Editor's Note:

There was a lot of movement on our play list today as the market continues to rise.

AMGN and TSCO hit our exit targets. Meanwhile DG, ITW, and WBC all hit our stop losses. We have removed CRM as a candidate.

Current Portfolio:


CALL Play Updates

Costco Wholesale - COST - close: 95.96 change: -0.10

Stop Loss: 93.95
Target(s): 99.75
Current Option Gain/Loss: - 8.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/18/12 update: COST's lack of progress with the market's major indices posting gains is a little surprising. Shares are hovering near the $96.00 area. I would still consider new positions now or you could wait for a new relative high over $96.50. FYI: The Point & Figure chart for COST is bullish with a $116 target.

- Suggested *SMALL* Positions -

Long AUG $97.50 call (COST1218H97.5) Entry $0.96

Entry on July 18 at $95.68
Earnings Date 10/11/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on July 17, 2012


CVS Caremark Corp. - CVS - close: 48.61 change: +0.17

Stop Loss: 46.75
Target(s): 52.00
Current Option Gain/Loss: - 2.1%
Time Frame: exit prior to the August 76th earnings
New Positions: see below

Comments:
07/18/12 update: CVS rebounded off its early morning lows and closed at another new high. I would still consider new positions here at current levels.

Earlier Comments:
It is possible that the $50.00 level could be round-number, psychological resistance but we are going to aim for the $52.00 mark. Just remember to exit prior to the August 7th earnings report.

- Suggested Positions -

Long Aug $50 call (CVS1218H50) Entry $0.47

07/17/12 triggered @ 48.40

Entry on July 17 at $48.40
Earnings Date 08/076/12 (confirmed)
Average Daily Volume = 7.3 million
Listed on July 14, 2012


Westlake Chemical Corp. - WLK - close: 58.29 change: +1.61

Stop Loss: 52.35
Target(s): 62.00
Current Option Gain/Loss: +69.6%
Time Frame: exit prior to earnings on August 2nd
New Positions: see below

Comments:
07/18/12 update: WLK continues to show relative strength with a +2.8% gain today. The close above its simple 100-dma is also a bullish development. There is a good chance that the $60.00 level is resistance so more conservative trades may want to start taking profits in the $59.50-60.00 zone. Readers may also want to start raising their stops. I am not suggesting new positions at this time.

- Suggested Positions -

Long Aug $60 call (WLK1218H60) Entry $1.12

07/13/12 trade triggered @ 54.55
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 13 at $54.55
Earnings Date 07/31/12 (unconfirmed)
Average Daily Volume = 543 thousand
Listed on July 09, 2012


PUT Play Updates

FLIR Systems - FLIR - close: 19.15 change: +0.64

Stop Loss: 19.45
Target(s): 17.05
Current Option Gain/Loss:(Jul20p: +42.1%) & Aug19p: +30.7%
Time Frame: exit prior to the late July earnings report
New Positions: see below

Comments:
07/18/12 update: Wow! I have to admit that I am really surprised by the action in FLIR recently. On July 16th, after the closing bell, the company issued an earnings warning. Normally that guarantees a big drop in the stock price. Yet FLIR only spiked down to $18.00 before bouncing back. Now shares are surging +3.4%. There was a headline today about a new $11 million order but why would one order worth less than 1% of FLIR's annual sales move the stock +3%? The move today looks like short covering. Readers may want to exit early now. I am not suggesting new positions!

If there is any follow through tomorrow we'll see FLIR hit our stop loss at $19.45.

NOTE: Our plan was to exit our July $20 puts at the open this morning.

NOTE: The July $20 puts still have an outrageous bid/ask spread. With only three days left on these puts I am suggesting we exit the July $20 puts at the opening bell tomorrow!
(current spread $1.35/2.30)

- Suggested Positions -

*closed 07/18/12 at the open*
Jul $20 PUT (FLIR1221S20) Entry $0.95 exit $1.35 (+42.1%)

- or -

Long Aug $19 PUT (FLIR1218T19) Entry $0.65

07/18/12 closed the Jul $20 put at the open
07/17/12 prepare to exit the July $20 puts at the open tomorrow
07/16/12 Exit Strategy Change: New Target: 17.05
after the bell tonight FLIR issued an earnings warning.
*07/14/12 can't get a good quote on the July 20 put. This is an estimate.
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 07/26/12 (confirmed)
Average Daily Volume = 1.7 million
Listed on June 30, 2012


Fossil, Inc. - FOSL - close: 68.10 change: +1.44

Stop Loss: 70.05
Target(s): 60.50
Current Option Gain/Loss: -26.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/18/12 update: All right, after two days of churning sideways FOSL is starting to move higher again. The stock looks poised to rally toward resistance near $70.00. Readers will want to seriously consider an early exit right now. I am not suggesting new positions tonight.

- Suggested Positions -

Long Aug $60 PUT (FOSL1218T60) Entry $2.60
07/18/12 FOSL is not cooperating. Readers may want to exit early now!
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


J.C.Penney Co. - JCP - close: 19.71 change: +0.46

Stop Loss: 21.35
Target(s): 19.50, 15.50
Current Option Gain/Loss: +34.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/18/12 update: If you look at an intraday chart of JCP there is a sharp spike midday around lunchtime. The rally failed but JCP started drifting higher again this afternoon, probably due to the market's gains. JCP is oversold a bit so it's not a surprise to see a bounce but the $20.00 level should be new resistance. More conservative traders may want to lower their stops. I am not suggesting new positions.

Our second 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

07/16/12 If you missed it the first time JCP hit our 1st target at $19.50 again.
07/12/12 new stop loss @ 21.35
1st target hit at $19.50, option bid @ $1.75 (+45.8%)
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


Joy Global, Inc. - JOY - close: 51.83 change: +1.28

Stop Loss: 51.05
Target(s): 45.25 and 41.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
07/18/12 update: The bounce in JOY is seems to be gaining strength. The larger trend is still very bearish but JOY could be headed for the $54-55 zone before it rolls over again. We may have to adjust our strategy or drop JOY as a candidate soon.

Currently the plan is to launch positions with a trigger to buy puts at $48.49. If triggered we will aim for two different targets. Cautious traders can aim for $45.25. More aggressive traders can aim for $41.50. FYI: The Point & Figure chart for JOY is bearish with a $37 target.

Trigger @ 48.49

- Suggested Positions -

buy the Aug $48 PUT (JOY1218T48)

Entry on July xx at $ xx.xx
Earnings Date 08/29/12 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on July 16, 2012


CLOSED BULLISH PLAYS

Amgen Inc. - AMGN - close: 79.62 change: +0.86

Stop Loss: 73.95
Target(s): 79.50
Current Option Gain/Loss: +121.8%
Time Frame: exit prior to the July 26th earnings
New Positions: see below

Comments:
07/18/12 update: Target achieved.

AMGN is up several days in a row. The stock has rallied straight to likely resistance at $80.00 and hit our exit target at $79.50.

- Suggested Positions -

Aug $77.50 call (AMGN1218H77.5) Entry $1.42 exit $3.15 (+121.8%)

07/18/12 target hit at $79.50.
07/17/12 adjust exit target to $79.50
07/13/12 triggered @ 76.35

chart:

Entry on July 13 at $76.35
Earnings Date 07/26/12 (confirmed)
Average Daily Volume = 5.3 million
Listed on July 12, 2012


Dollar General - DG - close: 53.74 change: -1.32

Stop Loss: 53.45
Target(s): 59.50
Current Option Gain/Loss: -68.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/18/12 update: I couldn't find any news to account for DG's relative weakness today. The stock tried to rally this morning and reversed into a sharp decline. Our stop loss was hit at $53.45.

- Suggested Positions -

Aug $55 call (DG1218H55) Entry $2.05 exit $0.65 (-68.2%)

07/18/12 stopped out
07/14/12 looking at DG's performance this past week, the breakout to new highs looks like a bull trap. readers may want to exit early

chart:

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


CLOSED BEARISH PLAYS

Salesforce.com - CRM - close: 134.90 change: +8.12

Stop Loss: 130.25
Target(s): 111.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/18/12 update: Yesterday shares of CRM looked poised to breakdown below key support and begin a new leg lower. Yet today's sharp rally in technology stocks has sparked a big bounce in CRM. The stock gapped open higher and surged +6.4%. CRM remains under resistance at the 50-dma but we are going to remove this stock as a candidate. It is unlikely that CRM will hit our breakdown trigger to buy puts at $124.45 any time soon.

Trigger @ 124.45

Trade did not open.

07/18/12 removed from the newsletter. trade did not open.

Annotated Chart:

Entry on July xx at $ xx.xx
Earnings Date 08/16/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on July 17, 2012


Illinois Tool Works - ITW - close: 52.74 change: +2.24

Stop Loss: 51.65
Target(s): 45.50
Current Option Gain/Loss: -60.5%
Time Frame: exit prior to the July 24th earnings report
New Positions: see below

Comments:
07/18/12 update: ITW exploded higher today and broke through multiple layers of resistance. I don't see the specific news that would account for this rally but it's probably a reaction to another company's earnings news. ITW didn't have that much short interest so the explosive move higher this morning is a surprise.

Our stop loss was hit at $51.65.

- Suggested Positions -

Aug $50 PUT (ITW1218T50) Entry $1.90 exit $0.75 (-60.5%)

07/18/12 stopped out at $51.65
07/12/12 triggered @ 49.75

chart:

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


Tractor Supply Co. - TSCO - close: 79.53 change: +0.96

Stop Loss: 84.15
Target(s): 76.00
Current Option Gain/Loss: +51.4%
Time Frame: exit prior to the July 25th earnings
New Positions: see below

Comments:
07/18/12 update: Target achieved.

It was a volatile day for TSCO. Shares spiked down and traded under their 300-dma before quickly bouncing back. Our exit target was hit at $76.00.

- Suggested Positions -

Aug $80 PUT (TSCO1218T80) Entry $3.50 exit $5.30 (+51.4%)

07/18/12 target hit at $76.00

chart:

Entry on July 16 at $81.14
Earnings Date 07/25/12 (confirmed)
Average Daily Volume = 1.0 million
Listed on July 14, 2012


WABCO Holdings - WBC - close: 50.62 change: +0.90

Stop Loss: 50.05
Target(s): 44.00 & 41.00
Current Option Gain/Loss: -54.0%
Time Frame: exit prior to the July 27th earnings report
New Positions: see below

Comments:
07/18/12 update: The rebound in WBC continues and shares rallied past the $50.00 mark hitting our stop at $50.05 along the way.

- Suggested Positions -

Aug $45 put (WBC1218T45) Entry $1.85 exit $0.75 (-59.4%)

07/18/12 stopped out
07/17/12 WBC is not cooperating. Readers may want to consider an early exit
07/12/12 triggered at $47.40

chart:

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