Editor's Note:

The stock market notched its sixth decline in a row and we had two of our bearish plays triggered (ITW and WBC). We closed DECK as planned.

Current Portfolio:


CALL Play Updates

Athenahealth, Inc. - ATHN - close: 82.54 change: +1.94

Stop Loss: 79.85
Target(s): 89.00
Current Option Gain/Loss: - 7.5%
Time Frame: exit prior to earnings on July 19th
New Positions: see below

Comments:
07/12/12 update: There is no surprise here. When the market turned around ATHN bounced from support near $80.00. Shares outperformed the market with a +2.4% gain. Readers can use this bounce as an entry point but remember our plans to exit prior to earnings on the 19th.

Earlier Comments:
We'll aim for $89.00 but conservative traders may want to exit early near the June highs (about $87). We will plan to exit prior to the July 19th earnings report. FYI: The Point & Figure chart for ATHN is bullish with a $92 target.

- Suggested Positions -

Long Jul $85 call (ATHN1221G85) Entry $2.00

07/03/12 new stop loss @ 79.85

Entry on July 03 at $81.51
Earnings Date 07/19/12 (confirmed)
Average Daily Volume = 481 thousand
Listed on July 02, 2012


Dollar General - DG - close: 54.00 change: -0.92

Stop Loss: 53.45
Target(s): 59.50
Current Option Gain/Loss: -51.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12/12 update: DG is definitely not cooperating. After breaking out to new highs just two days ago the stock is reversing. Today's breakdown under the 10-dma is short-term bearish. There is potential support at $54.00 but right now DG looks vulnerable even though the longer-term trend is bullish shares might be experiencing a correction here. I'm not suggesting new positions at this time.

- Suggested Positions -

long Aug $55 call (DG1218H55) Entry $2.05

Entry on July 11 at $55.51
Earnings Date 08/30/12 (unconfirmed)
Average Daily Volume = 3.8 million
Listed on July 10, 2012


Westlake Chemical Corp. - WLK - close: 53.94 change: -0.07

Stop Loss: 52.35
Target(s): 62.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
07/12/12 update: We are adjusting our entry point strategy on WLK. The market looks poised to bounce after six down days in a row. Traders have already started buying the dip in WLK. The stock fell to $52.43 this morning and traded near its 40-dma and its exponential 200-dma before bouncing back.

We are suggesting a trigger to buy calls at $54.55 with a stop loss at $52.35 (just under today's low).

Trigger @ 54.55 (new stop 52.35)

- Suggested Positions -

buy the Aug $60 call (WLK1218H60) current ask $1.10

07/12/12 adjusted the trigger to buy calls to $54.55, stop to 52.35
07/11/12 removed the July option

Entry on July xx at $ xx.xx
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 543 thousand
Listed on July 09, 2012


PUT Play Updates

FLIR Systems - FLIR - close: 18.59 change: -0.25

Stop Loss: 19.45
Target(s): 17.75
Current Option Gain/Loss: Jul20p: +36.8% & Aug19p: +38.4%
Time Frame: exit prior to the late July earnings report
New Positions: see below

Comments:
07/12/12 update: FLIR fell another -1.3% and spent most of the day bouncing along the $18.50 level. If the market bounces I would expect a rebound back toward new resistance near $19.00. We are adjusting our stop loss to $19.45.

More conservative traders may want to just take profits now!

NOTE: The July $20 put bid/ask spread appears to have returned to normal. Current bid $1.30.

FYI: The Point & Figure chart for FLIR is bearish with a $7 target.

- Suggested Positions -

Long Jul $20 PUT (FLIR1221S20) Entry $0.95

- or -

Long Aug $19 PUT (FLIR1218T19) Entry $0.65

07/12/12 new stop loss @ 19.45
07/11/12 odd bid/ask spread on the July $20 puts affecting our P/L.

Entry on July 02 at $19.56
Earnings Date 07/20/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on June 30, 2012


Fossil, Inc. - FOSL - close: 66.32 change: +1.19

Stop Loss: 70.05
Target(s): 60.50
Current Option Gain/Loss: - 3.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12/12 update: I want to warn you here. Today's move in FOSL looks like a one-day bullish reversal pattern. I cautioned readers yesterday that after so many down days in a row that FOSL could bounce soon. I would expect this stock to rebound back toward the $68-70 zone. Wait for a failed rally near these levels before launching new bearish positions.

FYI: The Point & Figure chart for FOSL is bearish with a $54 target.

- Suggested Positions -

Long Aug $60 PUT (FOSL1218T60) Entry $2.60
07/12/12 FOSL has produced a one-day bullish reversal pattern.

Entry on July 11 at $65.99
Earnings Date 08/07/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on July 10, 2012


Illinois Tool Works - ITW - close: 50.04 change: -0.25

Stop Loss: 51.65
Target(s): 45.50
Current Option Gain/Loss: -18.4%
Time Frame: exit prior to the July 24th earnings report
New Positions: see below

Comments:
07/12/12 update: Hmm... our new ITW trade is open but shares look like they could bounce. The stock broke down to new relative lows and hit our trigger to buy puts at $49.75. This break under $50.00 would have been very bearish. Yet ITW rebounded off the $49 level and closed back above $50. The $50.50-51.50 zone should offer some resistance. Wait for this bounce to roll over before launching new trades. Our target is $45.50 but we'll plan to exit prior to the July 24th earnings report.

- Suggested Positions -

Long Aug $50 PUT (ITW1218T50) Entry $1.90

07/12/12 triggered @ 49.75

Entry on July 12 at $49.75
Earnings Date 07/24/12 (confirmed)
Average Daily Volume = 3.4 million
Listed on July 11, 2012


J.C.Penney Co. - JCP - close: 20.04 change: -0.26

Stop Loss: 21.35
Target(s): 19.50, 15.50
Current Option Gain/Loss: +39.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12/12 update: JCP dipped below round-number support at $20.00 this morning but had rebounded back above this level by Thursday afternoon. Shares could see an oversold bounce back toward the $21.00 area. Readers may want to take profits now and re-start new positions on a bounce near $21.50ish.

We are going to try and reduce our risk by moving our stop loss down to $21.35.

Our first target is the 2010 lows near $19.50. Our second much more aggressive target is $15.50. FYI: The Point & Figure chart for JCP is bearish with a $7.00 target.

- Suggested Positions -

Long Aug $20 PUT (JCP1218T20) Entry $1.20

07/12/12 new stop loss @ 21.35
07/10/12 triggered @ 21.30

Entry on July 10 at $21.30
Earnings Date 08/08/12 (unconfirmed)
Average Daily Volume = 9.3 million
Listed on July 03, 2012


Sohu.com Inc. - SOHU - close: 39.62 change: +0.29

Stop Loss: 41.75
Target(s): 35.25
Current Option Gain/Loss: July40p: -13.7% & Aug37.50p: + 0.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12/12 update: SOHU managed to bounce near yesterday's lows but it struggled with new resistance at $40.00. With the market looking poised to bounce tomorrow I am not suggesting new positions tonight.

We will want to keep our position size small to limit our risk because the most recent data listed short interest at 23% of the small 29.6 million-share float. FYI: The Point & Figure chart for SOHU is bearish with a $32 target.

*Small Positions* - Suggested Positions -

(July options expire after July 20th)
Long Jul $40 PUT (SOHU1221S40) entry $1.45

- or -

Long Aug $37.50 PUT (SOHU1218T37.5) entry $1.85

07/11/12 triggered @ 39.65

Entry on July 11 at $39.65
Earnings Date 07/30/12 (unconfirmed)
Average Daily Volume = 634 thousand
Listed on July 09, 2012


WABCO Holdings - WBC - close: 48.59 change: +0.50

Stop Loss: 50.05
Target(s): 44.00 & 41.00
Current Option Gain/Loss: -35.1%
Time Frame: exit prior to the July 27th earnings report
New Positions: see below

Comments:
07/12/12 update: We might be in trouble here. WBC broke down to new lows and hit our trigger at $47.40. Yet shares revered at $46.73 and actually closed up on the session, outperforming the major market indices with a +1.0% gain. If the market bounce continues tomorrow I would look for WBC to challenge short-term resistance at $50.00. Wait for this rebound to rollover before launching new positions.

We'll set our first target at $44.00 and our second target at $41.00.

- Suggested Positions -

Long Aug $45 put (WBC1218T45) Entry $1.85

07/12/12 triggered at $47.40

Entry on July 12 at $47.40
Earnings Date 07/27/12 (confirmed)
Average Daily Volume = 648 thousand
Listed on July 11, 2012


Weight Watchers Intl. - WTW - close: 49.82 change: +1.72

Stop Loss: 50.75
Target(s): 42.00
Current Option Gain/Loss: Jul47.50p: -77.2% & Aug45p: -35.3%
Time Frame: exit prior to the early August earnings report
New Positions: see below

Comments:
07/12/12 update: I have been warning readers that if WTW bounces it will probably bounce to short-term resistance near $50.00. That's what happened today. We have a stop loss at $50.75. More conservative traders may want to inch their stops lower, closer to the $50 mark. A failed rally near $50.00 could be used as a new bearish entry point.

FYI: The most recent data does list short interest at 10% of the small 26.6 million share float. That raises the risk of a short squeeze but lately the any short covering has failed at the 10 or 20-dma.

NOTE: July options expire after July 20th.

- Suggested Positions -

Long Jul $47.50 PUT (WTW1221S47.5) Entry $1.10

- or -

Long Aug $45 PUT (WTW1218T45) Entry $2.01

Entry on July 09 at $48.28
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 764 thousand
Listed on July 07, 2012


Youku Inc. - YOKU - close: 18.50 change: +0.29

Stop Loss: 21.25
Target(s): 16.00
Current Option Gain/Loss: +25.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12/12 update: After five down days in a row YOKU managed a bounce today with a +1.59% gain. Shares should have resistance near $20.00 and its 10-dma. Readers may want to adjust their stop loss closer to the $20 level.

FYI: We want to keep our position size small because YOKU already has a high amount of short interest. The most recent data listed short interest at almost 19% of the 50.2 million share float and that raises the risk of a short squeeze higher.

*Small Positions* - Suggested Positions -

Long Aug $19 PUT (YOKU1218T19) Entry $1.55

07/10/12 triggered @ 19.90

Entry on July 10 at $19.90
Earnings Date 08/08/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on July 02, 2012


CLOSED BEARISH PLAYS

Deckers Outdoor Corp. - DECK - close: 46.44 change: -0.05

Stop Loss: 50.05
Target(s): 42.00
Current Option Gain/Loss: Jul45p: - 25.9% & Aug45P: - 1.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/12/12 update: Our new plan was to exit positions at the open this morning. DECK gapped down at $46.31 before traders bought the dip near $44.80.

Entry on June 21 at $47.31
Earnings Date 07/26/12 (unconfirmed)
Average Daily Volume = 1.45 million
Listed on June 20, 2012