Editor's Note:

Stocks put together a string of five gains in a row. Readers may want to take some money off the table. Some of our bullish candidates like IR, MJN, and PSMT almost hit our profit targets on Friday morning.

We are removing CS as a put play and our IWM trade has expired.

-James

Current Portfolio:


CALL Play Updates

Dollar Tree, Inc. - DLTR - close: 75.54 change: +0.27

Stop Loss: 71.75
Target(s): 76.00, 79.00
Current Option Gain/Loss: Oct$75: +36.1%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/17 update: DLTR did not make it very far on Friday. There was a morning spike to a new high at $76.32 but DLTR spent most of the day under $76 and closed near the $75.00 option strike for option expiration. The stock looks short-term overbought. I would expect a dip back toward possible support at $74.00 or $72.00. We will raise our stop loss to $71.75. I am not suggesting new positions at current levels.

There was a story on Friday by the New York Post that a private equity firm might make a bid for 99-Cents Only Stores (NDN). If investors think the dollar store industry is poised for consolidation it could add fuel for another rally. Other stocks in this group are DG and FDO.

- Suggested Positions -

Long OCT $75 call (DLTR1122J75) Entry $2.35

09/17 new stop loss @ 71.75
09/15 new stop loss @ 71.45
09/15 1st Target hit at $76.00. Oct $75 call bid @ 3.20 (+36.1%)
09/15 planned exit for Sep. $75 call. bid $0.65 (+30%)
09/14 exit the September $75 calls ASAP (tomorrow morning)
09/07 trade is open. DLTR gapped open at $72.97
09/06 trade not open. Adjusted entry point strategy, stop loss, and targets.

chart:

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


Ingersoll-Rand Plc. - IR - close: 35.70 change: +0.81

Stop Loss: 32.40
Target(s): 34.75, 37.25
Current Option Gain/Loss: Oct$35: +27.0%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
09/17 update: IR's rally continued on Friday. The stock broke out past resistance near $35.00 and its 50-dma. The stock is trading very technically. Friday's surge stalled at the 50% retracement of its July-August sell-off. The high on Friday was $36.94 that would have been enough to hit our target but on Thursday we raised our final target to $37.25. More conservative traders may want to exit early now. I am raising our stop loss to $32.40. I am not suggesting new positions at this time.

- Suggested Positions -

Long OCT $35 call (IR1122J35) Entry $1.85

09/17 new stop loss @ 32.40
09/15 1st target hit @ 34.75. Oct. $35 call @ 1.90 (+2.7%)
09/15 planned exit on Sep$33 call. bid $0.85 (-37%)
09/14 exit Sep. $33 calls tomorrow morning at the open
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

chart:

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


Mead Johnson Nutrition - MJN - close: 76.09 change: +0.82

Stop Loss: 71.45
Target(s): 77.00, 79.50
Current Option Gain/Loss: Oct$70: +26.9% & Oct$75: +14.2% Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/17 update: MJN almost hit our target on Friday morning. The stock rallied to $76.91 before paring its gains. Our first target is $77.00. Overall I do not see any changes from my prior comments. MJN looks short-term overbought. I'd wait for a dip toward the $74-72 zone before considering new positions. Please note that we are raising our stop loss to $71.45.

Earlier Comments:
NOTE: The spreads on the Oct. $75 calls are a lot wider than the spreads on the $70s. Buying the $75s would be a riskier bet.

- Suggested Positions -

Long OCT $70 call (MJN1122J70) Entry $5.20*

- or -

Long OCT $75 call (MJN1122J75) Entry $3.15

09/17 new stop loss @ 71.45
09/14 new stop loss @ 69.90
*09/14 entry price is an estimate

chart:

Entry on September 14 at $73.22
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on September 13, 2011


PriceSmart Inc. - PSMT - close: 73.28 change: +0.54

Stop Loss: 67.75
Target(s): 74.75
Current Option Gain/Loss: +61.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/17 update: Readers may want to exit early now and take profits on PSMT. Shares rallied to $73.93 on Friday morning before trimming its gains and churning sideways the rest of the session. Our profit target to exit has been $74.00. I am raising our final target to $74.75.

Please note that the simple 10-dma has risen to $68.27. We will raise our stop loss to $67.75.

No new positions at this time.

- Suggested Positions -

Long OCT $70 call (PSMT1122J70) Entry $3.40

09/17 Readers may want to take profits now. Option bid at $5.50 (+61.7%).
09/17 new stop loss @ 67.75, adjust target to $74.75
09/15 new stop loss @ 67.25
09/14 new stop loss @ 66.60

chart:

Entry on September 13 at $68.25
Earnings Date 11/10/11 (unconfirmed)
Average Daily Volume = 307 thousand
Listed on September 12, 2011


Range Resources Corp. - RRC - close: 63.44 change: +0.17

Stop Loss: 59.90
Target(s): 69.75, 72.50
Current Option Gain/Loss: Oct$65: -21.4% & Oct$70: -24.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/17 update: RRC has not made much progress after bouncing near its 50-dma on Monday. Friday's trading was almost a mirror image of Thursday's session with RRC churning sideways. Shares did manage to outperform its peers in the energy sector on Friday but we're not suggesting new positions at this time.

Conservative traders may want to take profits near $66.50 instead.

- Suggested Positions -

Long OCT $65 call (RRC1122J65) Entry $3.50

- or -

Long OCT $70 call (RRC1122J70) Entry $1.45

09/13 trade opened. RRC @ 63.12

chart:

Entry on September 13 at $63.12
Earnings Date 10/27/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on September 8, 2011


Sina Corp. - SINA - close: 110.33 change: +0.18

Target(s): 124.00
Entry #1) Current Option Gain/Loss: -35.9%
Stop Loss: 104.75
Entry #2) Current Option Gain/Loss: -20.0%
Stop Loss: 101.70
Time Frame: 4 to 6 weeks
New Positions: see trigger

Comments:
09/17 update: SINA's intraday bounce from $108.00 on Friday looks like a new bullish entry point to buy calls. This is an aggressive trade but more conservative traders might want to raise their stop loss.

Earlier Comments:
We do want to keep our position size small because SINA can be a volatile stock and we have a wide stop loss. I am setting our target at $124.00. More aggressive traders could aim higher. The inverse H&S pattern would suggest a target in the $150 area.

FYI: The Point & Figure chart for SINA has recently broken through resistance and is bullish with a $146 target.

Entry #1) Triggered @ 112.55, stop: 104.75 (SMALL positions!)

Long OCT $125 call (SINA1122J125) Entry $ 5.15

Entry #2) Entry @ 107.29, stop: 101.70 (SMALL positions!)

Long OCT $120 call (SINA1122J120) Entry $ 6.00

09/13 trade opened. both entry points hit.

chart:

Entry #1) Entry on September 13 at $112.55
Entry #2) Entry on September 13 at $107.29
Earnings Date 11/15/11 (unconfirmed)
Average Daily Volume = 6.0 million
Listed on September 8, 2011


PUT Play Updates

Stanley Black & Decker - SWK - close: 56.73 change: -0.29

Stop Loss: 58.05
Target(s): 50.25, 46.00
Current Option Gain/Loss: Oct$50: -55.2%, & Oct$55: -43.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/17 update: SWK did not participate in the market's rally on Friday. The stock's oversold bounce appears to have stalled under resistance at the $58.00 level. Readers could use Friday's move as a new entry point for bearish positions or wait for a new drop under $56.00 to buy puts.

- Suggested Positions -

Long OCT $50 put (SWK1122V50) Entry $1.90

- or -

Long OCT $55 put (SWK1122V55) Entry $3.90

chart:

Entry on September 12 at $54.78
Earnings Date 10/18/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on September 10, 2011


CBOE Volatility Index - VIX - close: 30.98 change: - 0.99

Stop Loss: n/a
Target(s): 26.00, 22.50
Current Option Gain/Loss: -100.0%
Second Position Gain/Loss: -100.0%
Third Position Gain/Loss: -91.2%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
09/17 update: This is the third time in the last six weeks that the VIX has pulled back to the 30.00 level. Will it breakdown this time? Or will stocks sink again, fueling another rebound in the volatility index?

We only have a few days left before September VIX options expire on Wednesday, Sep. 21. 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.

- 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 BEARISH PLAYS

Credit Suisse Group - CS - close: 26.12 change: +0.63

Stop Loss: n/a
Target(s): 19.00, 16.00
Current Option Gain/Loss: -55.0%
Time Frame: 4 to 10 weeks
New Positions: see below

Comments:
09/17 update: The stock market has been moving higher all week on hopes that regulators are making progress on Europe's debt problems. This has fueled a big bounce in the European banks. CS has risen from Monday's low near $22.25 to over $26.00. Now the longer-term trend for CS is still down. You could easily argue that this is nothing more than an exaggerated oversold bounce. CS is just now starting to fill the gap down from early September. More aggressive traders may want to add to positions right now.

Personally, I would be very tempted to hold on to this position. We have almost three months before December options expire. Unfortunately, the newsletter needs to exit before our losses get any worse (even though we went into this trade knowing it was a "lottery ticket" style of play). It's tough to fight the various central banks when they're coordinating together to provide liquidity for the EU banking system.

Earlier Comments:
The credit markets are telling investors that a Greek default is almost guaranteed but no one knows the actual date. It could be this month or it could be six months from now. Therefore, we need to label this CS put play as a speculative, aggressive bet. Greece and the EU do not want the country to default so CS could see a lot of volatility with sharp rebounds on positive headlines but these will be temporary.

With so much potential for volatility I am not listing a stop loss on this trade. Limit your risk by using small positions.

*Small Positions*

- Suggested Positions -

DEC $20 PUT (CS1117X20) Entry $2.00*, Exit $0.90 (-55%)

09/17 exit early. option bid @ 0.90 (-55%)
*09/12 option did not trade today but the $ASK did not move and remained at $2.00 (bid is $1.80)

chart:

Entry on September 12 at $22.48
Earnings Date --/--/-- (unconfirmed)
Average Daily Volume = 2.3 million
Listed on September 10, 2011


iShares Russell 2000 ETF - close: 71.52 change: +0.11

Stop Loss: n/a
Target(s): see below
Current Option Gain/Loss: - 100%
Time Frame: 1 or 2 days
New Positions: see below

Comments:
09/17 update: Our short-term, speculative bet on another Friday sell-off did not pay off. The IWM continued to drift higher. Our September $69 put has expired at zero.

- Suggested Positions -

SEP $69 PUT (IWM1117U69) Entry $0.35, Exit $0.00 (-100%)

09/17 Sept. $69 put expired @ 0.00 (-100%)

chart:

Entry on September 15 at $71.07
Earnings Date --/--/--
Average Daily Volume = 80 million
Listed on September 14, 2011