Editor's Note:

Stocks plunged at the open. The major indices closed negative but saw a sharp rebound off its morning lows. This intraday reversal higher could be a new entry point.

We had several stocks get stopped out this morning (COG, DECK, EXXI, LULU, and TSCO). We are still bullish on COG, EXXI and LULU but LULU is out of time with earnings on September 9th. We will reload the call plays on COG and EXXI in tonight's new trades.

-James

Current Portfolio:


CALL Play Updates

Dollar Tree, Inc. - DLTR - close: 71.21 change: -0.57

Stop Loss: 68.95
Target(s): 76.00, 79.00
Current Option Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Comments:
09/06 update: Our bullish trade on DLTR is not open. The market's gap down at the open aborted our play. DLTR opened at $69.65, dipped to $69.25, and then soared back into positive territory. We will try again. I am suggesting we buy calls now on DLTR but only if both the stock and the S&P 500 index both open positive tomorrow morning. We will move our stop loss to $68.95, which is 30 cents under today's low. Please note I am adjusting our price targets to $76.00 and $79.00.

We will list both September and October calls but bear in mind that Septembers will expire in less than two weeks. I prefer the Octobers!

*See Entry Details in Play Description*

- Suggested Positions -

buy the SEP $75 call (DLTR1117I75) current ask $0.80

- or -

buy the OCT $75 call (DLTR1122J75) current ask $2.40

09/06 trade not open. Adjusted entry point strategy, stop loss, and targets.

Entry on September xx at $ xx.xx
Earnings Date 11/17/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on September 3, 2011


Ingersoll-Rand Plc. - IR - close: 32.85 change: +0.47

Stop Loss: 31.25
Target(s): 34.75, 36.75
Current Option Gain/Loss: Unopened
Time Frame: 2 to 4 weeks
New Positions: Yes, see below

Comments:
09/06 update: Our trade on IR is not open yet. The gap down this morning negated our entry point. Shares dipped toward Friday's low and its simple 10-dma before recovering. IR actually displayed some relative strength with a +1.4% gain today.

I am suggesting we try again. Buy calls on IR now but only if this stock and the S&P 500 index can both open positive tomorrow. We will raise our stop loss to $31.25. Today's low was $31.43.

We will list both September and October calls but bear in mind that Septembers will expire in less than two weeks. I prefer the Octobers!

*See Entry Details in Play Description*

- Suggested Positions -

buy the SEP $33 call (IR1117I33) current ask $1.10 - new strike -

- or -

buy the OCT $35 call (IR1122J35) current ask $1.35

09/06 play not open. try again. new stop loss $31.25

Entry on September xx at $ xx.xx
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 8.0 million
Listed on September 3, 2011


U.S. Oil Fund - USO - close: 33.59 change: -0.05

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:
09/06 update: The USO gapped open lower at $32.62 but quickly found a bid. The low was $32.60 and this oil ETF nearly closed the gap before trading ended. Readers can choose to buy this bounce or wait for a dip closer to $32.00 instead.

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


PUT Play Updates

Moody's Corp. - MCO - close: 29.05 change: -0.29

Stop Loss: 31.60
Target(s): 26.50 , 25.25
Current Option Gain/Loss: Sep$30: -22.0% & Oct$27: -20.5%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/06 update: A big gap down at the open is not a great way to launch new put positions. The market's widespread weakness this morning pushed MCO to open lower at $28.06. Shares rallied off the $28.00 level and narrowed its losses to -0.98%. We're still bearish here but readers may want to wait for the bounce to stall or reverse near the $30.00 level before initiating new positions.

Earlier Comments:
FYI: There are plenty of investors who are bearish on MCO. The most recent data listed short interest at almost 15% of the 183 million-share float. That does raise the risk of a short squeeze. We want to keep our position size small.

The Point & Figure chart for MCO is bearish with a $19 target.

We will list both September and October calls but bear in mind that Septembers will expire in less than two weeks. I prefer the Octobers!

* Small Positions * - Suggested Positions -

Long SEP $30 PUT (MCO1117U30) Entry $2.00*

- or -

Long OCT $27 PUT (MCO1122V27) Entry $1.80*

09/06 *Entry price on these options are estimates. Options did not trade today.

Entry on September 06 at $28.06
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 4.5 million
Listed on September 3, 2011


CBOE Volatility Index - VIX - close: 37.00 change: + 3.08

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: -91.2%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
09/06 update: The sharp spike lower in stocks this morning gave the VIX is big push higher. This index gapped open higher at $39.84 (a +17% move) but immediately began to contract as stocks rebounded off their lows. It looks like the VIX Is building a pattern of lower highs, which would normally be bearish (a.k.a. forecasting lower values for the VIX).

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 = ---
Listed on August 4, 2011


CLOSED BULLISH PLAYS

Cabot Oil & Gas - COG - close: 75.10 change: +0.86

Stop Loss: 71.45
Target(s): --.--, 79.90
Current Option Gain/Loss: Sep.$75: -46.4% & Oct.$75: -18.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/06 update: The stock market suffered steep losses on Tuesday morning thanks to growing concerns over Europe. The major indices were all down more than -2%. COG gapped open lower at $72.06 and then dipped to $70.47 before bouncing back with a big surge to $75.10 (that's a +6.5% gain off its intraday low). Unfortunately, we were stopped out this morning at $71.45, which is a -9% correction from last week's highs.

We remain short-term and longer-term bullish on COG so we're re-listing it tonight as a new bullish call trade.

- Suggested Positions -

SEP $75 call (COG1117I75) Entry $2.80, exit $1.50 (-46.4%)

- or -

OCT $75 call (COG1122J75) Entry $4.80, exit $3.90 (-18.7%)

09/06 stopped out at $71.45.
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: 86.79 change: +0.89

Stop Loss: 84.40
Target(s): 93.50, 97.00
Current Option Gain/Loss: -64.8%
Time Frame: 1 to 3 weeks
New Positions: see below

Comments:
09/06 update: The sharp market-wide declines this morning was too much for DECK. The stock gapped open lower at $82.04, which was underneath our stop loss at $84.40. Our trade was closed immediately. DECK fell to $81.50 near its exponential 200-dma before reversing higher and actually posting a gain.

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 -

SEP $90 call (DECK1117I90) Entry $4.70, exit $1.65 (-64.8%)

09/06 stopped out, gap open lower exit
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: 25.08 change: -0.12

Stop Loss: 23.90
Target(s): 27.50, 29.75
Current Option Gain/Loss: + 11.5%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
09/06 update: The volatility in this market is hard to trade. Trading a volatile stock like EXXI can be even more challenging. EXXI opened lower at $24.13, dipped to $23.72, and then pared its losses. Our stop loss was hit at $23.90 this morning.

We remain fundamentally bullish on EXXI so we are re-listing it tonight as a new bullish call play.

- Suggested Positions -

DEC $25 call (EXXI1117L25) Entry $2.60, exit $2.90* (+11.5%)

09/06 stopped out at $23.90
*exit price at $2.90 is an estimate. option did not trade today
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: 54.11 change: +0.96

Stop Loss: 51.40
Target(s): 56.00, 59.50
Current Option Gain/Loss: - 40.6%
Time Frame: up to September 9th
New Positions: see below

Comments:
09/06 update: It's the same story with LULU. The market's sharp morning declines were too much. The stock gapped open lower and quickly hit our stop loss at $51.40 before rebounding sharply. In LULU's case the stock bounced at $51.00 and closed up +1.8% on the day.

Traders could buy this bounce but I'd exit at the close on Thursday ro avoid holding over earnings on September 9th.

- Suggested Positions -

SEP $55 call (LULU1117I55) Entry $3.20, exit $1.90 (-40.6%)

09/06 stopped out at $51.40
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: 59.86 change: +0.22

Stop Loss: 58.75
Target(s): 64.75
Current Option Gain/Loss: Sep.$65: -85.7% & Oct.$65: -60.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/06 update: Yup! You guessed it. TSCO has the same story. Gap down at the open. A spike lower that hits our stop loss (58.75), and then a very sharp rebound back into positive territory. Readers may want to buy calls on this bounce with a stop loss under today's low.

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 -

SEP $65 call (TSCO1117I65) Entry $0.70, exit $0.10 (-85.7%)

- or -

OCT $65 call (TSCO1122J65) Entry $2.00, exit $0.80 (-60.0%)

09/06 stopped out at $58.75

chart:

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