Editor's Note:

The stock market drifted higher on Monday. All the major indices closed in positive territory.

We have removed N as a candidate.


Current Portfolio:


CALL Play Updates

The Boeing Company - BA - close: 131.35 change: +0.54

Stop Loss: 129.40
Target(s): to be determined
Current Option Gain/Loss: -25.0%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/19/14: BA is bouncing from support near $130 but the rally stalled near $132. I do not see any changes from my prior comments.

- Suggested Positions -

Long Jul $135 Call (BA1419G135) entry $2.75

05/13/14 new stop @ 129.40
05/05/14 triggered at $132.00

Entry on May 05 at $132.00
Average Daily Volume = 3.7 million
Listed on May 03, 2014


Express Scripts Holding - ESRX - close: 68.87

Stop Loss: 66.90
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/19/14: Monday turned out to be a relatively quiet day for shares of ESRX. The stock churned sideways near the $69.00 level and technical resistance at its 200-dma.

The company is scheduled to have a conference call with the CEO, hosted by JPMorgan, tomorrow at 1:00 p.m. Anything positive could move the stock higher.

We are adjusting our entry point trigger from $70.50 to $69.50 (more conservative traders will want to stick with the $70.50 entry). We are also adjusting the strike price to the August $70s.

Earlier Comments:
ESRX is in the healthcare sector. The company provides pharmacy benefit management (PBM) services in the U.S. and Canada. Both the NASDAQ and shares of ESRX peaked in early March. It would appear that investors considered ESRX one of the higher-growth, momentum names since it has been sinking with that group over the last couple of months.

That big drop you see on ESRX's daily chart was market reaction to its latest earnings news. The results were disappointing. You could call it a trifecta of bad news. ESRX missed Wall Street's estimates on both the top and bottom line. Management guided lower for 2014. Plus they disclosed three separate subpoenas from different state authorities as the company is investigated for its relationship with drug makers.

Investors already had lowered expectations for ESRX's earnings because the company lost UnitedHealth Group (UNH) as a client last quarter. The loss of UNH accounted for about half of ESRX's lost revenues. ESRX complained that a lot of expected new enrollments had been postponed. They didn't see quite the impact from the new Obamacare exchanges previously expected.

It sounds like plenty of bad news for ESRX. Yet here's the interesting part. The stock lost -6% following its earnings report but there was no follow through lower. Investors have been buying the dip. Shares are up two weeks in a row and slowing chewing through resistance. With a drop from $79 to $65 (-17.7%) it is possible that all the bad news is already priced into ESRX stock price. The long-term trend for ESRX is still higher. As the new affordable healthcare policy changes gain momentum it should mean more enrollments for ESRX.

Trigger @ $69.50

- Suggested Positions -

Buy the Aug $70 call (ESRX140816C70) current ask $2.16

05/19/14 adjust entry trigger from $70.50 to $69.50
adjust the strike price to the August $70s.
option format: symbol-year-month-day-call-strike

Entry on May -- at $---.--
Average Daily Volume = 6.5 million
Listed on May 17, 2014


Gilead Sciences - GILD - close: 82.05 change: +1.25

Stop Loss: 77.90
Target(s): to be determined (potentially $85.00)
Current Option Gain/Loss: +67.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/19/14: Biotech stocks were outperformers today. GILD helped lead the way with a +1.5% gain and a new multi-week high. Shares did seem to struggle with the $82 level.

- Suggested Positions -

Long Jun $80 call (GILD1421F80) entry $2.12

05/15/14 new stop @ 77.90, readers may want to exit now to lock in potential gains.
05/10/14 new stop @ 75.75
05/01/14 new stop @ 74.45
04/30/14 triggered @ 77.00

Entry on April 30 at $77.00
Average Daily Volume = 23 million
Listed on April 29, 2014


LyondellBasell Industries - LYB - close: 96.80 change: +0.66

Stop Loss: 93.75
Target(s): to be determined
Current Option Gain/Loss: + 3.9%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/19/14: This stock spiked to a new all-time high this morning. The rally stalled near $98 and LYB pared its gains.

LYB will present at the Goldman Sachs Basic Materials conference tomorrow (May 20th).

Earlier Comments:
It is possible that the $100.00 level could be round-number resistance but we are aiming higher. The Point & Figure chart for LYB is bullish with a $110 target.

- Suggested Positions -

Long Sep $100 call (LYB140920C100)* entry $2.55**

05/15/14 new stop @ 93.75
05/12/14 LYB gapped open higher at $96.20 (+75 cents)
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Entry on May 12 at $96.20
Average Daily Volume = 3.1 million
Listed on May 10, 2014


3M Company - MMM - close: 141.67 change: +0.54

Stop Loss: 139.49
Target(s): to be determined
Current Option Gain/Loss: -26.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/19/14: MMM dipped to support near $140.00 again this morning and then shot higher. Traders may want to consider buying this bounce or as an alternative you could wait for a move past $142.00, which has been short-term resistance lately.

- Suggested Positions -

Long Jun $140 call (MMM1421F140) entry $3.45*

05/15/14 new stop @ 139.49
05/08/14 triggered @ $142.00

Entry on May 08 at $142.00
Average Daily Volume = 2.65 million
Listed on May 07, 2014


Pacira Pharmaceuticals - PCRX - close: 75.11 change: -0.10

Stop Loss: 69.95
Target(s): to be determined
Current Option Gain/Loss: - 22.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/19/14: PCRX outperformed the broader market with a +1.5% gain but it underperformed the BTK biotech index, which was up +1.99%. Shares of PCRX do look poised to rally past last week's highs.

Earlier Comments:
If PCRX does breakout it could see a short squeeze. The most recent data listed short interest at 17% of the 33.6 million share float. This is a somewhat aggressive trade because the option spreads on PCRX are a bit wider than we like. The Point & Figure chart for PCRX is bullish with a $93 target.

- Suggested Positions -

Long Aug $80 call (PCRX1416H80) entry $7.00

05/06/14 triggered on gap higher at $75.32, suggested entry was $74.25

Entry on May 06 at $75.32
Average Daily Volume = 602 thousand
Listed on May 05, 2014


Potasch Corp. of Saskatchewan - POT - close: 36.90 change: -0.05

Stop Loss: 34.90
Target(s): to be determined
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 months
New Positions: see below

Comments:
05/19/14: POT delivered a muted session on Monday with shares drifting sideways. Lack of follow through on Friday's bounce is a little bit concerning. I might hesitate to launch new positions here.

- Suggested Positions -

Long Sept $35 call (POT1420i35) entry $2.65

05/15/14 new stop @ 34.90
05/02/14 triggered @ 36.50

Entry on May 02 at $36.50
Average Daily Volume = 5.0 million
Listed on April 26, 2014


United Parcel Service - UPS - close: 101.39 change: +0.06

Stop Loss: 97.75
Target(s): to be determined
Current Option Gain/Loss: + 44.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/19/14: UPS also delivered a mellow Monday performance with shares moving sideways. I am not suggesting new positions at this time.

More conservative traders may want to raise their stop loss but I would keep it below $100.

We're not setting an exit target yet but the Point & Figure chart for UPS is bullish with a $114 target.

- Suggested Positions -

Long Jul $100 call (UPS140719C100)* entry $1.98

05/12/14 triggered @ 100.25
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Entry on May 12 at $100.25
Average Daily Volume = 2.9 million
Listed on May 10, 2014


Ventas, Inc. - VTR - close: 68.22 change: +0.79

Stop Loss: 66.75
Target(s): to be determined
Current Option Gain/Loss: + 9.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/19/14: The relative weakness in VTR today could be a warning signal. We are going to raise our stop loss to $66.75.

- Suggested Positions -

Long Aug $65 call (VTR1416H65) entry $2.75

05/19/14 new stop @ 66.75
05/12/14 readers may want to exit early right now
05/10/14 new stop @ 65.75
05/01/14 triggered @ 66.35

Entry on May 01 at $66.35
Average Daily Volume = 1.6 million
Listed on April 28, 2014




PUT Play Updates

Athenahealth, Inc. - ATHN - close: 114.55 change: +1.00

Stop Loss: 124.05
Target(s): to be determined
Current Option Gain/Loss: Jun$100put -26.8% & Sep100put: - 8.6%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
05/19/14: The widespread market rally today helped ATHN produce a $1.00 gain. If the current bearish trend remains true then ATHN should find resistance between here and the $120 level.

Earlier Comments:
The plan was to keep our position size small to limit our risk.

*small positions* - Suggested Positions -

Long Jun $100 PUT (ATHN140621P100) entry $2.05**

- or -

Long Sep $100 PUT (ATHN140920P100) entry $6.90**

05/15/14 trade opened on gap down at $115.66
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Entry on May 15 at $115.66
Average Daily Volume = 1.5 million
Listed on May 14, 2014


Discovery Communications - DISCA - close: 73.72 change: +1.02

Stop Loss: 75.05
Target(s): to be determined
Current Option Gain/Loss: -40.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/19/14: DISCA briefly traded above the $74 level before trimming its gains today. Shares eventually returned to virtually unchanged on the session. I am not suggesting new bearish positions at the moment.

Earlier Comments:
We're not setting a target yet but the Point & Figure chart for DISCA is bearish with a $59 target.

- Suggested Positions -

Long Jul $70 PUT (DISCA140719P70)* entry $1.60**

05/14/14 triggered @ 72.25
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Entry on May 14 at $72.25
Average Daily Volume = 1.63 million
Listed on May 10, 2014


Chart Industries - GTLS - close: 73.32 change: +0.82

Stop Loss: 75.55
Target(s): to be determined
Current Option Gain/Loss: - 35.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/19/14: GTLS is trying to bounce and managed a +1.1% gain today. The stock should find resistance near $75.00. After today's display of strength I would not suggest new positions at this time.

Earlier Comments:
More conservative traders could wait for a drop under $71.00 as an alternative entry point.

FYI: The Point & Figure chart for GTLS is currently bullish but a drop below $71.00 would produce a new triple-bottom breakdown sell signal.

- Suggested Positions -

Long Jun $70 PUT (GTLS140621P70) entry $2.25

05/16/14 trade begins. GTLS opened at $72.34
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Entry on May 16 at $72.34
Average Daily Volume = 652 thousand
Listed on May 15, 2014


Lumber Liquidators - LL - close: 81.90 change: -1.06

Stop Loss: 84.05
Target(s): to be determined
Current Option Gain/Loss: -26.6%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/19/14: LL did not see any follow through on Friday's bounce. The stock reversed with a -1.27% decline. I am not suggesting new positions at this time.

Earlier Comments:
I do consider a more aggressive trade because of LL's short interest. The most recent data listed short interest at 25% of the small 24.3 million share float, which raises the risk of a short squeeze. I am not setting a target yet. The P&F chart is bearish and forecasting at $72 target.

*small positions* - Suggested Positions -

Long Aug $75 PUT (LL140816P75) entry $4.50**

05/15/14 triggered @ 79.75
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Entry on May 15 at $79.75
Average Daily Volume = 888 thousand
Listed on May 14, 2014


Whole Foods Market, Inc. - WFM - close: 37.76

Stop Loss: 40.25
Target(s): to be determined
Current Option Gain/Loss: + 1.9%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/19/14: WFM opened at $37.89 this morning. The stock underperformed the broader market with a -0.39% decline. I do not see any changes from our weekend newsletter's new play description.

More conservative investors might want to wait for a decline below the May 7th intraday low of $37.31 before initiating positions.

Earlier Comments:
WFM is in the services sector. The company runs a grocery chain focused on natural and organic foods. As of May 2014 they had 379 stores. Unfortunately their success in the higher-margin organic foods has fueled significant competition.

The stock has been sinking for months as investors worried about growing competition. WFM's recent earnings report confirmed their fears. The stock crashed -19% after WFM missed estimates on both the top and bottom line and confessed they were facing tougher rivals. Management then lowered their 2014 guidance.

WFM said revenues still grew +10% and their same-store comparable sales were up +4.5%. Unfortunately profits were relatively flat and margins are getting squeezed with higher cost of goods sold and rising capex.

WFM is facing competition on all sides. Sprouts Farmers Market (SFM), The Fresh Market (TFM), Kroger (KR), Wal-mart (WMT), and regional competitors like HEB and Trader Joe's are all jumping on the organic and natural food bandwagon.

- Suggested Positions -

Long Aug $35 PUT (WFM140816P35) entry $1.01

05/19/14 trade begins. WFM opens at $37.89

Entry on May 19 at $37.89
Average Daily Volume = 9.2 million
Listed on May 17, 2014


CLOSED BEARISH PLAYS

NetSuite Inc. - N - close: 75.27 change: +1.53

Stop Loss: 73.15
Target(s): 60.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/19/14: The bounce from support in shares of N continued on Monday with a +2.0% gain. The stock is nearing what should be resistance at $75 and its 20-dma. More aggressive traders could buy puts here at current levels with a tight stop above the 20-dma. Our original plan was to wait for a breakdown and buy puts at $69.25. That seems unlikely any time soon so we're removing N as a candidate.

Trade did not open.

05/19/14 removed from the newsletter, suggested trigger was $69.25
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

chart:

Entry on May -- at $---.--
Average Daily Volume = 1.1 million
Listed on May 15, 2014