loss: -72.8%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
09/01 update: The VIX is hovering above the 30.00 level. If I had to guess I would bet on the VIX spiking higher tomorrow as investors react to the jobs number Friday morning. Plus, we have a long, three-day weekend and investors might want more protection.

We are 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.

NOTE: These VIX options expire on Wednesday, September 21st.

- 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