Editor's Note:

The stock market continued to sink on Monday but pared its losses off the morning lows.

COST was stopped out.

We have removed PETM and PCYC. Neither trade has opened.

ATK was triggered.

Current Portfolio:


CALL Play Updates

Mohawk Industries - MHK - close: 71.28 change: -1.27

Stop Loss: 69.75
Target(s): 78.50
Current Option Gain/Loss: -17.6%
Time Frame: exit prior to the Aug. 2nd earnings
New Positions: see below

Comments:
07/23/12 update: MHK offered us a new entry point today. Over the weekend I suggested readers wait for a dip into the $71.00-70.50 zone before initiating new positions. The stock opened at $70.98 and dipped to $70.48 before bouncing. I would still consider new positions here but you might want to use a condition that both MHK and the S&P 500 have to be positive at the open before launching positions.

There is potential resistance at the May highs (near $75.00) but we're aiming for $78.50. FYI: The Point & Figure chart for MHK is bullish with an $85 target.

- Suggested Positions -

Long Aug $75 call (MHK1218H75) Entry $1.70

Entry on July 20 at $72.07
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 408 thousand
Listed on July 19, 2012


PUT Play Updates

Alliant Techsystems - ATK - close: 45.31 change: -0.40

Stop Loss: 46.25
Target(s): 40.50
Current Option Gain/Loss: -17.6%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
07/23/12 update: Our new put play on ATK has been triggered. Shares fell to a new multi-year low and hit our entry point to buy puts at $44.75. I would still consider new positions now or you can wait for a new drop back under $45.00 to open plays.

FYI: The Point & Figure chart for ATK is bearish with a $35 target.

- Suggested Positions -

Long Aug $45 PUT (ATK1218T45) Entry $1.70

07/23/12 triggered @ 44.75

Entry on July 23 at $44.75
Earnings Date 08/02/12 (unconfirmed)
Average Daily Volume = 261 thousand
Listed on July 21, 2012


SINA Corp. - SINA - close: 44.56 change: -0.57

Stop Loss: 47.60
Target(s): 40.50
Current Option Gain/Loss: -10.7%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
07/23/12 update: SINA gapped open lower at $43.99 and then bounced off the morning low before settling with a -1.2% decline. The intraday rebound was just enough to fill the gap down form this morning. I would still consider new positions now at current levels. However, readers may want to wait until midday tomorrow. BIDU reported earnings after the closing bell tonight and the stock is up on the news. BIDU's report is also lifting shares of SINA, currently around $45.50 after hours tonight.

- Suggested Positions -

Long Aug $42.50 PUT (SINA1218T42.5) Entry $2.71

Entry on July 23 at $43.99
Earnings Date 08/16/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on July 21, 2012


CLOSED BULLISH PLAYS

Costco Wholesale - COST - close: 94.39 change: -1.22

Stop Loss: 93.95
Target(s): 99.75
Current Option Gain/Loss: -67.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/23/12 update: The market's Monday morning sell-off was enough to push COST toward short-term support near $94 and its 20-dma. Our stop loss was hit at $93.95 on an intraday dip below this level.

- Suggested *SMALL* Positions -

AUG $97.50 call (COST1218H97.5) Entry $0.96 exit $0.31 (-67.7%)

07/23/12 stopped out at $93.95

chart:

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: 67.28 change: -1.59

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: see below

Comments:
07/23/12 update: PETM continues to sink. Shares broke short-term support near $68 and its 30-dma with today's -2.3% decline. We are removing PETM as a bullish candidate. Our trade never opened.

Trigger was $70.25.

Our trade never opened.

07/23/12 removed from the newsletter. Our trade did not open.

chart:

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


CLOSED BEARISH PLAYS

Pharmacyclics Inc. - PCYC - close: 49.50 change: -0.49

Stop Loss: 51.05
Target(s): 45.05
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/23/12 update: The stock market has fallen sharply two days in a row. Yet PCYC continues to hover just under the $50.00 level. We've been waiting for the stock to hit our trigger at $48.40 but it hasn't happened yet. If PCYC isn't going to drop now, with the market declining, then when is it going to drop?

We are giving up on PCYC. More aggressive traders may want to give it more time.

Trigger @ 48.40

Our trade did not open.

07/23/12 removed. Our trade did not open.

chart:

Entry on July xx at $ xx.xx
Earnings Date 09/12/12 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on July 19, 2012