Editor's Note:

Our current portfolio of plays is getting slim thanks to earnings season. In the last few days we have had a number of stocks either hit our exit target or get stopped out. We try to avoid holding positions over an earnings report and that has made adding new candidates a challenge. However, that will change soon as we move deeper into earnings season with more and more companies reporting.

Today we had CVS, FLIR, FOSL, and JCP all hit our stops. JOY was removed. I am suggesting an early exit to lock in profits on WLK.

Current Portfolio:


CALL Play Updates

Costco Wholesale - COST - close: 95.95 change: -0.01

Stop Loss: 93.95
Target(s): 99.75
Current Option Gain/Loss: -11.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/19/12 update: COST churned sideways with traders buying the intraday dip near $95.00. The stock closed virtually unchanged. Readers may want to wait for a new high over $96.50 before initiating positions.

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


PetSmart, Inc. - PETM - close: 69.55 change: +0.01

Stop Loss: 67.75
Target(s): 74.75
Current Option Gain/Loss: Unopened
Time Frame: exit prior to the mid August earnings report
New Positions: Yes, see below

Comments:
07/19/12 update: PETM also spent the day consolidating sideways and closed almost unchanged on the session. We are waiting for a breakout past resistance at $70.00.

I am suggesting a trigger to buy calls at $70.25. Our target is $74.75.

Trigger @ 70.25

- Suggested Positions -

Buy the Aug $70 call (PETM1218H70)

Entry on July xx at $ xx.xx
Earnings Date 08/15/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on July 18, 2012


Westlake Chemical Corp. - WLK - close: 58.79 change: +0.50

Stop Loss: 52.35
Target(s): 62.00
Current Option Gain/Loss: +78.5%
Time Frame: exit prior to earnings on August 2nd
New Positions: see below

Comments:
07/19/12 update: WLK continues to march higher although the rally did start to stall once shares neared overhead resistance at $60.00. The high today was $59.69.

We are going to take a cautious approach here and exit positions at the open tomorrow morning to lock in gains. The current bid on our call is $2.00 (+78.5%).

- Suggested Positions -

Long Aug $60 call (WLK1218H60) Entry $1.12

07/19/12 prepare to exit at the open tomorrow
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



Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

CVS Caremark Corp. - CVS - close: 45.43 change: -3.02

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:
07/19/12 update: It was not a good day for shares of CVS. The company's rival, Walgreens (WAG) finally settled a long-running dispute with drug plan manager Express Scripts (ESRX). CVS has been the beneficiary of this quarrel, gaining business while WAG and ESRX argued over contracts. Today's news of a multi-year deal between WAG and ESRX definitely knocked shares of CVS for a loss. The stock (CVS) opened lower at $45.98 and closed under what should have been support near $46.00 and managed to hold the 100-dma (for now).

We had a stop loss at $46.75 but the gap open lower immediately closed our trade.

- Suggested Positions -

Aug $50 call (CVS1218H50) Entry $0.47 exit $0.21 (-55.3%)

07/19/12 stopped out on gap open lower at $45.98
07/17/12 triggered @ 48.40

chart:

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


CLOSED BEARISH PLAYS

FLIR Systems - FLIR - close: 19.47 change: +0.32

Stop Loss: 19.45
Target(s): 17.05
Current Option Gain/Loss:(Jul20p: +42.1%) & Aug19p: -38.4%
Time Frame: exit prior to the late July earnings report
New Positions: see below

Comments:
07/19/12 update: I cautioned readers yesterday that FLIR would likely hit our stop loss at $19.45 if there was any follow through higher on yesterday's rally. Sure enough, the stock continued to inch higher and added another +1.6%. Our stop was hit.

- Suggested Positions -

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

- or -

Aug $19 PUT (FLIR1218T19) Entry $0.65 exit $0.40 (-38.4%)

07/19/12 stopped out at $19.45
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.

chart:

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: 72.15 change: +4.05

Stop Loss: 70.05
Target(s): 60.50
Current Option Gain/Loss: -46.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/19/12 update: It looks like bulls have the bears on the run. FOSL broke through short-term resistance at $68 and at $70.00 and now FOSL is testing its 50-dma. Our stop loss was hit at $70.05. Yesterday I cautioned readers that FOSL wasn't cooperating and that readers should consider an early exit.

- Suggested Positions -

Aug $60 PUT (FOSL1218T60) Entry $2.60 exit $1.40 (-46.1%)
07/19/12 stopped out at $70.05
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.

chart:

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: 20.66 change: +0.95

Stop Loss: 21.35
Target(s): 19.50, 15.50
Current Option Gain/Loss: -10.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/19/12 update: Influential investor Bull Ackman issued bullish comments on JCP today and they sparked some short covering in the stock. JCP gapped open higher near $20.00 and then spiked toward $21.50 before paring its gains. Our stop loss was hit at $21.35.

- Suggested Positions -

Aug $20 PUT (JCP1218T20) Entry $1.20 exit $1.07 (-10.8%)

07/19/12 JCP hit our stop at $21.35
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

chart:

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: 52.90 change: +1.07

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:
07/19/12 update: JOY is not cooperating. Our plan was to buy puts as JOY continued lower. Yet shares have managed to bounce instead. The larger trend is still down and I would not consider bullish traders until we saw JOY close over technical resistance at its 50-dma.

We are choosing to drop JOY as a candidate for now.

Trigger @ 48.49

Our trade did not open.

07/19/12 removed. Trade did not open.

chart:

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