Current Portfolio:

CALL Play Updates

Volatility Index - VIX - close: 25.39 change: +3.02 stop: 19.60

Target(s): 25.95 (hit), 27.30, 28.90, 31.50, 35.00
Key Support/Resistance Areas: 20.00, 22.00, 24.00, 26.00, 28.00
Current Gain/Loss: +13.50%
Time Frame: 1 week
New Positions: Yes, on weakness

8/11: I spoke too soon thinking we caught a break yesterday when the VIX traded to within 1 penny of our trigger before backing off. It turns out it was a bad break as the SPX gapped lower today and hence the VIX gapped higher. So we would have gotten a better a fill yesterday had we been triggered. Nonetheless, it appears the market has spoken and this trade has some potential. We are long September 30 calls at $2.95. The VIX is now almost at its 50-day SMA and actually hit our first target this afternoon. Considering the massive sell-off today this trade is shaping up to be quicker than I thought.

8/10: VIX came within 1 penny of triggering our entry to buy calls. And it's a good thing we didn't get triggered because just after the FOMC announcement stocks took off and the VIX plummeted, so we caught a break on this one. Last night I mentioned aggressive traders may consider entering at current levels. But I just wasn't ready to officially make any changes to the play due to the FOMC announcement today. However, I'm suggesting we take advantage of any further weakness in the VIX which should happen if stocks rally from here. We may get a little further upside but the fact is we are in overbought conditions and the market is complacent, not to mention the seasonality. And it is not uncommon for stocks to reverse course from the initial FOMC reaction. In fact, on June 23rd the S&P 500 bounced hard intraday just like today, but then proceeded to sell off -80 points over the ensuing week. I realize the circumstances are completely different now but look at the daily S&P 500 chart. Currently we are just above the same levels as June 23rd and are also coming off of a strong rally. I suggest we enter positions now and look for a bounce up to its 50-day SMA which is above our first target of $25.95. We'll use a stop of $19.60 and if the market rolls over I suggest traders trail their stops. I've adjusted the targets.

NOTE: September VIX options expire on Wednesday, Sept. 15th, not Friday

Current Position: Long VIX September $30 CALL, entry was at $2.95

Entry on August 11, 2010
Earnings Date N/A
Average Daily Volume N/A
Listed on August 7, 2010

PUT Play Updates

SPDR DJIA ETF - DIA - close 104.13 change -2.53 stop 104.85 *NEW*

Target(s): 105.40 (hit), 104.75 (hit), 103.65, 103.05
Key Support/Resistance Areas: 108.00, 107.00, 105.90, 104.75, 104.20, 103.50
Current Gain/Loss: +46%
Time Frame: 1 week
New Positions: Yes

8/11: DIA fell out of the rising wedge pattern and tanked lower today, hitting two targets. We now have a +46% gain which needs to be protected. I've lowered the stop to $104.85 which is above the intraday congestion area from today and the 20-day SMA. This should provide enough resistance to keep any bounces in check. I suspect DIA may head towards its 50-day SMA which is just below $103. We have two more targets: $103.65 which just above the low on 7/30, and $103.05 which is just above the 50-day SMA. These are the areas I suggest taking profits or tightening stops. If we get stopped out our gain should still be +30%.

8/10: DIA keeps getting close to hitting our target but the market keeps getting saved. Today in early trading this position could have been closed for a +10% gain but stocks rallied. I suspect we may have a spike in the markets over the next day or two but I do believe we will get a meaningful correction that could happen at anytime within the next week, and it could happen fast. DIA is forming a bearish rising wedge pattern and if it lets go we should see a $2 or $3 drop relatively quick. This is what we are positioned for and should the drop happen I suggest readers begin to tighten stops as our targets approach to protect capital and against a reversal.

Current Position: Long September $106.00 PUTS, entry was at $2.70

Entry on August 3, 2010
Earnings: N/A (unconfirmed)
Average Daily Volume: 14 million
Listed on August 2, 2010

Leggett & Platt - LEG - close 20.15 change -0.73 stop 21.75

Target(s): 19.85, 19.35, 18.70
Key Support/Resistance Areas: 21.50, 20.50, 19.80, 19.00, 18.50
Current Gain/Loss: +20%
Time Frame: 1 to 2 weeks

8/11: LEG PUTS were initiated at the open for 75 cents as the stock traded below yesterday's low. LEG drifted down all day long and we currently have gain of +20%. Our targets are approaching which are near support areas so I suggest trailing or tightening stops on the way down to protect profits.

8/10: We are back with a short play in LEG. LEG is in the furniture & fixtures industry and purchases of these types of items are not on the minds of consumers. The stock continues to make lower highs on a descending trend line that began on 4/30 and is now on the verge of breaking an upward trend line that began 7/6. On its daily chart LEG closed below all of its moving averages today and if the broader market gets moving to the downside LEG should be one of the first to go. I suggest we enter short positions if LEG trades to $21.20 (below today's highs and the 50-day SMA) or to $20.70 (below today's low), whichever occurs first. We have realistic targets that are easily achievable and will produce a good winning trade if they are reached.

Current Position: Long September $20.00 PUT, entry was at $0.75

Entry on August 11, 2010
Earnings: 10/21/10 (unconfirmed)
Average Daily Volume: 1.45 million
Listed on August 10, 2010

Occidental Petrol. - OXY - close: 76.34 change: -1.47 stop: 81.05

Target(s): 70.50, 66.00
Key Support/Resistance Areas: 75-74.00, 70.00, 65.00
Current Gain/Loss: N/A
Time Frame: Several Weeks
New Positions: Yes, trigger at $77.50 or $73.90

8/11: Considering today's broad based sell off I am inclined to suggest we take advantage of any strength in OXY to initiate short positions. The S&P 500 closed above its 50-day SMA today so we could get a bounce in equities before the selling continues. OXY's high on 8/10 was $78.14. All of the stock's major moving averages are also overhead and a downward trend line that started on 6/21. I am suggesting we use a bounce to $77.50 or a break weakness to $73.90 as a trigger to enter short positions, whichever occurs first.

8/10: OXY doesn't seem ready to break down just yet as the stock gained +1.12% today on a weak tape. The stock is approaching all of its major SMA's from below and a down trend line near the $80 level. This sets up a good short entry as opposed to waiting for a break down. I'm assessing this option and may change the trigger in the coming days.

Suggested Position: Buy September $70.00 PUT, current ask $1.14

Entry on August XX
Earnings Date 10/21/10 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on August 7th, 2010

Procter & Gamble - PG - close: 60.27 change: -0.51 stop: 63.26

Target(s): 59.30, 58.05, 57.25
Key Support/Resistance Areas: 59.00, 61.00
Current Gain/Loss: +30%
Time Frame: 2 to 3 weeks
New Positions: Yes

8/11: PG is a defensive stock so it did not suffer like the broader market today. I think we will see $59.30 and possibly lower in this stock in the next couple of weeks. We've made 11 cents on our 36 cents option so we have a nice gain already. Protect profits if the weakness in PG continues.

8/10: PG triggered our higher target to enter positions at $60.69. We are long $57.50 PUTS at 36 cents. This is a cheap out of the money option that shouldn't move too much with underlying price of PG. But if we get PG to retest its recent lows, which are below our first target of $59.30, we should easily make 25 cents on the position. This would represent a +69% gain. As such, I've removed the $55.00 target and added three closer targets that are very easily achievable.

Current Position: Long September $57.50 PUT, entry was at $0.36

Entry on August 10, 2010
Earnings Date 10/28/10 (unconfirmed)
Average Daily Volume 2.5 million
Listed on August 7th, 2010


SPDR KBW Bank ETF - KBE - close 24.05 change -0.14 stop 23.25

Target(s): 24.85, 25.30, 26.00
Key Support/Resistance Areas: 26.00, 25.50, 24.85, 23.75, 23.35
Final Gain/Loss: -27.8%
Time Frame: 1 to 2 weeks
New Positions: Closed

8/11: The broad based weakness was too much for our bank play and our stop was hit this morning. The inverse head and shoulders pattern failed and the upward trend line was broken. In addition, the moving averages have been broken. These are the reasons the trade was initiated and they did not work so we have to get out of the way and are flat the position.

8/10: We are long KBE calls at the open at 90 cents and are looking for the bank ETF to bounce up towards its 100-day SMA which is above our first target of $25.30. A move up to this area should produce a +50% gain on this position. Readers may also want to consider an added target of $24.85 as an area to tighten stops or take profits. This will also produce a nice gain and is a resistance from late July/early August to consider.

Closed Position: Long September $24.00 CALL @ $0.65, entry was at $0.90

Annotated chart:

Entry on August 10. 2010
Earnings Date N/A (unconfirmed)
Average Daily Volume: 3.5 million
Listed on August 9, 2010