Editor's Note:

After Wednesday's big gains the stock market was in a wait and see mode while investors looked toward the President's speech tonight.

-James

Current Portfolio:


CALL Play Updates

Cabot Oil & Gas - COG - close: 74.30 change: -2.82

Stop Loss: 69.90
Target(s): 82.00, 84.75
Current Option Gain/Loss: Oct.$80: -31.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/08 update: Another rise in the U.S. dollar weighed on oil prices, which could have influenced the weakness in energy stocks. COG definitely saw some profit taking with a -3.6% drop after yesterday's failure to breakout past resistance. COG should see support in the $72-70 zone. Traders will want to wait for the next bounce before considering new positions.

- 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: 71.20 change: -0.79

Stop Loss: 68.95
Target(s): 76.00, 79.00
Current Option Gain/Loss: Sep$75: -50.0% & Oct$75: -34.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/08 update: DLTR tried to rally this morning but ran out of steam at $72.50. Shares gave up -1.0%, which was in line with the S&P500's decline. The $69-70 zone should be short-term support so we can use a dip or a bounce near this area as a new bullish entry point to buy calls.

- 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: 25.32 change: -0.46

Stop Loss: 23.49
Target(s): 27.90, 29.75
Current Option Gain/Loss: Oct$27: -18.9% & Dec$30: -13.5%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
09/08 update: EXXI tried to rally a couple of times today but it couldn't get past the 30-dma. If you look at an intraday chart you can see where EXXI was failing near the $26.40 level. The failure to breakout also reinforces the pennant formation pattern. The next move could be a dip toward this week's lows near $24.00. I'd wait for that dip or a bounce from $24.00 before launching new positions.

Earlier Comments:
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: 33.35 change: -1.11

Stop Loss: 31.25
Target(s): 34.75, 36.75
Current Option Gain/Loss: Sep$33: -18.5% & Oct$35: -27.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/08 update: IR managed to tag a new four-week high this morning before reversing directions. The stock closed down -3.2%, which erased a good chunk of yesterday's big gains. I would wait for a dip near the simple 10-dma (about 32.50) or a dip near $32.00 before considering new bullish positions on IR.

- 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: 34.46 change: -0.23

Stop Loss: 31.90
Target(s): $37.50, 40.00
Current Option Gain/Loss: +33.6%
Time Frame: 2 to 3 months
New Positions: see below

Comments:
09/08 update: The USO oil ETF stalled at resistance near $35.00. Another rise in the U.S. dollar put pressure on oil prices. There is a good chance that the USO will pull back toward the $33 area if stocks retreat.

No new 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


PUT Play Updates

Moody's Corp. - MCO - close: 30.08 change: -0.19

Stop Loss: 31.60
Target(s): 26.50 , 25.25
Current Option Gain/Loss: Sep$30: -61.5% & Oct$27: -50.5%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/08 update: MCO rallied to $30.70 this morning before eventually reversing and closing negative (-0.6%). This almost looks like a failed rally/lower high sort of pattern. Readers could use this move as a new entry point. Cautious traders will want to consider a lower stop loss (maybe near $31.00 or closer to today's high). Alternative you could wait for a new drop under $29.50 as an entry point to buy puts.

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: 34.32 change: + 0.94

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:
09/08 update: It was almost a quiet day for the VIX given the big moves recently. The VIX did see an intraday reversal higher and closed up +2.8%.

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