Editor's Note:

After significant losses last week the market produced a big bounce today. The bounce is probably not over yet.

We want to exit our TIF trade early, tomorrow at the close.

Current Portfolio:


CALL Play Updates

Verizon Communication - VZ - close: 41.34 change: -0.19

Stop Loss: 39.95
Target(s): 45.75
Current Option Gain/Loss: Jun$42c: -35.0% & Jul$43c: -45.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21 update: Uh-oh! The market produced a widespread oversold bounce. Virtually everything rebounded today. Yet shares of VZ did not. Since the stock was already outperforming this can happen sometimes but I would be cautious about launching new positions. Readers may want to wait for a bounce off the $41.00 level.

More conservative traders may want to use a stop closer to $40.50 instead. Keep in mind that VZ does not move super fast so we'll need to show some patience.

- Suggested Positions -

Long Jun $42 call (VZ1216F42) Entry $0.60

- or -

Long Jul $43 call (VZ1221G43) Entry $0.66

05/18/12 triggered on gap higher at $41.61 (trigger was 41.55)

Entry on May 18 at $41.61
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 13.8 million
Listed on May 17, 2012


PUT Play Updates

Fiserv, Inc. - FISV - close: 65.98 change: +1.37

Stop Loss: 67.25
Target(s): 63.50
Current Option Gain/Loss:(May$70p: +12.5%) & Jun65P: + 5.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/21 update: The market's oversold bounce produced a +2.1% gain in FISV. Shares close just beneath technical resistance at the 10-dma and 100-dma. I am not suggesting new positions at this time.

- Suggested Positions -

- previously closed position -
May $70 put (FISV1219Q70) Entry $3.02 exit $3.40 (+12.5%)

- or -

Long Jun $65 put (FISV1216R65) Entry $0.90

05/19/12 new stop loss @ 67.25
05/17/12 new stop loss @ 68.25
05/15/12 closed May $70 puts at the open: bid @ 3.40 (+12.5%)
05/14/12 prepare to exit the May $70 puts at the open tomorrow
05/07/12 triggered on gap down at $67.26 (our trigger was 67.40)

Entry on May 07 at $67.26
Earnings Date 05/01/12
Average Daily Volume = 693 thousand
Listed on May 05, 2012


General Dynamic - GD - close: 64.55 change: +1.21

Stop Loss: 66.05
Target(s): 61.50
Current Option Gain/Loss: + 6.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/21 update: GD's oversold bounce amounted to a +1.9% gain. The rebound may not be over yet. Look for a rise to $65.00 or the 10-dma a little higher. A failed rally under $66 can be used as a new bearish entry point.

- Suggested Positions -

Long Jun $65 PUT (GD1216R65) Entry $1.50

05/19/12 new stop loss @ 66.05
05/17/12 new stop loss @ 66.55
05/15/12 triggered @ 65.75

Entry on May 15 at $65.75
Earnings Date 07/25/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 09, 2012


Informatica - INFA - close: 42.68 change: +1.11

Stop Loss: 45.25
Target(s): 40.25
Current Option Gain/Loss: +29.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/21 update: INFA actually traded lower this morning and hit $40.95 before bouncing higher with the market. I would not be surprised to see a rebound back toward the $44-45 area.

- Suggested Positions -

Long Jun $45 PUT (INFA1216R45) Entry $2.40

05/19/12 readers may want to take profits now
05/16/12 new stop loss @ 45.25
05/14/12 triggered at $44.50

Entry on May 14 at $44.50
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on May 10, 2012


iShares Russell 2000 ETF - IWM - close: 76.45 change: +1.76

Stop Loss: 78.75
Target(s): 72.00-70.00 zone
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
05/21 update: We were expecting the IWM to bounce. This ETF looks headed for what should be significant resistance in the $77-78 area. I am suggesting we buy puts when the IWM hits $76.75. More conservative traders may want to wait and buy puts when IWM hits $77.75 instead.

Trigger: buy puts on a bounce at $76.75, stop 78.75

- Suggested Positions -

buy the Jul $75 PUT (IWM1221S75)
05/19/12 adjusted strategy: buy puts on a bounce at $76.75, stop 78.75
05/17/12 temporarily wait on buying puts. We will re-evaluate tomorrow.

Entry on May xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 53 million
Listed on May 12, 2012


L-3 Communications - LLL - close: 68.10 change: +0.52

Stop Loss: 68.75
Target(s): 62.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
05/21 update: Whew! That was a close call. LLL spiked down this morning before reversing higher and closing back above its simple 200-dma. Thankfully the intraday low was only $66.79. Our trade is not open yet but if shares do breakdown to new relative lows we will be ready with our trigger to buy puts at $66.75.

If triggered we will target $62.75. More aggressive traders could aim closer to the $60 area.

Trigger @ 66.75

- Suggested Positions -

buy the Jul $65 PUT (LLL1221S65)

Entry on May xx at $ xx.xx
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 856 thousand
Listed on May 19, 2012


Siemens AG - SI - close: 85.52 change: +1.96

Stop Loss: 87.75
Target(s): 80.25
Current Option Gain/Loss: -44.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/21 update: Europe was due for a bounce after big losses last week. The German DAX index gained +0.9% today. The bounce in Germany and today's bounce on Wall Street helped SI rally +2.3% toward short-term resistance at its simple 10-dma. I am not suggesting new positions at this time. FYI: The Point & Figure chart for SI is bearish with a $74 target.

- Suggested (SMALL) Positions -

Long Jun $80 PUT (SI1216R80) Entry $1.35

05/16/12 SI gapped open higher at $84.94

Entry on May 16 at $84.94
Earnings Date --/--/--
Average Daily Volume = 832 thousand
Listed on May 15, 2012


Tiffany & Co. - TIF - close: 61.14 change: +0.50

Stop Loss: 62.55
Target(s): 59.00
Current Option Gain/Loss: - 0.0%
Time Frame: exit prior to the May 24th earnings report
New Positions: see below

Comments:
05/21 update: We don't have much time left for this trade to work. Shares of TIF underperformed the market with a +0.8% gain versus a +1.6% gain in the S&P 500. Yet if the market continues to rebound it's going to be bad news for our trade.

Instead of waiting until Wednesday's close to exit positions I am suggesting we exit early tomorrow at the close. Cautious traders may want to exit immediately instead. We'll drop our stop loss down to $62.55.

- Suggested Positions -

Long Jun $60 put (TIF1216R60) Entry $2.35

05/21/12 new stop loss @ 62.55, exit tomorrow at the close
05/19/12 new stop loss @ 63.55, only 3 days left
05/17/12 TIF is testing $60 readers may want to take profits now
05/16/12 new stop loss @ 64.25
05/14/12 TIF gapped down at $61.67, under our trigger.

Entry on May 14 at $61.67
Earnings Date 05/24/12 (confirmed)
Average Daily Volume = 1.5 million
Listed on May 12, 2012