Editor's Note:

The intraday bounce that began on Tuesday continues. The S&P 500 surged +2.8% to settle near overhead resistance at 1200.

All of our "new" bullish trades are open.

-James

Current Portfolio:


CALL Play Updates

Cabot Oil & Gas - COG - close: 77.12 change: +2.02

Stop Loss: 69.90
Target(s): 82.00, 84.75
Current Option Gain/Loss: Oct.$80: - 8.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/07 update: Our expectation that COG would continue higher today was correct. Unfortunately the stock gapped open higher at $76.72. Our new trade is open but the entry point puts us at a disadvantage. COG stalled at resistance near its recent highs, which isn't too surprising. If you're still looking for an entry point a dip near the $75.50-74.50 zone could work. Otherwise you may want to wait for COG to close over resistance in the $78.50 area. Our targets are $82.00 and $84.75.

- Suggested Positions -

Long OCT $80 call (COG1122J80) Entry $4.50

09/07 trade opened. COG gapped open higher at $76.72
09/06 original trade stopped out. Try again tomorrow with new stop and targets

Entry on September 7 at $76.72
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on September 6, 2011


Dollar Tree, Inc. - DLTR - close: 71.99 change: -0.19

Stop Loss: 68.95
Target(s): 76.00, 79.00
Current Option Gain/Loss: Sep$75: -10.0% & Oct$75: -10.6%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/07 update: Hmm... that's an interesting. DLTR opened higher but the rally stalled and shares underperformed today with a -0.2% decline. It could have been traders moving away from defensive names and putting money into riskier sectors. I didn't see any news to explain the relative weakness today. The overall trend is still bullish. The strength this morning did open our trade but readers may want to wait for a dip near $70.00 before initiating new positions.

- Suggested Positions -

Long SEP $75 call (DLTR1117I75) Entry $0.50

- or -

Long OCT $75 call (DLTR1122J75) Entry $2.35

09/07 trade is open. DLTR gapped open at $72.97
09/06 trade not open. Adjusted entry point strategy, stop loss, and targets.

Entry on September 7 at $72.97
Earnings Date 11/17/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on September 3, 2011


Energy XXI Ltd. - EXXI - close: 25.78 change: +0.70

Stop Loss: 23.49
Target(s): 27.90, 29.75
Current Option Gain/Loss: Oct$27: - 8.1% & Dec$30: - 2.7%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
09/07 update: The market's strength this morning and EXXI's gap open higher has reopened our trade. Shares opened at $25.67 and rallied to $26.45 before trimming its gains to settle up +2.7%.

Readers may want to keep their position size small because EXXI can be a volatile stock! Plus, I want to point out that technically EXXI is in a neutral trading pattern of higher lows and lower highs (pennant formation).

- Suggested Positions -

Long OCT $27 call (EXXI1122J27) Entry $1.85*

- or -

Long DEC $30 call (EXXI1117L30) Entry $1.85*

09/07 trade open. EXXI opened at $25.67
*prices are estimates. options did not trade today
09/06 original trade stopped out. Try again tomorrow with new stop and targets

Entry on September 7 at $25.67
Earnings Date 10/25/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on September 6, 2011


Ingersoll-Rand Plc. - IR - close: 34.46 change: +1.61

Stop Loss: 31.25
Target(s): 34.75, 36.75
Current Option Gain/Loss: Sep$33: +37.0% & Oct$35: + 0.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/07 update: Our trade on IR is open. Shares gapped higher at $33.39 and soared to a +4.9% gain and a new four-week high. I probably would not chase it now. Wait for a dip before considering new positions.

- Suggested Positions -

Long SEP $33 call (IR1117I33) Entry $1.35*

- or -

Long OCT $35 call (IR1122J35) Entry $1.85

09/07 trade opened. IR gapped higher at $33.39
*price is an estimate. option did not trade today
09/06 play not open. try again. new stop loss $31.25

Entry on September 7 at $33.39
Earnings Date 10/20/11 (unconfirmed)
Average Daily Volume = 8.0 million
Listed on September 3, 2011


U.S. Oil Fund - USO - close: 34.69 change: +1.10

Stop Loss: 31.90
Target(s): $37.50, 40.00
Current Option Gain/Loss: +37.5%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
09/07 update: Oil prices rallied and the USO delivered a +3.2% gain. This ETF is nearing prior resistance in the $35 area. Don't be surprised to see a pull back soon. I would not chase it here.

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: 30.27 change: +1.22

Stop Loss: 31.60
Target(s): 26.50 , 25.25
Current Option Gain/Loss: Sep$30: -61.5% & Oct$27: -46.6%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/07 update: The combination of the gap down entry point on Tuesday and now this big two-day rebound in stocks has turned this play against us pretty quickly. The close over $30.00 is short-term bullish even though the larger trend is down. More conservative traders may want to consider an early exit now. I am not suggesting new positions at this time.

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: 33.38 change: - 3.62

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:
09/07 update: The stock market's big surge today took a chunk out of the VIX (-9.7%) but it remains well above the 30 level.

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