Editor's Note:

The stock market's Tuesday morning rally faded on Syria worries. Yet traders were starting to buy the dip late Tuesday afternoon.

DO was triggered. MAN was stopped out.


Current Portfolio:


CALL Play Updates

Sturm, Ruger & Co. Inc. - RGR - close: 52.07 change: -0.30

Stop Loss: 49.95
Target(s): 57.50
Current Option Gain/Loss: -27.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/03/13: It was a down day for RGR. The stock failed near technical support near its 20-dma for the third time in four sessions. Shares underperformed the broader market with a -0.5% decline.

I am not suggesting new positions at this time. We'll wait and see if RGR dips toward its simple 50-dma.

Earlier Comments:
If this rally continues it could spark a short squeeze. The most recent data listed short interest at 30% of the very small 18.8 million share float.

- Suggested Positions -

Long Oct $55 call (RGR1319j55) entry $1.24

08/28/13 trade opened on gap higher at $53.45. Trigger was 52.65

Entry on August 28 at $53.45
Average Daily Volume = 341 thousand
Listed on August 27, 2013


PUT Play Updates

Diamond Offshore Drilling - DO - close: 63.46 change: -0.57

Stop Loss: 66.01
Target(s): 57.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/03/13: Shares of DO opened higher this morning but the rally attempt failed near its descending 10-dma. The stock reversed to close down -0.89%, underperforming the market. DO's decline today also broke down below support near $64.00 and hit our suggested entry point to buy puts at $63.75.

Earlier Comments:
If triggered our target is the $57.50 level. I would not be surprised to see a temporary bounce near the $60.00 mark.

- Suggested Positions -

Long Oct $60 PUT (DO1319v60) entry $0.85

Entry on September 03 at $63.75
Average Daily Volume = 1.0 million
Listed on August 28, 2013


DaVita HealthCare - DVA - close: 108.59 change: +1.08

Stop Loss: 110.51
Target(s): 105.25
Current Option Gain/Loss: + 18.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03/13: DVA gapped open higher this morning. Shares spent most of the day churning sideways inside the $108-109 zone. Traders might want to adjust their stop loss closer to the $110 level or the 10-dma.

Keep in mind that we'll most likely close this trade before next Friday to avoid holding over the stock split.

Earlier Comments:
Our short-term target is $105.25. More aggressive traders could aim lower since the Point & Figure chart for DVA is bearish with a $96 target.

FYI: Investors should note that DVA does have a 2-for-1 split coming up on September 9th.

- Suggested Positions -

Long Sep $110 PUT (DVA1321u110) entry $2.20*

08/29/13 new stop loss @ 110.51
08/27/13 trade opens on gap down at $109.95
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on August 27 at $109.95
Average Daily Volume = 833 thousand
Listed on August 26, 2013


eBay Inc. - EBAY - close: 50.32 change: +0.33

Stop Loss: 51.75
Target(s): 46.00
Current Option Gain/Loss: -27.4%
Time Frame: exit PRIOR to September option expiration
New Positions: see below

Comments:
09/03/13: EBAY bounced this morning but it's rebound failed near short-term technical resistance at its 10-dma. The gains faded and shares settled with a +0.6% gain (or about one third of Friday's decline). I would wait for a new drop under $50.00 or under $49.60 before considering new bearish positions.

Earlier Comments:
Our target is $46.00. More aggressive traders may want to aim lower.

NOTE: We are listing the September puts, which expire in less than four weeks. You might want to play the Octobers instead.

- Suggested Positions -

Long Sep $50 PUT (EBAY1321u50) entry $1.35

Entry on August 30 at $49.75
Average Daily Volume = 8.2 million
Listed on August 28, 2013


iShares Russell 2000 ETF - IWM - close: 101.06 change: +0.68

Stop Loss: 103.25
Target(s): 99.00
Current Option Gain/Loss: - 8.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
09/03/13: Global markets bounced on Monday and the small cap ETF reacted on Tuesday morning by spiking higher. Yet the rebound stalled and reversed near last Thursday's highs. By the closing bell the IWM had pared its gains to +0.6%.

Keep in mind that we have less than three weeks left on our September puts.

- Suggested Positions -

Long Sep $100 PUT (IWM1321u100) Entry $1.48

08/31/13 new stop loss @ 103.25
08/27/13 adjust exit target to $99.00
08/24/13 new stop loss @ 105.25
08/19/13 new stop loss @ 104.25
08/15/13 adjust exit target from $97.00 to $98.50
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


Polaris Industries - PII - close: 109.86 change: +0.65

Stop Loss: 112.05
Target(s): 101.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
09/03/13: PII's early gains faded. The stock actually hit a new relative low this afternoon but PII bounced at $108.68. Thus our trade is not open yet. The suggested entry point to buy puts is at $108.65.

Earlier Comments:
Upward momentum stalled in August and shares have begun to correct lower. PII tried to find support near $110 but the bounce just failed near $112. Now PII is breaking down to new four-week lows and we suspect shares could see a correction toward round-number, psychological support near $100.

I am suggesting a trigger to buy puts at $108.65. If triggered our target is $101.00.

Trigger @ 108.65

- Suggested Positions -

buy the Oct $105 PUT (PII1319v105) current ask $2.05

Entry on September -- at $---.--
Average Daily Volume = 535 thousand
Listed on August 31, 2013


Red Robin Gourmet Burgers Inc. - RRGB - close: 66.42 change: +1.56

Stop Loss: 66.75
Target(s): 60.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
09/03/13: RRGB is not cooperating. The stock erased Friday's losses (almost exactly) with a strong bounce today. Yet RRGB failed to breakout back above its simple 10-dma. If shares continue to bounce we will likely drop RRGB as a bearish candidate. For the moment, our plan is unchanged.

Earlier Comments:
RRGB's longer-term trend is still higher. We're just trying to capture a correction back toward likely support near $60.00 and its 50-dma.

Friday's low was $64.74. I am suggesting a trigger at $64.65. Our target is $60.25.

Trigger @ 64.65

- Suggested Positions -

Buy the Oct $60 PUT (RRGB1319v60)

Entry on September -- at $---.--
Average Daily Volume = 152 thousand
Listed on August 31, 2013


Sherwin-Williams Co. - SHW - close: 171.08 change: -1.32

Stop Loss: 176.05
Target(s): sell half at 161.00, then exit the rest at $156.00
Current Option Gain/Loss: Sep165p: +45.4% & Oct165p: +12.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03/13: SHW displayed some volatility this morning. The stock spiked higher but the rally reversed at resistance near $175.00 and some moving averages. Shares eventually underperformed the broader market with a -0.7% gain. Our new plan was to buy puts at the opening bell today. The small gap higher actually helped our entry point with the put options opening lower.

Earlier Comments:
SHW's long-term up trend is in serious jeopardy. The Point & Figure chart has turned bearish and is forecasting a $136 target.

I am suggesting we plan on exiting half of our position at $161.00. We'll plan on exiting the remain of our position at $156.00.

- Suggested Positions -

Buy the Sep $165 PUT (SHW1321u165) entry $1.10

- or -

Buy the Oct $165 PUT (SHW1319v165) entry $3.20

09/03/13 trade opened this morning (SHW @ 172.92)
08/31/13 entry point strategy change: buy puts now following Friday's intraday reversal.
Adjust the stop loss to $176.05
Adjust the option strike from Sep $160 to 165 put.
Previous plan was an entry trigger at $165.90.

Entry on September 03 at $172.92
Average Daily Volume = 781 thousand
Listed on August 27, 2013


Time Warner Cable - TWC - close: 109.25 change: +1.90

Stop Loss: 110.55
Target(s): 105.00
Current Option Gain/Loss: -48.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03/13: TWC and CBS were making headlines today as the two companies came together on a content agreement after more than a month of bickering that produced a blackout for millions of cable subscribers. News of an agreement produced a spike higher on both stocks and TWC was up +2.4% at its best levels of the day. Yet the rebound in TWC failed at resistance near $110.

On a short-term basis today's close above the 10-dma is bullish and more conservative traders may want to abandon ship immediately to cut their losses. We're not suggesting new positions at this time.

Earlier Comments:
We do want to keep our position size small. There is potential support at $108.00. The next level of support is $104.00. If we are triggered at $109.50, our target is $105.00.

- Suggested Positions -

Long Sep $105 PUT (TWC1321u105) entry $2.35

09/03/13 readers may want to exit early now. News of an agreement with CBS sparked a bounce in TWC.
08/29/13 new stop loss @ 110.55

Entry on August 16 at $109.50
Average Daily Volume = 2.3 million
Listed on August 15, 2013



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 60.45 change: +0.62

Stop Loss: 55.75
Target(s): 74.50
Current Option Gain/Loss: -23.5%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
09/03/13: CBI bounced with +1.0% gain, which was enough to outperform the major indices. Shares are still consolidating sideways and the range seems to be narrowing, which should suggest a breakout, one way or the other, is coming soon. 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


Vanguard FTSE Europe ETF - VGK - close: 51.78 change: +0.74

Stop Loss: 51.25
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to 2013 December option expiration
New Positions: Yes, see below

Comments:
09/03/13: Global markets bounced on Monday. The VGK gapped open higher this morning in response. Yet gains faded by the closing bell. We are still in a wait and see mode.

Earlier Comments:
We are taking a multi-month time frame with this trade. I am suggesting we wait for the VGK to close above $53.50 and then buy calls the next morning. If we are triggered our target is $58.50 but we'll adjust it as the trade progresses.

FYI: The Point & Figure chart for VGK is bullish with a $63 target.

Trigger: Wait for a close above $53.50,
then buy calls the next morning.

- Suggested Positions -

Buy the 2014 Mar $55 call (VGK1422L55)

08/24/13 adjust the option strike from 2013 Dec $55 to $2014 Mar $55.

Entry on August -- at $---.--
Average Daily Volume = 3.0 million
Listed on August 10, 2013


CLOSED BEARISH PLAYS

ManpowerGroup Inc. - MAN - close: 66.65 change: +1.80

Stop Loss: 67.05
Target(s): 61.00
Current Option Gain/Loss: -50.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
09/03/13: Shares of MAN gapped open higher this morning at $65.82. The rally continued with MAN pushing past short-term resistance near $67.00 and its 20 and 30-dma before paring its gains. The stock still outperformed the major indices with a +2.7% gain today. I didn't see any specific headlines behind today's move. Our stop loss was hit at $67.05.

- Suggested Positions -

Sep $65 PUT (MAN1321u65) entry $1.70 exit $0.85* (-50.0%)

09/03/13 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.

chart:

Entry on August 27 at $65.75
Average Daily Volume = 530 thousand
Listed on August 21, 2013