Editor's Note:

Stocks extended their gains on Tuesday with the major indices hitting new highs (again).

Our LL trade has been triggered.

AGU was stopped out. I have removed DEO and UFS for not cooperating.


Current Portfolio:


CALL Play Updates

The Boeing Co. - BA - close: 94.79 change: +0.60

Stop Loss: 92.40
Target(s): 99.00
Current Option Gain/Loss: + 9.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/07/13: BA rebounded from short-term support at $94.00 this morning and rallied to another new multi-year high. I don't see any changes from our prior comments although it is possible that $95.00 is round-number resistance. If BA pulls back look for additional support near the rising 10-dma.

- Suggested Positions -

Long Jun $95 call (BA1322F95) entry $2.02

Entry on May 06 at $94.25
Average Daily Volume = 4.9 million
Listed on May 04 2013


Lumber Liquidators - LL - close: 84.20 change: +0.30

Stop Loss: 79.45
Target(s): 89.50
Current Option Gain/Loss: -7.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/07/13: Our new trade on LL has been opened. We wanted to buy calls when LL rose to $84.10. The stock gapped open higher this morning at $84.35, immediately triggering our trade. The stock didn't make much progress after the gap open. Overall I don't see any changes from my prior comments.

Earlier Comments:
LLL had a lot of short interest prior to the report and the good news sparked a short squeeze. The most recent data listed short interest at 27% of the small 26.2 million share float but that number may be out of date. If triggered our short-term target is $89.50. I would keep our position size small to limit our risk.

*Small Positions* - Suggested Positions -

Long Jun $85 call (LL1322F85) entry $4.10

05/07/13 triggered on gap open higher

Entry on May 07 at $84.35
Average Daily Volume = 761 thousand
Listed on May 06 2013


L Brands, Inc. - LTD - close: 52.63 change: +1.65

Stop Loss: 50.40
Target(s): 54.50
Current Option Gain/Loss: +41.5%
Time Frame: Exit PRIOR to earnings in mid-May
New Positions: see below

Comments:
05/07/13: LTD displayed relative strength with a +3.2% gain and a rally to new all-time highs. I am adjusting our stop loss up to $50.40. Keep in mind we only have a couple of weeks, maybe less, before we need to exit prior to LTD's earnings report.

- Suggested Positions -

Long Jun $50 call (LTD1322F50) entry $2.26

05/07/13 new stop loss $ 50.40

Entry on May 03 at $50.85
Average Daily Volume = 2.7 million
Listed on April 27 2013


Ross Stores - ROST - close: 66.50 change: +1.30

Stop Loss: 64.15
Target(s): 69.00
Current Option Gain/Loss: +12.9%
Time Frame: exit prior to earnings in late May
New Positions: see below

Comments:
05/07/13: ROST was also showing relative strength today with a +1.99% gain and a bullish breakout past resistance near $66.00. I am not suggesting new positions.

- Suggested Positions -

Long Jun $67.50 call (ROST1322F67.5) entry $1.55

05/04/13 new stop loss @ 64.15
05/01/13 new stop loss @ 63.90

Entry on April 26 at $65.25
Average Daily Volume = 2.3 million
Listed on April 25 2013


PUT Play Updates

Amgen Inc. - AMGN - close: 104.46 change: -0.37

Stop Loss: 106.75
Target(s): 96.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
05/07/13: AMGN continues to underperform the market and posted a -0.3% decline. The stock looks poised to breakdown under short-term support soon. It is worth noting that AMGN might see another spike higher at the open tomorrow. Tonight after the closing bell AMGN announced positive results on its Vectibix Phase 3 study. Yet I'm not seeing any after hours rally in the stock so far.

Earlier Comments:
Last Tuesday's low was $103.85. More aggressive traders could buy puts now but I am suggesting a trigger to buy puts at $103.65. If triggered our target is $96.00. However, more conservative traders may want to exit near $100 since it's possible the $100 level could prove to be round-number support.

Trigger @ 103.65

- Suggested Positions -

buy the Jun $100 PUT (AMGN1322R100)

Entry on May -- at $---.--
Average Daily Volume = 1.4 million
Listed on April 30 2013


Expedia Inc. - EXPE - close: 57.07 change: -1.22

Stop Loss: 60.25
Target(s): 1st target: 55.10, 2nd target 53.00
Current Option Gain/Loss: +23.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/07/13: Our new EXPE trade is off to a good start. Shares fell -2.0% while the major indices hit new highs. I do want to caution readers that EXPE could be influenced by earnings results from rival Priceline.com (PCLN), who reports earnings on May 9th, after the closing bell.

Earlier Comments:
Please note I am listing two targets. Our conservative target is $55.10 since the $55 level has been support in the past. Our more aggressive target is $53.00. You choose which target you want to exit at. FYI: The Point & Figure chart for EXPE is bearish with a $55 target.

- Suggested Positions -

Long Jun $55 PUT (EXPE1322R55) entry $1.50

Entry on May 07 at $58.48
Average Daily Volume = 2.9 million
Listed on May 06 2013


Vertex Pharma. - VRTX - close: 76.40 change: -0.85

Stop Loss: 80.50
Target(s): 66.00
Current Option Gain/Loss: + 2.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/07/13: It is encouraging to see VRTX underperforming the market. Lack of follow through on yesterday's bounce is good news for the bears.

Earlier Comments:
The old 2012 highs were near $65.00. This could be new support. We will aim for $66.00.

- Suggested Positions -

Long Jun $75 PUT (VRTX1322R75) entry $3.60

Entry on May 02 at $76.30
Average Daily Volume = 3.8 million
Listed on May 01 2013



Longer-Term Play Updates



Chicago Bridge & Iron Co. - CBI - close: 56.50 change: +0.20

Stop Loss: 49.25
Target(s): 62.50
Current Option Gain/Loss: July's: +63.6% or Jan's: +37.9%
Time Frame: 3 to 4 months
New Positions: see below

Comments:
05/07/13: No change from my earlier comments.

Please review our original play description on this page here.

- Suggested Positions -

Long 2013 Jul $55 call (CBI1320G55) Entry $2.20*

- or -

Long 2014 Jan $60 call (CBI1418A60) Entry $2.90*

*option entry price is an estimate since the option did not trade at the time our play opened.

Entry on April 22 at $51.53
Average Daily Volume = 2.5 million
Listed on April 20 2013


CLOSED BULLISH PLAYS

Diageo Plc - DEO - close: 122.95 change: +0.40

Stop Loss: 121.45
Target(s): 129.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/07/13: DEO slipped lower this morning after news hit that after 13 years its CEO was retiring soon. Traders did buy the dip at $122 but we're still waiting on a rally past $124.00. The U.S. market is breaking out to new highs and DEO is not really participating. Of course DEO is a British company so I looked at the FTSE index and the FTSE is nearing multi-year highs set in February. Considering DEO's failure to follow the market higher we are removing it as an active candidate tonight. The long-term trend is still bullish. Patient investors might want to give DEO more time.

Trade did not open.

05/07/13 removed from the newsletter

chart:

Entry on May -- at $---.--
Average Daily Volume = 608 thousand
Listed on May 04 2013


CLOSED BEARISH PLAYS

Agrium Inc. - AGU - close: 91.05 change: +0.67

Stop Loss: 91.55
Target(s): 85.25
Current Option Gain/Loss: -34.6%
Time Frame: Exit prior to earnings on May 9th
New Positions: see below

Comments:
05/07/13: Our AGU trade has been stopped out. We were planning to exit positions today at the closing bell. Yet shares hit our new stop loss at $91.55 midday.

Earlier Comments:
We wanted to keep our position size small to limit our risk.

*Small Positions* - Suggested Positions -

May $90 PUT (AGU1318Q90) entry $2.45 exit $1.60 (-34.6%)

05/07/13 stopped out
05/06/13 new stop loss @ 91.55, exit tomorrow at the close
05/04/13 prepare to exit on May 7th at the closing bell

chart:

Entry on May 01 at $89.75
Average Daily Volume = 1.5 million
Listed on April 23 2013


Domtar Corp. - UFS - close: 70.16 change: +1.25

Stop Loss: 70.05
Target(s): 62.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/07/13: UFS is not cooperating. The stock rallied past its 10-dma and outperformed the major indices with a +1.8% gain. Our trade has not opened yet. I am removing UFS from the newsletter.

Trade did not open.

05/07/13 removed from the newsletter

chart:

Entry on May -- at $---.--
Average Daily Volume = 448 thousand
Listed on May 02 2013