Editor's Note:

The better than expected ISM services report this morning failed to lift stocks after last week's breakout to new highs.

SRCL has been triggered. SPY was closed at the open.


Current Portfolio:


CALL Play Updates

Capital One Financial - COF - close: 69.50 change: -0.09

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:
08/05/13: COF produced a very quiet session on Monday with shares drifting sideways in a narrow range. 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 $1.76

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


Costco Wholesale - COST - close: 120.07 change: +0.70

Stop Loss: 117.90
Target(s): 124.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
08/05/13: Bullish analyst comments helped COST outperform the broader market on Monday. Shares are flirting with a breakout past the $120.00 level yet the high today was only $120.20.

We are suggesting a trigger to buy calls at $120.25. If triggered our target is $124.75.

NOTE: COST is due to begin trading ex-dividend on August 7th. The dividend should be 31 cents.

Trigger @ 120.25

- Suggested Positions -

buy the Sep $120 call (COST1321i120) current ask $2.40

Entry on August -- at $---.--
Average Daily Volume = 1.4 million
Listed on August 03, 2013


Johnson & Johnson - JNJ - close: 93.80 change: -0.59

Stop Loss: 92.75
Target(s): 98.00
Current Option Gain/Loss: Aug.call +18.2% & Sept.call: + 2.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/05/13: JNJ gave back most of Friday's gains with some profit taking on Monday. Shares are still respecting short-term support at the rising 10-dma for now.

- 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

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


Shire plc - SHPG - close: 110.45 change: -1.32

Stop Loss: 108.95
Target(s): 118.50
Current Option Gain/Loss: -30.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/05/13: After hitting new highs on Friday SHPG saw some profit taking Monday. Shares underperformed the market with a -1.1% decline but traders did buy the dip this afternoon near the $110 level. More conservative traders may want to raise their stop loss.

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

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


Stericycle, Inc. - SRCL - close: 117.38 change: +0.19

Stop Loss: 115.95
Target(s): 124.00
Current Option Gain/Loss: -18.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
08/05/13: SRCL continued to drift higher today and shares hit our suggested entry point to buy calls at $117.35. I do not see any changes from our weekend comments on this play.

Earlier Comments:
We suspect that SRCL will not only retest its highs but breakout past the $120 level. If triggered our target is $124.00. I do expect some resistance and a pullback near $120 but we have a four to six week time frame.

- Suggested Positions -

Long Sep $120 call (SRCL1321i120) entry $1.85

Entry on August 05 at $117.35
Average Daily Volume = 334 thousand
Listed on August 03, 2013


United Technologies - UTX - close: 106.64 change: -1.13

Stop Loss: 104.90
Target(s): 109.85
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/05/13: UTX produced a dip right on cue. Yet the low today was only $106.60. We are suggesting traders buy calls on a dip at $106.50. Odds are good that UTX will hit that entry point tomorrow. More nimble traders may want to wait and see if UTX dips as low as $106.00 before jumping in.

Our initial target is $109.85 but we will adjust the target as the play progresses.

FYI: UTX will begin trading ex-dividend on August 14th. The quarterly dividend should be 53.5 cents.

Buy the dip trigger @ $106.50

- Suggested Positions -

Buy the Sep $110 call (UTX1321i110) current ask $0.84

Entry on August -- at $---.--
Average Daily Volume = 3.2 million
Listed on August 03, 2013


Xilinx Inc. - XLNX - close: 46.13 change: -0.38

Stop Loss: 45.45
Target(s): 49.85
Current Option Gain/Loss: -33.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/05/13: XLNX spent most of the session hugging the $46.00 level. If there is any follow through lower then we'll likely see XLNX hit our stop loss at $45.45. I am not suggesting new positions at this time.

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

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: 78.37 change: +1.09

Stop Loss: 81.55
Target(s): 75.25
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/05/13: After a multi-day decline ILMN bucked the market's malaise today and produced a bounce (+1.4%). Readers may want to adjust their stop so it's closer to the $80.00 level. 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

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


iShares Russell 2000 ETF - IWM - close: 105.52 change: +0.36

Stop Loss: 106.05
Target(s): 97.00
Current Option Gain/Loss: -46.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/05/13: IWM is not cooperating with us. The small cap ETF outperformed the S&P 500 and the Dow Industrials with a +0.3% gain and another new all-time high. I am not suggesting new positions and traders will want to seriously consider an early exit now.

- Suggested Positions -

Long Sep $100 PUT (IWM1321u100) Entry $1.48

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

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



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 60.10 change: +0.26

Stop Loss: 55.75
Target(s): 74.50
Current Option Gain/Loss: -11.7%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
08/05/13: CBI produced a very quiet day with shares hovering just below $60.00. Then in the last few minutes the stock spiked higher.

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

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


CLOSED BEARISH PLAYS

SPDR S&P 500 ETF - SPY - close: 170.70 change: -0.25

Stop Loss: 172.75
Target(s): 165.25
Current Option Gain/Loss: -50.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/05/13: After last week's bullish breakout past resistance at the $170.00 level we decided to close our SPY trade early. The plan was to exit at the opening bell this morning. The ETF opened at $170.57. The option opened slightly higher.

- Suggested Positions -

Aug $170 PUT (SPY1317T170) entry $1.98 exit $0.98 (-50.5%)

08/05/13 scheduled exit
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