Editor's Note:

The relief rally continues with all of the major U.S. averages posting gains on Tuesday.

ESI and IWM were stopped out. MDVN was removed. FISV, SI, and VZ were closed as planned.

Current Portfolio:


CALL Play Updates

Bed Bath & Beyond Inc. - BBBY - close: 73.92 change: +1.52

Stop Loss: 71.45
Target(s): 79.00
Current Option Gain/Loss: Jun75c: +22.3% & Jul75c: +12.1%
Time Frame: Exit prior to earnings on June 20th
New Positions: see below

Comments:
05/29 update: BBBY displayed relative strength today. Shares broke out to new highs and closed with a +2.0% gain. We are raising our stop loss up to $71.45.

Our multi-week target is $79.00. FYI: The Point & Figure chart for BBBY is bullish with an $83 target.

Trigger @ 72.75

- Suggested Positions -

Long JUN $75 call (BBBY1216F75) Entry @ $1.03

- or -

Long JUL $75 call (BBBY1221G75) Entry $2.72

05/29/12 new stop loss @ 71.45
05/25/12 triggered at @72.75

Entry on May 25 at $72.75
Earnings Date 06/20/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on May 24, 2012


Cymer Inc. - CYMI - close: 55.04 change: +1.74

Stop Loss: 52.50
Target(s): 57.00
Current Option Gain/Loss: Jun55c: +50.0% & Aug55c: +18.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/29 update: CYMI was also showing relative strength today. Shares finally broke out past short-term resistance near $54.00 and rallied to a +3.2% gain today. We are raising our stop loss up to $52.50.

Our multi-week target is $57.00. FYI: The Point & Figure chart for CYMI is bullish with a long-term $80 target.

- Suggested Positions -

Long Jun $55 call (CYMI1216F55) Entry $0.90

- or -

Long Aug $55 call (CYMI1218H55) Entry $2.95

05/29/12 new stop loss @ 52.50
05/22/12 triggered at $52.60

Entry on May 22 at $52.60
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 476 thousand
Listed on May 21, 2012


Edwards Lifesciences - EW - close: 87.53 change: +0.13

Stop Loss: 85.75
Target(s): 89.50
Current Option Gain/Loss: Jun85c: +18.7% & Jun$90c: +56.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/29 update: The trading in EW today was not very impressive. Shares churned sideways in a narrow range. We are going to try and reduce our risk by raising the stop loss to $85.75.

FYI: The Point & Figure chart for EW is bullish with a $126 target.

- Suggested Positions -

Long Jun $85 call (EW1216F85) Entry $3.20

- or -

Long Jun $90 call (EW1216F90) Entry $1.15

05/29/12 new stop loss @ 85.75

Entry on May 24 at $85.21
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on May 23, 2012


Sourcefire, Inc. - FIRE - close: 56.79 change: +0.87

Stop Loss: 52.75
Target(s): 59.35
Current Option Gain/Loss: Jun55c: +24.3% Jun60c: - 3.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: FIRE managed to close above short-term resistance at $56.00 today with its +1.5% gain. The stock is making progress as it appears to be running towards the early May highs. More conservative traders may want to inch up their stops.

Earlier Comments:
FIRE could see some short covering. The most recent data listed short interest at 14% of the very small 28 million share float.

- Suggested Positions -

Long Jun $55 call (FIRE1216F55) Entry $2.90

- or -

Long Jun $60 call (FIRE1216F60) Entry $1.50

Entry on May 24 at $55.50
Earnings Date 08/01/12 (unconfirmed)
Average Daily Volume = 857 thousand
Listed on May 23, 2012


The Hain Celestial Group - HAIN - close: 56.80 change: +0.85

Stop Loss: 53.40
Target(s): 59.00
Current Option Gain/Loss: Jun55c: +30.0% Jul60c: +21.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: HAIN continues to rally and shares added +1.5% to close at new highs. The breakout over potential resistance at $56.00 is bullish. We are raising our stop loss to $53.40.

- Suggested Positions -

Long JUN $55 call (HAIN1216F55) Entry $2.00

- or -

Long JUL $60 call (HAIN1221G60) Entry $1.15*

05/29/12 new stop loss @ 53.40
*entry price is an estimate. looks like a possible bad tick at $5.00 on the morning of 05/25/12
05/25/12 trade opened on gap higher at $55.37, trigger was 55.25

Entry on May 25 at $55.37
Earnings Date 08/23/12 (unconfirmed)
Average Daily Volume = 742 thousand
Listed on May 24, 2012


SolarWinds, Inc. - SWI - close: 48.12 change: +0.44

Stop Loss: 45.75
Target(s): 52.50
Current Option Gain/Loss: Jun50c: - 4.1% & Jul50c: + 2.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: Both SWI and the S&P 500 opened positive, which met our criteria to open positions. SWI didn't make it very far before the rally stalled but overall the trend is still bullish. We do need to keep a wary eye on the $50.00 level, which could be round-number resistance but I am setting our exit target at $52.50.

- Suggested Positions -

Long Jun $50 call (SWI1216F50) Entry $1.20

- or -

Long Jul $50 call (SWI1221G50) Entry $2.45

05/29/12 trade opened.

Entry on May 29 at $48.20
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on May 26, 2012


PUT Play Updates

Cummins Inc. - CMI - close: 101.06 change: +2.11

Stop Loss: 102.55
Target(s): 92.50
Current Option Gain/Loss: -25.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/29 update: The stock market's widespread gains this morning helped fuel a pop in CMI. Shares rallied toward resistance but ran out of steam at $101.92. Today's low was $99.67. Readers may want to wait for a new drop under $99.60 before initiating new positions.

- Suggested Positions -

Long Jun $95 PUT (CMI1216R95) Entry $1.55

05/29/12 CMI gapped open higher at $100.67

Entry on May 29 at $100.67
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on May 26, 2012


General Dynamic - GD - close: 64.35 change: +0.77

Stop Loss: 65.25
Target(s): 61.50
Current Option Gain/Loss: - 6.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: GD's oversold bounce continues but it did stall at short-term technical resistance at the 10-dma. Shares should reverse here or at the $65.00 level. We are moving our stop loss down to $65.25.

- Suggested Positions -

Long Jun $65 PUT (GD1216R65) Entry $1.50

05/29/12 new stop loss @ 65.25
05/23/12 tweaking our stop to $66.25
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: 45.72 change: +0.52

Stop Loss: 44.25
Target(s): 40.25
Current Option Gain/Loss: + 2.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: The market's rebound today also helped fuel the oversold bounce in INFA, which gained +1.6%. We are going to try and limit our risk by moving the stop loss down to $44.25.

- Suggested Positions -

Long Jun $45 PUT (INFA1216R45) Entry $2.40

05/29/12 new stop loss @ 44.25
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


L-3 Communications - LLL - close: 67.90 change: +0.71

Stop Loss: 68.75
Target(s): 62.75
Current Option Gain/Loss: -35.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: Shares of LLL were upgraded this morning. This helped shares post a gain but the stock was unable to breakout above its 200-dma, which is encouraging. However, I remain cautious here. The lack of follow through on LLL's recent breakdown under support is troubling if you're bearish. I would wait for a new drop under $66.40 before considering new positions.

- Suggested Positions -

Long Jul $65 PUT (LLL1221S65) Entry $1.85

05/23/12 triggered at $66.75

Entry on May 23 at $66.75
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 856 thousand
Listed on May 19, 2012


Reliance Steel - RS - close: 49.54 change: +1.54

Stop Loss: 50.55
Target(s): 42.50
Current Option Gain/Loss: -57.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/29 update: The steel industry saw big gains today possibly due to growing expectations that China will enact more stimulus for its slowing economy. Whatever the catalyst was RS saw a big bounce with a +3.2% gain and a rebound back toward resistance near $50.00. I am not suggesting new positions at this time.

- Suggested Positions -

Long JUN $48 PUT (RS1216R48) Entry $2.45

Entry on May 23 at $47.79
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 534 thousand
Listed on May 22, 2012


CLOSED BULLISH PLAYS

Medivation, Inc. - MDVN - close: 86.61 change: -0.77

Stop Loss: 84.90
Target(s): 99.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
05/29 update: MDVN is just not cooperating. Shares are flirting with a breakdown under its simple 10-dma. Our trade is not open yet and we're electing to drop MDVN as a candidate.

Trigger @ 90.25 (small positions)

Trade did not open.

05/29/12 removed from the newsletter. trade did not open.

chart:

Entry on May xx at $ xx.xx
Earnings Date 08/09/12 (unconfirmed)
Average Daily Volume = 755 thousand
Listed on May 24, 2012


Verizon Communication - VZ - close: 41.75 change: +0.30

Stop Loss: 39.95
Target(s): 45.75
Current Option Gain/Loss: Jun$42c: -45.0% & Jul$43c: -54.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/29 update: This weekend we decided that VZ was not moving fast enough for us. Our plan was to exit positions at the open this morning. VZ opened higher at $41.65.

- Suggested Positions -

Long Jun $42 call (VZ1216F42) Entry $0.60 exit 0.33 (-45.0%)

- or -

Long Jul $43 call (VZ1221G43) Entry $0.66 exit $0.30 (-54.5%)

05/29/12 closed at the open this morning
05/26/12 prepare to exit on Monday at the open.
05/18/12 triggered on gap higher at $41.61 (trigger was 41.55)

chart:

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


CLOSED BEARISH PLAYS

ITT Educational Services - ESI - close: 58.39 change: +0.49

Stop Loss: 59.25
Target(s): 51.50
Current Option Gain/Loss: -45.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/29 update: We knew that moving our stop loss under $60.00 was a risk but we didn't want a big market rally to exacerbate any losses in this trade. That's why we lowered our stop this weekend to $59.25. As we feared the market did see a big bounce on Monday morning. Shares of ESI gapped open at $59.13 and rallied to resistance at $60.00 before fading lower.

- Suggested Positions -

Jun $55 PUT (ESI1216R55) Entry $2.55 exit $1.40 (-45.0%)

05/29/12 stopped out @ 59.25
05/26/12 new stop loss @ 59.25
05/24/12 new stop loss @ 60.55

chart:

Entry on May 23 at $57.71
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 410 thousand
Listed on May 22, 2012


Fiserv, Inc. - FISV - close: 67.62 change: +0.45

Stop Loss: 68.55
Target(s): 63.50
Current Option Gain/Loss:(May$70p: +12.5%) & Jun65P: - 72.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/29 update: Our plan was to exit our FISV early at the open this morning. Shares opened at $67.74 and then rallied to resistance at $68.00 before stalling.

- Suggested Positions -

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

- or -

Jun $65 put (FISV1216R65) Entry $0.90 exit $0.25 (-72.2%)

05/29/12 planned exit at the open
05/26/12 prepare to exit on Monday morning.
05/23/12 Raising our RISK - new stop loss @ 68.55, above the 50-dma
More conservative traders will want to exit now instead.
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)

chart:

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


iShares Russell 2000 ETF - IWM - close: 77.70 change: +1.11

Stop Loss: 77.35
Target(s): 72.00-70.00 zone
Current Option Gain/Loss: -26.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/29 update: We took a gamble that the IWM would not breakout higher from last week's sideways consolidation and we lowered our stop loss at $77.35. Big gains in Asian markets and a lack of negative headlines out of Europe this morning allowed stocks to rally in the U.S. The IWM gapped open higher at $77.33 before quickly hitting our new stop loss at $77.35. Sure enough the rally stalled at resistance near $78.00.

- Suggested Positions -

Jul $75 PUT (IWM1221S75) Entry $3.20 exit $2.36 (-26.2%)
05/29/12 stopped out at $77.35
05/26/12 new stop loss @ 77.35
05/22/12 triggered at $76.75
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.

chart:

Entry on May 22 at $76.75
Earnings Date --/--/--
Average Daily Volume = 53 million
Listed on May 12, 2012


Siemens AG - SI - close: 85.86 change: +0.35

Stop Loss: 87.75
Target(s): 80.25
Current Option Gain/Loss: -66.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/29 update: Over the weekend we decided it was time to exit our SI trade early. The plan was to exit positions on Monday morning at the open. Shares of SI gapped open at $86.36 before bouncing to their 20-dma and then fading lower again.

- Suggested (SMALL) Positions -

Long Jun $80 PUT (SI1216R80) Entry $1.35 exit $0.45 (-66.6%)

05/29/12 planned exit at the open
05/26/12 upgraded by DB on Friday. We want to exit early on Monday morning
05/16/12 SI gapped open higher at $84.94

chart:

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