Editor's Note:

The market's reaction to Ben Bernanke's speech on Friday was incredibly anti-climatic. I was really expecting to see some market movement. Maybe everyone left early for their Labor Day weekend holiday.

Shares of MDVN soared on news of an FDA approval for a new prostate cancer drug. The stock hit our exit target on Friday.

We are doing a little pruning and removing SNA and WLK as plays. Neither had opened yet.

Current Portfolio:


CALL Play Updates

Amgen Inc. - AMGN - close: 83.15 change: -0.57

Stop Loss: 82.40
Target(s): 88.50
Current Option Gain/Loss: Sep85c: -34.0% & Oct85c: -12.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/01/12: AMGN outperformed both the broader market and the biotech index with a +0.9% bounce on Friday. Today's high was $84.42. Readers may want to use a rise past $84.50 as a new entry point.

Thursday's low was $82.59. I am raising our stop loss to $82.40.

- Suggested Positions -

Long Sep $85 call (AMGN1222i85) Entry $1.35

- or -

Long Oct $85 call (AMGN1220j85) Entry $2.15

09/01/12 new stop loss @ 82.40
08/27/12 new stop loss @ 81.95
08/15/12 triggered at $83.75

chart:

Entry on August 15 at $83.75
Average Daily Volume = 4.8 million
Listed on August 14, 2012


BRCM - Broadcom - close: 35.53 change: +0.54

Stop Loss: 34.40
Target(s): 38.50
Current Option Gain/Loss: +11.1%
Time Frame: 4-6 weeks
New Positions: see below

Comments:
09/01/12: BRCM managed a bounce near the bottom of its $35-36 trading range. Bulls got some technical help from the simple 150-dma. BRCM remains under resistance near $36.00. At the moment the stock has an intermediate trend of higher lows.

I am not suggesting new positions at this time.

- Suggested Positions -

Position: Nov $36.00 Call (BRCM1217K36) entry $1.80

08/18/12 new stop loss @ 34.40
08/08/12 new stop loss @ 33.25
no follow through, turning cautious
08/07/12 triggered @ $34.75
08/06/12 adjust stop loss to $32.45

chart:

Entry on August 07 at $34.75
Average Daily Volume = 10 million
Earnings Oct-23rd
Listed on Aug 4, 2012


Celgene Corp. - CELG - close: 72.04 change: +1.21

Stop Loss: 70.45
Target(s): 77.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
09/01/12: A positive market environment allowed CELG to bounce back toward resistance near $72.00. The stock looks poised to breakout higher.

I am suggesting a trigger to buy calls at $72.75 with a stop loss at $70.45.

Trigger @ 72.75

- Suggested Positions -

buy the Sep $75 call (CELG1221i75) current ask $0.50

- or -

buy the Oct $75 call (CELG1220j75) current ask $1.43

chart:

Entry on August xx at $ xx.xx
Average Daily Volume = 2.9 million
Listed on August 25, 2012


Concur Technologies - CNQR - close: 72.40 change: +0.20

Stop Loss: 69.75
Target(s): 74.75
Current Option Gain/Loss: Sep75c: -12.0% & Nov75c: +11.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01/12: Aside from some volatility in the first hour of trading CNQR's Friday looked like the rest of the week - boring. The stock continues to churn on either side of the $72.00 level.

More conservative traders might want to consider a higher stop but I am expecting $70.00 to act as support.

I am not suggesting new positions at this time.

- Suggested Positions -

Long Sep $75 call (CNQR1222i75) Entry $1.25

- or -

Long Nov $75 call (CNQR1217j75) Entry $3.60

08/21/12 new stop loss @ 69.75
08/16/12 new stop loss @ 68.75
08/15/12 triggered at $70.25

chart:

Entry on August 15 at $70.25
Average Daily Volume = 577 thousand
Listed on August 13, 2012


Express Scripts - ESRX - close: 62.62 change: +0.89

Stop Loss: 59.75
Target(s): 67.50
Current Option Gain/Loss: Sep62.5c: +34.7% & Oct$62.5c: +27.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/01/12: ESRX tagged its all-time high set on August 9th this year with a +1.4% gain on Friday. Shares look ready to run with a bullish trend of higher lows but I would not launch positions with ESRX sitting just under its high, which is technically potential resistance.

FYI: The Point & Figure chart for ESRX is bullish with a $76 target.

- Suggested Positions -

Long Sep $62.50 call (ESRX1222i62.5) Entry $0.95

- or -

Long Oct $62.50 call (ESRX1220j62.5) Entry $1.67

chart:

Entry on August 24 at $61.31
Average Daily Volume = 5.1 million
Listed on August 23, 2012


Whole Foods Market, Inc. - WFM - close: 96.75 change: -0.29

Stop Loss: 94.75
Target(s): 104.50
Current Option Gain/Loss: Sep$100c: -40.6% & Oct$100c: -28.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/01/12: WFM's performance on Friday was also disappointing. The stock spent almost the entire week churning inside the $96-98 zone. Wednesday's high was $98.47. Readers may want to wait for a new advance past $98.50 before initiating positions.

Currently our stop is at $94.75. More conservative traders may want to tighten their stop further.

Earlier Comments:
Keep position size small to limit risk.

- Suggested *SMALL* Positions -

Long Sep $100 call (WFM1222i100) Entry $1.45

- or -

Long Oct $100 call (WFM1220j100) Entry $2.50

chart:

Entry on August 23 at $98.00
Average Daily Volume = 1.7 million
Listed on August 22, 2012


PUT Play Updates

CH Robinson Worldwide - CHRW - close: 56.61 change: +0.37

Stop Loss: 58.05
Target(s): 51.25
Current Option Gain/Loss: -16.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01/12: CHRW managed to outperform the major indices with a +0.6% gain on Friday. Yet the stock continues to trade under a bearish trend of lower highs (see chart). I would still consider new positions now or you could wait for a new drop under $56.00 as your entry point.

- Suggested *Small* Positions -

Long Oct $55 PUT (CHRW1220v55) entry $1.38

chart:

Entry on August 29 at $56.29
Average Daily Volume = 1.1 million
Listed on August 28, 2012


Cummins Inc. - CMI - close: 97.11 change: +1.37

Stop Loss: 100.55
Target(s): 92.50
Current Option Gain/Loss: + 5.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01/12: I cautioned readers that CMI might see a bounce near the $95.00 level. Shares rebounded +1.4% on Friday. We can look for overhead resistance near the $100 level. A bounce near $100 or a failed rally near this area can be used as a new entry point for puts.

Earlier Comments:
There is potential support at $95.00 and the 50-dma but we are aiming for $92.50.

- Suggested Positions -

Long Sep $95 PUT (CMI1222u95) Entry $1.70

08/28/12 new stop loss @ 100.55
08/28/12 trade opens with CMI gapping down at $98.28

chart:

Entry on August 28 at $98.28
Average Daily Volume = 2.3 million
Listed on August 27, 2012


Dril-Quip - DRQ - close: 70.04 change: +2.09

Stop Loss: 70.75
Target(s): 64.00
Current Option Gain/Loss: -40.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01/12: I warned readers that DRQ might fill the gap but Friday's bounce was a lot stronger than expected. The most recent data does not list a lot of short interest but Friday's move almost looks like a short squeeze. The close over the 50-dma is technically bullish. The rally did stop right at round-number resistance near $70.00. If there is any follow through higher next week we could see DRQ hit our stop loss at $70.75.

I would wait for a new drop under $69.50 before initiating new bearish positions.

The plan was to limit our risk by keeping our position size small.

- Suggested *Small* Positions -

Long Sep $70 PUT (DRQ1222u70) entry $3.30

chart:

Entry on August 30 at $68.40
Average Daily Volume = 425 thousand
Listed on August 29, 2012


FB - Facebook - close: 18.06 change: -1.03

Stop Loss: 19.15
Target(s): 17.00
Time Frame: 2-4 weeks
Current Option Gain/Loss: +44.8%
New Positions: see below

Comments:
09/01/12: Shares of FB continue to disappoint investors. The stock plunged to new lows with a -5.3% drop on Friday. This breakdown under support at $19.00 looks pretty ugly. Broken support should be new resistance so we are adjusting our stop loss down to $19.15.

Readers may want to exit now but we are aiming for $17.00 on FB.

NOTE: We are starting to hear more chatter about "attractive valuations" for FB. That may be true but a stock can always get "cheaper" especially one with another billion plus shares coming available in November. Personally, I do think FB could be a "buy" but that might be near $10.00 and could be months away. We'll have to wait and see.

Earlier Comments:
Facebook has turned into the stock everyone loves to hate. Facebook has 674 million shares outstanding as of Friday. On August 15th another 268 million shares will see their lockup expire and become available for trading. That is 40% additional shares. If you were an investor or employee and you watched your shares decline from $35 to $20 ahead of your lockup expiration you are probably just waiting for an opportunity to sell. Another factor is that taxes are due on the awarded shares regardless of whether they are sold. That means employees have a big tax bill and they have not been able to sell those shares to pay the taxes. That is an additional incentive to pull the trigger on at least part of their position on August 15th.

Facebook has hundreds of detractors and they seem to be racing each other trying to put a lower price target on the stock. Mark Hulbert was on CNBC on Friday with a $13.80 price target based on a bunch of different metrics.

Facebook also has the various lawsuits over the IPO including the valuation and the various claims made about users and revenue in the days leading up to the IPO. There are plenty of clouds and no real catalysts to pump up the stock.

Facebook said expenses grew by 60% in Q2 and they would grow faster in Q3/Q4. That means earnings will decline.

I am recommending a September option with plans to exit (some time) after the August 15th share lock up expiration.

Suggested Positions

current position: Sept $20 PUT (FB1222U20) entry $1.45

09/01/12 new stop loss @ 19.15
08/18/12 new stop loss @ 20.35, readers may want to take profits now
08/07/12 triggered @ 20.95
08/06/12 adjust entry trigger to $20.95

chart:

Entry on August 07 at $20.95
Average Daily Volume = 80.0 million
Listed on August 5, 2012


Weight Watchers Intl. - WTW - close: 47.77 change: +0.22

Stop Loss: 50.10
Target(s): 42.50
Current Option Gain/Loss: Sep47.5p: -24.3% & Oct45p: -18.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/01/12: WTW managed a bounce that was in-line with the major indices on Friday. Yet the overall trend for WTW remains bearish. I would still consider new positions now at current levels or nimble traders could try and launch positions near the 50-dma around $49.

- Suggested Positions -

Long Sep $47.50 PUT (WTW1222u47.5) Entry $1.85

- or -

Long Oct $45.00 PUT (WTW1220V45) Entry $1.85

08/28/12 new stop loss @ 50.10

chart:

Entry on August 24 at $48.21
Average Daily Volume = 929 thousand
Listed on August 23, 2012


CLOSED BULLISH PLAYS

Medivation, Inc. - MDVN - close: 104.86 change: +7.44

Stop Loss: 94.75
Target(s): 104.50
Current Option Gain/Loss: +42.5%
Time Frame: exit prior to Sept. 24th and the 2-for-1 split
New Positions: see below

Comments:
09/01/12: Target achieved!

It was a strong Friday for MDVN thanks to news that the F.D.A. had approved MDVN's prostrate cancer drug. The treatment, with labeled as Xtandi, was jointly developed with Astellas Pharma Inc., a Japanese company. According to Bloomberg, today's FDA approval could boost MDVN's sales by six-fold to $357 million next year.

The stock opened at $97.79 and slowly drifted toward $99.00 before being halted for news pending. Then in the last hour of trading MDVN reopened and shot higher toward $105.00. Our target was hit at $104.50.

- Suggested Positions -

Oct $105 call (MDVN1220j105) Entry $4.00* exit: $5.70** (+42.5%)

08/31/12 target hit at $104.50
**exit price is an estimate. option did not trade at time of our exit.
08/30/12 triggered @ 98.50
*entry price is an estimate. The option did not trade at the time our play opened.

chart:

Entry on August 30 at $98.50
Average Daily Volume = 360 thousand
Listed on August 29, 2012


Snap On Inc. - SNA - close: 69.42 change: +0.03

Stop Loss: 69.65
Target(s): 74.90
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01/12: A three-cent gain in SNA on Friday is disappointing. The stock is churning inside the $69-70 area. I am giving up on SNA for now. We can revisit the stock if shares breakout past $71.00.

Our trade did not open.

09/01/12 removed from the newsletter.

chart:

Entry on August xx at $ xx.xx
Average Daily Volume = 390 thousand
Listed on August 21, 2012


Westlake Chemical - WLK - close: 68.78 change: +0.42

Stop Loss: 68.40
Target(s): 74.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/01/12: WLK continues to churn under resistance at the $70.00 level. We are going to drop our play on WLK. Our trade has not opened yet. Readers may want to keep an eye on this stock for a bullish breakout past $70.00.

Trade did not open.

09/01/12 removed from the newsletter.

chart:

Entry on August xx at $ xx.xx
Average Daily Volume = 507 thousand
Listed on August 22, 2012