Editor's Note:
Good evening. DIA puts were closed today for nice +81% gain. All of our other positions are currently positive. Feel free to email me with any questions.

Current Portfolio:

CALL Play Updates

SPDR Gold Trust - GLD - close 118.77 change +1.43 stop 112.50

Target(s): 121.60, 123.00, 125.00
Key Support/Resistance Areas: 123.00, 119.10, 116.50, 113.50
Current Gain/Loss: +5%
Time Frame: Several weeks
New Positions: Yes

8/12: GLD gained +1.43% today. Unfortunately for us, the gains came overnight so we did not get filled at a better price. Nonetheless, gold is gaining momentum and if it trades above $119.15, which is near the July highs, GLD should be on the fast path to retest its YTD highs and possibly print new highs. We may see a pullback to close the gap higher today, and if it does it will present another opportunity to get in if readers aren't already in.

8/11: I'm not necessarily a longer term bull on gold, but if the Fed is going to monetize our country's debt gold is going to catch a bid, and I believe now is a perfect time to get in via GLD. Considering the events of the past few days gold and gold miners should catch a bid here and act as a defensive play. From a technical perspective GLD bounced perfectly off of its upward trend line from its lows on 8/17 to 2/5 to 7/28. And I think GLD will print new all time highs within the next several of weeks. I suggest readers enter long positions now. I've provided three realistic targets that will produce good winning trades if reached. Our stop is below the 200-day SMA at 112.50.

Current Position: Long September $120.00 CALL, entry was at $1.80

Entry on August 12, 2010
Earnings Date N/A (unconfirmed)
Average Daily Volume: 12.4 million
Listed on August 10, 2010

Volatility Index - VIX - close: 25.73 change: +0.34 stop: 19.60

Target(s): 25.95 (hit), 27.20, 28.00, 31.50, 35.00
Key Support/Resistance Areas: 20.00, 22.00, 24.00, 26.00, 28.00
Current Gain/Loss: +15%
Time Frame: 1 week
New Positions: Yes, on weakness

8/12: The VIX came within 9 cents of hitting our second target so I am going to lower the target to $27.20. If we get further weakness in the S&P 500 prior to a bounce the VIX may spike up to our targets and then retreat like it did today. Therefore, taking profits or tightening stops if that happens is the smart play. If the market finds its legs and bounces from here we will need to exhibit some patience with the trade.

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

Leggett & Platt - LEG - close 19.90 change -0.25 stop 21.75

Target(s): 19.85(hit), 19.40, 18.70
Key Support/Resistance Areas: 21.50, 20.50, 19.80, 19.00, 18.50
Current Gain/Loss: +33%
Time Frame: 1 to 2 weeks
New Positions: Yes, on strength

8/12: LEG hit our first target today and we now have a +33% gain in the position. The stock is finding support at the 7/19 and 7/20 lows which were just below $19.80. This is why my first target was $19.85. If it breaks here it should be a vacuum down to the $19.40 area which is our second target (raised 5 cents). This target should give us a +65% gain so I suggest either taking profits or tightening stops to protect gains if we get there.

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: 76.46 change: +0.12 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

8/12: OXY came within 25 cents of our trigger to enter short positions. I think this is a good entry and there is a lot of overhead resistance to keep any additional strength in check. My comments from below remain the same.

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 on 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: 59.99 change: -0.28 stop: 63.26

Target(s): 59.50, 59.05, 58.05, 57.25
Key Support/Resistance Areas: 59.00, 61.00
Current Gain/Loss: +44%
Time Frame: 2 to 3 weeks
New Positions: Yes, on strength

8/12: This morning PG came within 8 cents of reaching our 1st target before reversing with the market. Positions could have exited for a +60%. So I've raised that target 20 cents to $59.50 should PG retest this area. PG chart looks good to the short side but there is support near $59.00. Tomorrow we get CPI and retail sales data and this could spark selling if the reports are bad. If PG gets down to $59.50 again it may break through this support. There is more support $59.00 which are the January and July lows. PG bounced hard at these levels so I've added $59.05 as a target as well. I would be inclined to take profits or at least tighten stops as PG approaches these levels. We now have a +44% gain so protect profits if the weakness continues.

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 DJIA ETF - DIA - close 103.45 change -0.68 stop 104.85

Target(s): 105.40(hit), 104.75(hit), 103.65(hit), 103.05(hit)
Key Support/Resistance Areas: 108.00, 107.00, 105.90, 104.75, 104.20, 103.50
Final Gain/Loss: +81.48%
Time Frame: 1 week
New Positions: Closed

8/12: DIA gapped lower to its 50-day SMA which was just below our final target so positions were closed at the open. We have nice gain of +81% on the trade. I'll be looking for more short entries on the indexes on strength, perhaps up to their moving averages overhead, or gap fills.

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.

Closed Position: Long September $106.00 PUTS at $4.90, entry was at $2.70

Annotated chart:

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