Current Portfolio:

CALL Play Updates

Diana Shipping, Inc - DSX - close 13.56 change -0.43 stop 12.90

Target(s): 14.35, 14.75
Key Support/Resistance Areas: 15.00, 14.40, 14.15, 13.50, 13.30, 13.00
Current Gain/Loss: +0.00%
Time Frame: 1 to 2 weeks
New Positions: Yes

DSX traded down to our entry at $13.50 so we are now long $12.50 CALLS at $1.55. My comments from the play release remain the same. This was a play in the OI newsletter several weeks ago and we are back for more. DSX found long term support near the $12.35 area and has bounced nicely. The stock broke through its recent downtrend line and I am looking for it to retrace some of the recent gains prior to entering long positions. DSX has good fundamentals trading at a PE below 10 and has beaten earnings estimates in recent quarters. The stock has surged higher with the market this week but I don't suggest chasing it at these levels. I am looking for a pullback near $13.50 which I suggest readers use as a trigger to enter long positions. This would also be a logical area for the stock to make a higher low and then proceed higher, although a pullback to $13.25 is possible as well. We are looking to make about a dollar in this trade. I have listed two targets at $14.35 and $14.75. We'll place a stop at $12.90.

Current Position: July $12.50 CALL, entry $1.55

Annotated Chart:

Entry on 5/28/10
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 1.4 million
Listed on 5/27/10

Rino International - RINO - close 12.91 change -0.40 stop 11.70

Target(s): 14.00, 14.50, 15.95, 16.90
Key Support/Resistance Areas: 15.00, 14.50, 13.75, 12.75, 11.75
Current Gain/Loss: +0.00%
Time Frame: Several weeks
New Positions: Yes, if there is a pullback to support

RINO pulled back to our key support level at $12.75 and bounced nicely, although the stock sold off at the end of the day along with the rest of the market. We are currently breakeven on the position but I am looking for more upside this week, possibly to our new first target of $14.00 which is near the 20-day SMA. Our option has a delta of 0.60 which means that for every $1 move in the stock price, the price of the option is estimated to move 60 cents. If RINO can rally to $14.00 our option should be worth $2.20 which would represent a +47% gain. I would at least tighten stops at this level but I'm thinking we can get more out of the trade as long as the overall market is not too weak. The above targets and support/resistance areas can be used as a guide for exiting positions. Traders can enter positions on pullbacks. I'll leave my comments from the play release as they have not changed. RINO has been taken out to the woodshed recently and I believe it is due for a turnaround. The stock appears to have found support in the $10.75 area which dates back to prior support in August 2009 and prior resistance in June of 2008. The stock bounced nicely off of this level and has followed through. In addition, the stock trades at a ridiculously low PE ratio of about 5. I think there is a lot of room to for this stock to run and I suggest readers take advantage of the building momentum. I think we can make $2 in this trade but there could be some volatility so please use proper position to manage risk. Our stop is $11.70 which below the close of the last two weeks.

Current Position: July $12.50 CALL, entry at $1.50

Annotated Weekly Chart:

Entry on May 27, 2010
Earnings Date More than 2 months (unconfirmed)
Average Daily Volume: 926,000
Listed on 5/25/10, 2010

Walter Energy - WLT - close 79.33 change -0.72 stop 71.75 *NEW*

Target(s): 77.25, 80.95
Key Support/Resistance Areas: 81.00, 79.00, 77.75, 74.50, 72.50
Current Gain/Loss: N/A
Time Frame: 1 week
New Positions: Waiting to be triggered

We are still waiting patiently for WLT to come down to our trigger to enter long positions. This may take several more days but I want to be ready to pounce on the trade if this happens. If WLT trades down near $75.25 I would like to enter long positions. One bad day in the market could get us triggered and I suggest taking advantage of the weakness if that happens. So we will wait patiently for the trade to come to us and not jump the gun. The new entry would be a back test of the stock's 20-day SMA that I think will hold. I believe the recent sell off in coal stocks was overdone and they are building momentum. WLT has retaken its 200-day SMA and 20-day SMA, but I would like to see some retracement in the recent gains before entering long positions. If triggered, I am looking for a move up to $80.95. I view this trade as aggressive and quick so please use small position size to manage risk.

Suggested Position: June $75.00 CALL if WLT trades down near $75.25

Annotated Chart:

Entry on May xx
Earnings Date: More than 2 months (unconfirmed)
Average Daily Volume: 3.4 million
Listed on 5/25/10

PUT Play Updates

The Gymboree Corporation - GYMB - close 44.58 change -0.43 stop 46.60

Target(s): 42.90, 42.40, 40.25
Key Support/Resistance Areas: 46.30, 46.00, 44.00, 43.60
Current Gain/Loss: +7%
Time Frame: 1 to 2 weeks
New Positions: Yes

GYMB is oscillating above and below the $44.60 level. It has formed a bear flag and I am looking for the stock break lower. I've listed three targets above that I suggest traders use to exit positions or tighten stops. The stock keeps getting knocked down on any rally attempt and remains below its 200-day SMA. More market weakness will do wonders for our position. But if the market continues to rip higher from here this could be a short lived trade. We have a fairly tight stop on the position to limit risk and also have realistic targets to book quick profits. We should know early this week the direction of the stock. Retailers have been offering weak guidance for the remainder of 2010 and I think it is a matter of time before more selling starts in GYMB. The bear flag also provides a good reference point to place a protective stop at $44.60 which is above the 100-day SMA. NOTE: the bid/ask spread on GYMB options is a little wide. Place a limit order between the two and you should get filled.

Current Position: July $45.00 PUT, entry at $2.95

Annotated Chart:

Entry on May 27, 2010
Earnings More than 2 months (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 22, 2010