Editor's Note:

Stocks were in meltdown mode on Friday thanks to disappointing economic data from around the world. It was a rough first day of June with the major U.S. indices plunging through support.

All of our active bullish call trades were stopped out (BBBY, CYMI, FIRE, and HAIN). We closed GD as planned at the open. INFA hit our bearish target. We have adjusted some stop losses on our current put plays.

Current Portfolio:


CALL Play Updates

We currently do not have any active call trades.


PUT Play Updates

Baxter Intl. - BAX - close: 50.17 change: -0.45

Stop Loss: 51.51
Target(s): 48.00
Current Option Gain/Loss: Jun$50p: +43.9% & Jul50p: +20.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: Shares of BAX were upgraded on Friday but that didn't stop shares from sinking. The stock is testing potential round-number support at $50.00. We are going to try and reduce our risk by moving the stop loss down to $51.51.

- Suggested Positions -

Long Jun $50 PUT (BAX1216R50) Entry $0.66

- or -

Long Jul $50 PUT (BAX1221S50) Entry $1.55

06/02/12 new stop loss @ 51.51
05/31/12 triggered at $50.95

chart:

Entry on May 31 at $50.95
Earnings Date 07/19/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on May 29, 2012


Cummins Inc. - CMI - close: 93.56 change: -3.39

Stop Loss: 98.25
Target(s): 92.50
Current Option Gain/Loss: +138.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
06/02 update: CMI continues to accelerate lower. The stock fell -3.49% and closed at new four-month lows. Conservative traders will want to take profits right now. Our exit target is $92.50. Aggressive traders could aim for the $91.00-90.00 zone instead. We are adjusting the stop loss down to $98.25.

- Suggested Positions -

Long Jun $95 PUT (CMI1216R95) Entry $1.55

06/02/12 new stop loss @ 98.25
Readers may want to take profits now (+138.7%)
05/31/12 CMI seems to be testing the long-term trend line of higher lows
05/29/12 CMI gapped open higher at $100.67

chart:

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


Goldman Sachs Group - GS - close: 92.64 change: -3.06

Stop Loss: 97.55
Target(s): 88.50
Current Option Gain/Loss: Jun$90p: +12.7% & Jul90p: + 9.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: Financial stocks were leading the market's decline lower. GS fell -3.19% to close at new multi-month lows.

Earlier Comments:
I do consider this an aggressive, higher-risk trade. GS can be a volatile stock. Plus, shares are nearing a potential trend line of support dating back to late 2008 (see weekly chart). FYI: The Point & Figure chart for GS is bearish with a $58 target.

Trigger @ 93.90

- Suggested Positions - (Small Positions)

Long Jun $90 PUT (GS1216R90) Entry $1.80

- or -

Long Jul $90 PUT (GS1221S90) Entry $4.25

05/31/12 triggered at $93.90

chart:

Entry on May 31 at $93.90
Earnings Date 07/17/12 (unconfirmed)
Average Daily Volume = 5.5 million
Listed on May 30, 2012


McDonald's Corp. - MCD - close: 86.71 change: -2.63

Stop Loss: 88.75
Target(s): 85.25
Current Option Gain/Loss: Jun$90p: +10.9% & Jul87.50P: +16.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: Hmm... MCD is certainly moving the direction we expected - down. Unfortunately big declines overseas put a lot of pressure on U.S. stocks at the open on Friday and shares of MCD gapped down to open at $87.47. That definitely impacts our entry price and our risk. Suddenly this trade just got a lot more risky with the potential for MCD to try and fill the gap.

I am not suggesting new positions at this time. We'll try and reduce our risk by adjusting the stop loss to $88.75. Our exit target remains unchanged at $85.25.

- Suggested Positions -

Long Jun $90 PUT (MCD1216R90) Entry $3.20

- or -

Long Jul $87.50 PUT (MCD1221S87.5) Entry $2.50

06/01/12 new stop loss @ 88.75
06/01/12 MCD gaps open lower at $87.47, affecting our entry price

chart:

Entry on June 01 at $87.47 (gap down)
Earnings Date 07/23/12 (unconfirmed)
Average Daily Volume = 6.1 million
Listed on May 31, 2012


Reliance Steel - RS - close: 46.08 change: -1.13

Stop Loss: 47.75
Target(s): 42.50
Current Option Gain/Loss: +10.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: RS has finally broken out from its two-week trading range in the $47-50 zone. This should signal the beginning of the next leg lower. I am adjusting our stop loss down to $47.75.

- Suggested Positions -

Long JUN $48 PUT (RS1216R48) Entry $2.45

06/02/12 new stop loss @ 47.75

chart:

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

Bed Bath & Beyond Inc. - BBBY - close: 70.78 change: -1.47

Stop Loss: 71.45
Target(s): 79.00
Current Option Gain/Loss: Jun75c: -62.1% & Jul75c: -14.7%
Time Frame: Exit prior to earnings on June 20th
New Positions: see below

Comments:
06/02 update: The stock market's weakness on Friday pushed BBBY to a -2.0% decline. Shares actually gapped open lower at $71.45. Our stop loss just happened to be $71.45, ending the play immediately.

- Suggested Positions -

JUN $75 call (BBBY1216F75) Entry @ $1.03 exit $0.39 (-62.1%)

- or -

JUL $75 call (BBBY1221G75) Entry $2.72 exit $2.32 (-14.7%)

06/01/12 stopped out at $71.45
05/29/12 new stop loss @ 71.45
05/25/12 triggered at @72.75

chart:

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: 52.75 change: -1.42

Stop Loss: 52.50
Target(s): 57.00
Current Option Gain/Loss: Jun55c: -38.8% & Aug55c: -15.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
06/02 update: The stock market's sharp decline pushed CYMI to an intraday low of $52.50, which just happens to be our stop loss. Readers may want to keep CYMI on their radar screen as a bullish candidate once the market finds a bottom.

- Suggested Positions -

Jun $55 call (CYMI1216F55) Entry $0.90 exit $0.55*(-38.8%)

- or -

Aug $55 call (CYMI1218H55) Entry $2.95 exit $2.50*(-15.2%)

*option exit prices are an estimates. options did not trade at the time of our exit.
06/01/12 stopped out at $52.50
05/29/12 new stop loss @ 52.50
05/22/12 triggered at $52.60

chart:

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


Sourcefire, Inc. - FIRE - close: 49.86 change: -5.30

Stop Loss: 52.75
Target(s): 59.35
Current Option Gain/Loss: Jun55c: -51.7% Jun60c: -73.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: When the selling started on Friday there was definitely a panicked rush for the exits in FIRE on Friday. I couldn't find any news to explain the sudden weakness. Shares suffered a -9.6% decline. Our stop loss was hit pretty early at $52.75.

- Suggested Positions -

Jun $55 call (FIRE1216F55) Entry $2.90 exit $1.40 (-51.7%)

- or -

Jun $60 call (FIRE1216F60) Entry $1.50 exit $0.40 (-73.3%)

06/01/12 stopped out at $52.75

chart:

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: 53.76 change: -1.73

Stop Loss: 53.40
Target(s): 59.00
Current Option Gain/Loss: Jun55c: -57.5% Jul60c: -56.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: HAIN broke down under potential support at both $55 and $54 on Friday. Our stop was hit at $53.40.

- Suggested Positions -

JUN $55 call (HAIN1216F55) Entry $2.00 exit $0.85 (-57.5%)

- or -

JUL $60 call (HAIN1221G60) Entry $1.15* exit $0.50 (-56.5%)

06/01/12 stopped out at $53.40
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

chart:

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


CLOSED BEARISH PLAYS

General Dynamic - GD - close: 62.72 change: -1.29

Stop Loss: 64.55
Target(s): 61.50
Current Option Gain/Loss: +47.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: We had decided on Thursday night to exit our GD positions at the open on Friday. The stock's gap down certainly helped our exit.

- Suggested Positions -

Jun $65 PUT (GD1216R65) Entry $1.50 exit $2.21 (+47.3%)

06/01/12 exit at the open
05/31/12 prepare to exit at the open tomorrow
05/30/12 new stop loss @ 64.55
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

chart:

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: 40.03 change: -1.40

Stop Loss: 44.25
Target(s): 40.25
Current Option Gain/Loss: +54.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
06/02 update: Target achieved.

The market's widespread declines helped push INFA toward potential support at $40.00. Our exit target was hit at $40.25.

Unfortunately the volatile markets is having a negative influence on INFA's options. The spreads are getting worse (i.e. wider). The bid on this option should have closed Friday in the $4.75 area but it didn't. There was no volume for this option on Friday.

We will not trade INFA options again until the spreads improve.

- Suggested Positions -

Jun $45 PUT (INFA1216R45) Entry $2.40 exit $3.70*(+ 54.1%)

06/01/12 target hit at $40.25
trade exit at $3.70 on the option but it should have been closer to $4.70 instead.
05/31/12 readers may want to take profits now. option +54%
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

chart:

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