Editor's Note:

The stock market bounced back from a weak open on Friday morning and the major U.S. indices closed at new highs.

SHPG has been triggered. ACN was closed Friday morning.
Prepare to exit our SPY play on Monday morning.


Current Portfolio:


CALL Play Updates

Capital One Financial - COF - close: 69.59 change: -0.11

Stop Loss: 68.25
Target(s): 74.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/03/13: Friday's session saw the major U.S. indices close at new highs. Yet COF is still struggling with resistance near the $70.00 level. We are waiting for a breakout higher.

We are suggesting a trigger to buy calls at $70.25. If triggered our target is $74.75.

Trigger @ 70.25

- Suggested Positions -

Buy the Sep $70 call (COF1321i70) current ask $1.85

chart:

Entry on August -- at $---.--
Average Daily Volume = 3.1 million
Listed on August 01, 2013


Johnson & Johnson - JNJ - close: 94.39 change: +0.62

Stop Loss: 92.75
Target(s): 98.00
Current Option Gain/Loss: Aug.call +52.5% & Sept.call: +37.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/03/13: Another day, another new high for shares of JNJ. The stock outperformed the market indices on Friday with a +0.6% gain. The simple 10-dma has risen to $93.05. We will adjust our stop loss up to $92.75.

- Suggested Positions -

Long Aug $92.50 call (JNJ1317H92.5) entry $1.37

- or -

Long Sep $95 call (JNJ1321i95) entry $0.82

08/03/13 new stop loss @ 92.75
08/01/13 new stop loss @ 92.35
07/31/13 new stop loss @ 91.90

chart:

Entry on July 29 at $93.05
Average Daily Volume = 9.0 million
Listed on July 27, 2013


Shire plc - SHPG - close: 111.77 change: +0.78

Stop Loss: 108.95
Target(s): 118.50
Current Option Gain/Loss: -15.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/03/13: We did not have to wait very long for our new SHPG trade to open. The stock gapped higher on Friday morning at $111.35 and quickly hit our entry trigger at $111.50. SHPG spent a good portion of the day hovering near the $112 level before finally starting to pare its gains by the close. If the S&P 500 opens positive on Monday we would still consider new positions now at current levels.

Earlier Comments:
SHPG is overbought at current levels but it can always grow more overbought. I would keep position size small to limit risk.

*small positions* - Suggested Positions -

Long Sep $115 call (SHPG1321i115) entry $2.60

chart:

Entry on August 02 at $111.50
Average Daily Volume = 347 thousand
Listed on August 01, 2013


Xilinx Inc. - XLNX - close: 46.51 change: -0.64

Stop Loss: 45.45
Target(s): 49.85
Current Option Gain/Loss: -21.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/03/13: Ouch! What happened to XLNX on Friday? The semiconductor sector underperformed on Friday but XLNX underperformed its peers with a -1.35% decline. I couldn't find any specific catalyst behind the move. Traders did buy the dip near $46.00. We are adjusting our stop loss to $45.45.

NOTE: XLNX will begin trading ex-dividend on Monday, August 5th. The cash dividend should be 25 cents a share. The stock will likely gap down by 25 cents at the open.

Earlier Comments:
I would keep our position size small since bears could argue that XLNX is overbought with a significant six-week rally already underway.

*small positions* - Suggested Positions -

Long Aug $46 call (XLNX1317H46) entry $1.06

08/03/13 new stop loss @ 45.45

chart:

Entry on July 31 at $46.65
Average Daily Volume = 3.5 million
Listed on July 25, 2013


PUT Play Updates

Illumina Inc. - ILMN - close: 77.28 change: -2.17

Stop Loss: 81.55
Target(s): 75.25
Current Option Gain/Loss: +12.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/03/13: ILMN continues to perform as expected. The stock is underperforming the market and on its way to filling the gap. I am not suggesting new positions. Our exit target is $75.25.

NOTE: Once ILMN fills the gap we can re-evaluate it for a potential bullish entry point.

*small positions* - Suggested Positions -

Long Sep $75 PUT (ILMN1321u75) entry $2.00

chart:

Entry on August 01 at $79.50
Average Daily Volume = 1.2 million
Listed on July 31, 2013


iShares Russell 2000 ETF - IWM - close: 105.16 change: +0.09

Stop Loss: 106.05
Target(s): 97.00
Current Option Gain/Loss: -36.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/03/13: Stocks were weak on Friday morning thanks to the jobs number but equities managed to fight their way back into positive territory. The Russell 2000 index and the IWM probably produced one of the most least inspiring rallies and barely managed another gain. Technically this is a new all-time high and more conservative traders will want to seriously consider an early exit immediately. We are not giving up on a pullback just yet. We're not suggesting new positions at this time.

- Suggested Positions -

Long Sep $100 PUT (IWM1321u100) Entry $1.48

08/03/13 readers may want to consider an early exit

chart:

Entry on July 30 at $103.69
Average Daily Volume = 31 million
Listed on July 29, 2013


SPDR S&P 500 ETF - SPY - close: 170.95 change: +0.29

Stop Loss: 172.75
Target(s): 165.25
Current Option Gain/Loss: -53.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/03/13: Traders bought the dip on Friday morning in the SPY near $170. This large-cap index managed to bounce back into positive territory and another record high. While we are keeping the IWM put play active we are suggesting an early exit for this SPY trade. The breakout past $170 is bullish. I'm suggesting an immediate exit on Monday morning for our SPY put.

- Suggested Positions -

Long Aug $170 PUT (SPY1317T170) entry $1.98

08/03/13 prepare to exit on Monday morning
07/24/13 trade opened with the SPY gapping higher at $169.79
07/23/13 adjust entry strategy. Do not wait for a trigger. Buy puts at the opening bell tomorrow.

chart:

Entry on July 24 at $169.79
Average Daily Volume = 123 million
Listed on July 22, 2013



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 59.84 change: -0.17

Stop Loss: 55.75
Target(s): 74.50
Current Option Gain/Loss: - 9.8%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
08/03/13: We remain cautious on our CBI trade. The action this past week has been somewhat bearish with multiple failures near the 50-dma and 10-dma. While earnings results were better than expected the company's outlook was probably too cautious. We are currently expecting the simple 100-dma to hold up as support. Traders bought the dip near this moving average back in April land again in June. I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

Long 2014 Jan $65 call (CBI1418A65) entry $2.55

07/20/13 new stop loss @ 55.75
06/29/13 CBI might be poised to dip into the $57-55 zone again.
06/24/13 triggered @ 56.75
06/22/13 adjust entry trigger to $56.75
06/15/13 entry strategy change: change the breakout trigger at $65.25 to a buy-the-dip trigger at $56.50. Adjust the stop loss to $53.75.
Adjust the option strike to the 2014 Jan. $65 call

chart:

Entry on June 24 at $56.75
Average Daily Volume = 1.8 million
Listed on June 01, 2013


CLOSED BEARISH PLAYS

Accenture Plc - ACN - close: 74.59 change: -0.26

Stop Loss: 75.21
Target(s): 70.25
Current Option Gain/Loss: -64.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/03/13: ACN has not been cooperating with us. We decided in Thursday's newsletter to exit positions on Friday morning. Shares did gap down on Friday morning at $74.34.

- Suggested Positions -

Aug $72.50 PUT (ACN1317T72.5) entry $0.85 exit $0.30 (-64.7%)

08/02/13 planned exit
08/01/13 prepare to exit tomorrow morning

chart:

Entry on July 24 at $73.80
Average Daily Volume = 4.9 million
Listed on July 23, 2013