Current Portfolio:

CALL Play Updates

Hewlett Packard Co - HPQ - close 45.69 change -0.89 stop 44.60

Target(s): 46.65, 48.20, 48.60, 49.70
Key Support Areas: 46.00, 45.11, 44.80
Key Resistance Areas: 46.75, 48.25, 48.70, 50.00
Current Gain/Loss: -37%
Time Frame: 1 to 2 weeks
New Positions: No

There was simply no follow through in the markets today and HPQ fell apart late in the day, but I'm not giving up yet. I've listed a new target above at $46.65 which below the highs of the past few days. It would probably be a smart level to exit positions if HPQ trades up here. I'll leave my comments from the weekend as they have not changed. I am also keeping an eye on the declining 20-day SMA. HPQ has not touched this SMA since 4/27 and it is overdue to get there. It appears this is going to correspond nicely with our targets or $48.20 and $48.60. If HPQ can continue the bounce to these levels our options should be worth north of $2.00 which would represent a +40% to +50% gain. I will gladly take profits at those levels. HPQ closed right at a key level for the stock near $46.60. If it can breakout above this level we should be on way to reaching our target. HPQ is a quality company and that has great fundamentals and is trading at 11 times forward earnings estimates. I'm viewing the recent pullback as opportunity to enter a quality name that may catch a bid as investors flee from more speculative names.

Current Position: JUNE $47.50 CALL, entry was at $1.47

Entry on May 19, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 16 million
Listed on May 18, 2010

Morgan Stanley - MS - close 25.75 change -1.36 stop 25.50

Target(s): 28.50
Key Support Areas: 26.40, 25.64
Key Resistance Areas: 27.25, 28.00
Current Gain/Loss: -32%
Time Frame: 1 to 2 weeks
New Positions: Yes, with a tight stop

I was looking for a retracement in MS but I didn't think it would retrace almost all of Friday's gains. MS found support at our entry but it was short lived as the selling picked up steam in the overall market this afternoon. If the market is weak tomorrow we will most likely be stopped out. I use the following rule if there on positions with gaps. For long positions here is my rule of thumb: If a stock gaps down below the stop that has been established, wait for the first 15 minutes of trading before doing anything. Then place a new protective stop just under the low of that first 15 minutes of trading. Reverse the entire scenario for shorts. The reason I do this is because I want to measure the real strength or weakness in the stock. I don’t want a Good Til Cancelled (GTC) stop to be unnecessarily triggered at the open because often times stocks gap and reverse immediately, which keeps us in the position and looking for a better exit.

Current Position: June $27.00 CALL, entry at $1.15

Entry on May 24
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 25 million
Listed on 5/19/10

PUT Play Updates

IAC/Interactive Corp - IACI - close 22.16 change +0.68 stop 23.10

Target(s): 20.50, 20.05
Key Support Areas: 21.15, 200-day SMA
Key Resistance Areas: 22.04, 22.30, 22.80
Current Gain/Loss: +5%
Time Frame: Several Weeks
New Positions: Yes

IACI closed the gap I referred to in the play release which triggered our entry to buy June $22.50 PUTS at 85 cents. My comments from the play release remain the same. IACI's chart looks bad and it is barely hanging on to an upward trend line that began in March 2009. I'm expecting a bounce in the stock but I think the bounce will be short lived and I suggest readers initiate short positions when that happens. I have listed two areas for possible entries of short positions: If IACI retests its highs from Thursday near $21.90 or if the stock fills the gap down from Wednesday to Thursday (5/19 to 5/20) near $22.25. I have listed 3 targets that I expect IACI to trade down to in the coming weeks: $20.50, $20.05, and $19.50. I also like the 2:1 risk/reward ratio of this trade set-up: depending on the entry/exit prices, we are essentially risking about $1.00 to make $2.00 or more. Our stop is $23.10 which is above its 50-day SMA. It will take a monumental effort for IACI to get back up to this level.

Current Position: June $22.50 PUT, entry at $0.85

Entry on May 24
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 1.4 million
Listed on May 22, 2010


EMC Corp. - EMC - close 18.06 change +0.10 stop 16.95

Target(s): 18.20 (hit), 20-day SMA, 18.70
Key Support Areas: 17.65, 17.55, 17.45, 17.10
Key Resistance Areas: 17.80, 18.00, 18.50, 18.85
Current Gain/Loss: +23%
Time Frame: 1 to 2 weeks
New Positions: Closed

We made a judgment call to close EMC at our first target of $18.20 today for a +23% gain. Lack of continued follow through on the market's early strength was the clue to close the position. I'll leave my comments from the weekend as they have not changed. The stock is now battling its long term pivot level dating back to June of 2007 at $18.00. EMC is finding support on a trend line that began with the 9/3/09 lows to 2/5/10 lows, and finally the flash crash lows on 5/6/10. But the stock still faces overhead congestion like many others. If EMC can get over $18.00 we should hit our first target at $18.20. Our more aggressive second target has been lowered to $18.70 which is just below the stock's 50-day and 20-day SMA's. I've also listed the 20-day SMA as a target and urge readers to exit positions or tighten stops if the stock trades anywhere near this level to protect capital and protect against a reversal. EMC could trade up to its 50-day SMA if the bounce in the overall market can continue this week. With the extreme up and down volatility and oversold conditions we could easily see a continued short covering rally creating a sharp move higher and if that happens we need to be taking profits.

Closed Position: June $18.00 CALL at $0.80, entry was at $0.65.

Annotated Chart:

Entry on May 20, 2010
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 25 million
Listed on 5/19/10