Editor's Note:

The market's are showing the worst start to September since 1974. Just as we expected, the stock market sold off on the jobs report. A few of our bullish candidates were stopped out (BCR, CAT, FFIV, and UTX).

Don't forget that September options expire in nine trading days.

-James

Current Portfolio:


CALL Play Updates

Cabot Oil & Gas - COG - close: 74.24 change: -1.06

Stop Loss: 71.45
Target(s): --.--, 79.90
Current Option Gain/Loss: Sep.$75: - 5.3% & Oct.$75: +10.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03 update: The jobs data renewed fears of a recession. A recession means lower demand for oil. That send oil prices lower, which in turn weighed on the energy sector. The OSX oil services index was off -3.3%. COG outperformed its peers. Shares gapped open lower, dipped to $72.00 and bounced to close down -1.4% instead.

Readers could use this intraday bounce as a new entry point or you could wait for another dip near $72.00 as a new entry point.

Currently our final target is $79.90 but if you're launching positions now or near $72 then I'd be tempted to exit in the $78.00-78.50 zone.

- 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

chart:

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: 85.90 change: -3.23

Stop Loss: 84.40
Target(s): 93.50, 97.00
Current Option Gain/Loss: -58.5%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
09/03 update: I am a little bit surprised that DECK actually held support near $85 and its 200-dma. Normally this volatile stock would see rally big moves on a day like today. Granted the -3.6% drop on Friday was worse than the NASDAQ's -2.5% decline but it could have been worse.

We are quickly running out of time for this trade. With Monday's holiday we are down to just nine trading days left for September options.

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%)

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


Energy XXI Ltd. - EXXI - close: 25.20 change: -1.10

Stop Loss: 23.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 34.6%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
09/03 update: EXXI gapped open lower at $25.34 and then spent the rest of Friday churning sideways in the $24.50-25.50 zone. Friday's morning drop should effectively fill the gap from August 29th. EXXI is a volatile stock so the -4.1% drop on Friday isn't a surprise. I was actually expecting a drop towards $24.00.

Readers could use this pull back as a new entry point but you may want to raise your stop loss toward the $24.50 area.

- 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

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


Lululemon Athletica - LULU - close: 53.15 change: -1.38

Stop Loss: 51.40
Target(s): 56.00, 59.50
Current Option Gain/Loss: - 23.4%
Time Frame: up to September 9th
New Positions: see below

Comments:
09/03 update: Traders bought the dip near $52.00 on Friday morning and they bought the dip again at $52.20 on Friday afternoon. This area also happens to be converging technical support with its 10, 20, and 100-dma all meeting together. Friday's pull back also fills the gap from August 29th.

The fact that shares did not drop to $50 or lower on Friday is a positive sign. We can use this dip as a new entry point to buy calls. Just remember our time frame.

NOTE: This is a short-term trade. We do not want to hold over the Sept. 9th earnings report. LULU reports on the morning of Sep. 9th. That means we need to exit on Thursday, Sep. 8th at the close.

- Suggested Positions -

Long SEP $55 call (LULU1117I55) Entry $3.20

09/03 only 3 trading days left
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%)

chart:

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: 59.64 change: -1.54

Stop Loss: 58.75
Target(s): 64.75
Current Option Gain/Loss: Sep.$65: -78.5% & Oct.$65: -27.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03 update: TSCO is trading very technically right now. The stock gapped open lower on Friday morning at $59.93. Shares ignored potential support at $60.00 yet did not fall enough to hit technical support at the 10-dma. Instead the stock was trading on technical support at the 38.2% Fibonacci retracement of the current two-week bounce (mid-August lows to Thursday's highs).

If there is any follow through lower on Tuesday then we will likely get stopped out. At this point I'd rather see a new rally past $61.00 or a close over $61.00 before considering new bullish 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

chart:

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: 33.64 change: -0.83

Stop Loss: 31.90
Target(s): $37.50, 40.00
Current Option Gain/Loss: +14.1%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
09/03 update: The dismal jobs data fueled fears of another recession. A recession would mean lower demand for oil and thus oil prices fell today. The USO dropped -2.4% on Friday. Yet this ETF managed to rebound after filling the gap from August 29th. It is still trading with a short-term bullish trend of higher lows.

I'd rather wait for another dip near $32.50-32.00 before considering new bullish positions.

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


PUT Play Updates

CBOE Volatility Index - VIX - close: 33.92 change: + 2.10

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -98.7%
Second Position Gain/Loss: - 98.0%
Third Position Gain/Loss: -86.8%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
09/03 update: Friday saw the VIX gain +6.5%. Are investors growing temporarily numb to the market's volatile swings? You'd think a -2.5% plunge across the market would produce a bigger gain in the VIX. Of course the VIX was already at elevated levels.

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.

chart:

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


CLOSED BULLISH PLAYS

CR Bard Inc. - BCR - close: 91.85 change: -2.94

Stop Loss: 91.75
Target(s): 94.75, 98.25
Current Option Gain/Loss: Sep.$85: -56.7% & Oct. $95: -20.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03 update: BCR was caught up in the stock market sell-off on Friday. Shares hit $91.54 on Friday afternoon. That was enough to stop us out at $91.75. Readers may want to keep BCR on their watch list for a bounce from the $90.00 level, which should be round-number support.

- Suggested (small) Positions -

SEP $95 call (BCR1117I95) Entry $1.85*, exit $0.80 (-56.7%)

- or -

OCT $95 call (BCR1122J95) Entry $3.40*, exit $2.70 (-20.5%)

09/02 stopped out @ 91.75
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

chart:

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: 85.38 change: -3.17

Stop Loss: 85.75
Target(s): --.--, 94.50
Current Option Gain/Loss: Sep.$90: --.-% & Oct. $90: -26.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03 update: CAT was hit pretty hard on Friday. The jobs data set the market up for a plunge on Friday morning and CAT actually gapped open lower at $85.25. That was below our stop loss at $85.75 so the play was closed immediately.

At this point readers may want to wait for another bounce from support near $80.00 before considering new positions. While the $85.00 level is short-term support the stock is kind of in no man's land between $80 and resistance in the $93 area.

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

- Suggested Positions -

OCT $90 call (CAT1122J90) Entry $4.35, exit $3.20 (-26.4%)

09/02 stopped out @ 85.25, gap down exit
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.

chart:

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


F5 Networks Inc - FFIV - close: 76.31 change: -2.82

Stop Loss: 76.25
Target(s): 84.50, 89.00
Current Option Gain/Loss: Sep.$85: -72.2% & Oct.$85: -39.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03 update: Our play in FFIV survived the initial sell-off on Friday morning and then another spike down to $76.30 before 10:00 a.m. Yet as the market turned lower on Friday afternoon shares eventually hit our stop at $76.25. FFIV filled the gap from August 29th before finally paring it losses to -3.5%. Coincidentally FFIV bounced on Friday afternoon from the 50% retracement of the two-week rally. Readers will want to keep an eye on this stock. A bounce from here or a bounce from $74.00 might be a new bullish entry point.

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, exit $0.60 (-72.2%)

- or -

Long OCT $85 call (FFIV1122J85) Entry $5.05, exit $3.05 (-39.6%)

09/02 stopped out at $76.25

chart:

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


United Technologies Corp. - UTX - close: 71.04 change: -2.01

Stop Loss: 71.75
Target(s): 76.40, 79.75
Current Option Gain/Loss: (Sep. - 78.6%)
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/03 update: Industrial names were hit hard on Friday due to recession fears. UTX gapped open lower at $71.64. This was under our stop at $71.75 so the play was closed immediately.

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

- Suggested Positions -

SEP $75 call (UTX1117I75) Entry $1.83, Exit $0.39 (-78.6%)

09/02 stopped out @ 71.64, gap down exit
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%)

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