Editor's Note:

The U.S. market ended a three-day decline but gains were mild on Thursday. The initial rally failed but traders bought the dip and equities climbed back into the green by the closing bell.

COST has been removed. JNJ was stopped out.
UA was triggered.


Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 116.80 change: +0.59

Stop Loss: 113.95
Target(s): 119.75
Current Option Gain/Loss: - 11.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/08/13: BCR continues to inch higher and today shares were trying to rally past the $117.00 level.

- Suggested Positions -

Long Sep $120 call (BCR1321i120) entry $0.90

Entry on August 06 at $116.25
Average Daily Volume = 475 thousand
Listed on August 05, 2013


Lockheed Martin Corp. - LMT - close: 124.64 change: +0.10

Stop Loss: 123.45
Target(s): 129.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/08/13: LMT tested the $125.00 level multiple times today. Shares are still slowly drifting higher and LMT does look poised to breakout past this level.

After the market's close, on CNBC's Fast Money program, Carter Worth, who is the chief market technician at Oppenheimer & Co., had some interesting things to say about the defense stocks. Carter illustrated that the defense stocks have been outperforming the market. As a matter off fact Carter suggested that the defense stocks have done so well that they are now extremely overbought. He compared where they are now to their long-term 150-day moving average. According to his research the group has only been this over-bought (extremely high above their long-term moving average) something like 14 times ever and every time there was little upside and the group was closer to a top.

I certainly agree with Carter that the group and shares of LMT are overbought and extended. That's why we labeled this a momentum trade and suggested small bullish positions to limit our risk. It's worth noting that in spite of his concerns LMT did not show any weakness during the market's recent dip. Eventually the group will see a correction and because they are overbought the correction will be very sharp and painful. Until then the trend is up.

Traders may want to reduce their position size even smaller than normal and/or use a tighter stop loss to reduce your risk.

Earlier Comments:
LMT is currently hovering just below the $125.00 level. A breakout could keep the momentum going toward $130. We are suggesting small bullish positions if LMT can trade at $125.25. If triggered our target is $129.75.

Trigger @ 125.25 *small positions*

- Suggested Positions -

buy the Sep $125 call (LMT1321i125) current ask $2.15

Entry on August -- at $---.--
Average Daily Volume = 1.6 million
Listed on August 07, 2013


Polaris Industries - PII - close: 113.49 change: +0.82

Stop Loss: 113.40
Target(s): 119.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/08/13: PII managed a bounce off its rising 10-dma. We're still waiting for a breakout higher.

We are suggesting a trigger to buy calls at $116.25. If triggered our target is $119.75.

Trigger @ 116.25

- Suggested Positions -

Buy the Sep $120 call (PII1321i120)

Entry on August -- at $---.--
Average Daily Volume = 829 thousand
Listed on August 06, 2013


Shire plc - SHPG - close: 111.03 change: +0.74

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:
08/08/13: SHPG bounced to the top of its new short-term trading range near the $111 level. Readers may want to consider new positions on a rally past today's high (111.14).

Earlier Comments:
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


Under Armour, Inc. - UA - close: 71.98 change: +2.48

Stop Loss: 68.45
Target(s): 74.75
Current Option Gain/Loss: +24.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/08/13: UA started off slow this morning but after about an hour of trading the stock just took off higher. UA displayed relative strength with a +3.5% gain and a new all-time high. Our trigger to buy calls was hit at $70.50.

- Suggested Positions -

Long Sep $72.50 call (UA1321i72.5) entry $1.85

Entry on August 08 at $70.50
Average Daily Volume = 1.3 million
Listed on August 06, 2013


United Technologies - UTX - close: 106.26 change: +0.23

Stop Loss: 103.45
Target(s): 109.75
Current Option Gain/Loss: +12.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/08/13: It was a bit of a choppy session for shares of UTX. Shares managed to eke out a gain but they underperformed the S&P 500. I am not suggesting new positions at this time. More conservative traders may want to use a tighter stop.

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

*small positions* - Suggested Positions -

Long Sep $105 call (UTX1321i105) entry $2.40

Entry on August 07 at $105.55
Average Daily Volume = 3.2 million
Listed on August 03, 2013


PUT Play Updates

Illumina Inc. - ILMN - close: 78.29 change: -0.26

Stop Loss: 80.25
Target(s): 75.25
Current Option Gain/Loss: - 5.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/08/13: ILMN underperformed the market today with a -0.3% decline. Yet shares still managed to find support at its rising 20-dma. I am not suggesting new positions at this time.

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

08/06/13 new stop loss @ 80.25

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


iShares Russell 2000 ETF - IWM - close: 104.15 change: +0.43

Stop Loss: 106.05
Target(s): 97.00
Current Option Gain/Loss: -28.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/08/13: The stock market's initial morning spike higher faded but traders bought the dip midday. Overall the session really didn't tell us much and stocks could go either way here. I am not suggesting new bearish 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

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: 59.66 change: +0.49

Stop Loss: 55.75
Target(s): 74.50
Current Option Gain/Loss: -17.6%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
08/08/13: CBI's bounce on Thursday outperformed the S&P 500. Yet shares remain below a two-week trend of lower highs.

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 BULLISH PLAYS

Costco Wholesale - COST - close: 117.39 change: -1.95

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

Comments:
08/08/13: COST reported disappointing same-store sales and the stock spiked lower this morning. Shares fell from $119.34 to $116.08 pretty quickly. Traders did buy the dip near $116 but short-term upward momentum looks broken.

Our trade has not opened yet with our suggested trigger at $120.25. Tonight we are removing COST as a candidate. I would keep COST on your watch list. A dip or a bounce near $115 or its 50-dma might be an alternative bullish entry point.

Trade did not open.

08/08/13 removed from the newsletter

chart:

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


Johnson & Johnson - JNJ - close: 93.34 change: -0.32

Stop Loss: 92.75
Target(s): 98.00
Current Option Gain/Loss: Aug.call -43.0% & Sept.call: -34.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/08/13: Our JNJ trade has been stopped out. The last few days have seen JNJ quietly consolidate sideways pretty much ignoring the market weakness. We thought JNJ might be able to escape the market's pullback without any real pain. Then this morning shares spiked higher only to immediately reverse lower. The stock broke down under short-term support at its 10-dma and eventually it our stop loss at $92.75 before paring its losses.

- Suggested Positions -

Aug $92.50 call (JNJ1317H92.5) entry $1.37 exit $0.78 (-43.0%)

- or -

Sep $95 call (JNJ1321i95) entry $0.82 exit $0.54 (-34.1%)

08/08/13 stopped out
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