Target - AAPL (456.30)

We believe AAPL will move sideways and remain range bound as traders decide if 400-500 is the "new" 500-600. AAPL and its products have become commoditized and margins will continue to come under increasing pressure as the tech giants battle it out on pricing, similar to the implosion of the airline industry.

Tactic - March Iron Condor

This neutral tactic consists of selling 2 spreads, a bull put spread (credit spread) believing AAPL will not go below a certain price and a bear call spread (credit spread) believing that AAPL will not go above a certain price.

The trade and price (credit of 1.26) is listed below, along with the probabilities of max profit, max loss, and breakeven.

The probabilities of max loss/gain/breakeven are listed below using at the money volatility.

Adjustment/Exit Tactic - Since we are a net seller of this iron condor we will look for this trade to expire worthless and for us to collect a max gain of $1,890 as AAPL remains between our 2 short strikes - below the 490 call and above the 410 put.

If the trade rises in value to 2.52 (double the credit received) we will look to eject or adjust the trade, based on the velocity of the movement. We will break the iron condor up into individual spreads and if the stock is seeing significant velocity, eject from the trade.

If the stock velocity is not that high we will consider rolling a losing bull put spread down and out to April, or a losing bear call spread up and out to April, with the strike prices to be determined by the velocity.

This trade will be added to the Wealth Creation with Options model portfolio and managed in our weekly live trading session for maximum profit or exited for minimum loss. To see our portfolio manager trade live each week and see all the trades in the model portfolio, follow this link.

Target - Goldman Sachs (GS), 141.01

Commit Criteria - This week Wall Street's flagship reported strong earnings, seeing Q4 net income nearly triple to $2.83B over $1.01B for the same period last year. GS seems to be returning to its pre-financial crisis role as the Street's ATM. Fixed income trading, once a powerhouse for the former investment bank, has returned in full force, along with their traditional investment banking business. The financial crisis also forced GS to tighten its belt; headcount has been reduced and costs slashed while its infamous compensation structure was updated to strike a balance between paying their top talent and returning equity to shareholders.

While still very far south of the mid-200's the stock visited in the past, I believe that GS has cracked the code on the "new normal" and once again will print money ahead of its peers. I am long term bullish on Goldman, however I still believe that GS, along with the rest of the financial sector, will see short term headwinds as we face a faltering economy, out of control deficits, and increased financial regulations, in addition to an unsolved European fiscal and economic crisis.

Tactic - Long Call Diagonal

Buy 1 Jan15 105 call
Sell 1 Feb13 145 call
Net debit of 40.43, or $4,043

Tactical Employment - A Long Call Diagonal is the perfect tactic to employ when we hold a short and long term strategic mindset that differs. This bullish tactic involves going out as far in time as possible and purchasing deep-in-the-money calls. When buying calls at Top Gun Options we select a strike that has a delta of at least .80. Delta is a measure of the rate of change in the price of an options relative to a change in price of the underlying stock. The higher the delta the higher the rate of change in the option price, and vice versa.

Since these .80 delta calls are expensive (loaded with time and intrinsic value), we look to sell front month, in this case, February upside calls to help 'finance' the .8 delta call purchase. After Wednesday's 4.1% pop and the stock hovering at 52 week highs, we believe the stock will stabilize as the Street battens down the hatches in preparation for the debt ceiling dogfight.

Therefore we have selected the February13 145 calls. By selling these calls we take in a credit of $1.65, reducing the cost of the deep-in-the-money Jan15 105 calls from $42.08 to $40.43.

Mid-Course Guidance - If by February expiry GS is trading below 145 we will collect the full credit of the short calls and will look to roll the short call position out to March. By continuing to sell front month upside calls we can potentially pay off the deep-in-the-money calls, own them outright, and continue selling calls to potentially further profit.

If GS is trading above 145 we will simply buy back the calls and roll them up and out to a higher strike in March, and that strike will depend upon our short term strategic mindset and current economic conditions.

We recently closed a bullish long call diagonal on [[RIMM]] for a nice profit as we anticipated a run up in the stock prior the Blackberry 10 release on January 30th. We initiated the position when RIMM was trading around $7 and closed the trade when it recently hit $14. The trade gained over $8,000 on $4,500 in risk.

Click here to learn more about our live trading services.

Exit Plan - The main risk in a diagonal is the underlying position. Stocks can go to 0, however we obviously believe that the probability of this occurring is statistically insignificant and our max loss is limited to the debit (minus the credit) for the trade.

We will exit this trade before expiry of the Jan15 105 deep-in-the-money calls for maximum profit as GS powers to the head of the financial class and shows the Street that it has the maneuverability to deliver outside returns in the new world.

Disclosure: I am long [[GS]].

With conflicting economic data overseas and ashore along with weak Q3 earnings giving investors vertigo of late, this week will most likely provide an answer to the question - Go or No Go?

Before getting airborne in my F/A-18 Hornet off the flight deck of an aircraft carrier I had to make sure that my systems, weapons, aircraft and I were FMC, or fully mission capable. With a single thumbs up to my plane captain followed by a salute to the catapult officer I signaled my ability to carry out my mission.

This week we will see if the market is a 'Go' or a 'No Go' for launch. But before we take an operational and then tactical look at the U.S. we must first take a look strategically at the financial battlefield and how this helps shape our neutral with a bearish slant strategic mindset.

The United State's banker, China, reported GDP 2 weeks ago. Any numbers out of China that involve government hands are of course suspect. China's head of state declared a month ago at the World Economic Forum that they will hit their annual goal of 7.5% GDP for 2013. Period. He can say that. China can say whatever they want and put up whatever numbers they want. Kind of like our government and monthly unemployment claims the month before an election.

CPI numbers out of Big Red for September were in line with expectations but the Producer Price Index (wholesale) fell, a bigger retreat in fact than August. Add in the once a decade change of command in the leadership next month and China is a significant contact on our radar.

Europe has done a nice job of taking Greece off the front page, attempting to get the markets to price in the eventual 'Grexit', or the Greece exit from the Euro Zone. Spain's borrowing costs have eased somewhat, but other than that Mrs. Lincoln, how was the play? The country faces systemic pressures from banks, government institutions, and the people. Spain is viewed as too proud to request a bailout as ECB President Dragi acts like Jack Nicholson's character in A Few Good Men when asked for the all important tower logs - His response? "You have to ask me nicely".

The request might not happen and if it does it may be too late. With borrowing costs on their 10 year bonds hovering over 7% for a couple weeks last month the country only slid further under the waves.

A front page story in today's Wall Street Journal reports that Catalonia may seek independence from Spain. Why? Known as 'the factory of Spain', the region has tired of powering the nation's economic engine while others sit on their hands and live off the fruits of their northern neighbor. Sound familiar? Any way we can boot Kalifornia and Illinois from the Union? Or maybe Texas and Florida will declare independence… Texas did it once and after living in the Republic for 7 years I can tell you they would have no problem doing it again. For good.

The Middle East continues to be a bubbling cauldron as the administration plays 'Who's on First' with their not so subtle cover up of the 9/11 attacks that, again, killed Americans. Syria continues to thumb their nose at the international community, with big brothers China and Russia laughing at a weakened United States. And of course Iran continues spinning away, looking forward to the day in the immediate future where they can destroy Israel.

Operationally here in the U.S. we've seen weak Q3 numbers from a majority of companies. At Top Gun Options we focus on revenue - not earnings. Why? Simple. Earnings can be manipulated and anything that can be manipulated by the street will be. Can you say 'Libor'?

Even stocks that tend to sandbag, like Apple (AAPL), are having a hard time hitting the ball over the net…that they had previously lowered.

This of course is causing us to already start focusing on Q4 earnings, along with the impending fiscal cliff and sequestration. At least the 2008 tsunami was somewhat a surprise (not really). We have known about this fiscal cliff for over a year and no one has done a thing to stop it. Our bearish positions on SPX, along with positions in SH, SDS and VIX have been performing as designed and have been profiting nicely as the sleeping giant wakes up and sees a recession occurring on 2 January. Not our words, but words from the independent Congressional Budget Office (CBO).

At Top Gun Options we remain market neutral to bearish until after the elections when we will see if anyone in Washington intends on doing the job they're getting paid to do. We will continue to hold our bearish positions while looking at potential bullish trades in Jan/Feb in case the brain trust in Washington kicks the can down the road and the market experiences a relief rally.

Market Schedule -

Mon - Commerce reports personal income/spending

Tues - S&P/Case Shiller 20 market housing index, Conference Board reports consumer confidence

Wed - Q3 employment cost index

Thurs - Auto and retail sales numbers, October ISM, ADP private payroll numbers, weekly jobless claims, construction spending and business productivity

Fri - Commerce releases October jobs numbers, look for an increase to 7.9%, unless of course the administration plays with the numbers again…

Commit Criteria - We believe that Facebook (FB) is significantly overpriced after a 15% pop the stock experienced after releasing earnings last week. At its current price FB trades north of 40 times 2012 projected earnings. If this doesn't sound like a lot, search giant Google (GOOG) trades at 17 times 2012 earnings. Both of these stocks are struggling to monetize handheld advertising profits and FB has been extremely slow out of the gate to attack this issue compared to GOOG.

Tactic - November Bearish Double Vertical Spread:

Sell 30 Nov 12 18/20/23/25 Double Vertical Spread for credit of .10 ($300)

This tactic involves selling a Bear Call Spread (Nov 23/25 credit spread) and buying a Bear Put Spread (Nov 18/20 debit spread). We like this tactic at Top Gun Options because when done correctly an investor can potentially take in a credit by employing a Double Vertical Spread, essentially being paid for their strategic mindset on a stock.

Historical vol is below implied vol although not by much so this supports a tactic that involved buying and selling spreads simultaneously.

Tactical Employment -

1. Sell 30 Nov 18 Puts
2. Buy 30 Nov 20 Puts
3. Sell 30 Nov 23 Calls
4. Buy 30 Nov 25 Calls
5. Credit .10 ($300)
6. Max Potential Profit $6300
7. Max Potential Loss $5700
8. Breakeven $23.10, 68% probability using at-the-money volatility

Midcourse Guidance - I am taking in a credit in the Primary Model Portfolio and at a minimum want to retain the $300 credit. However if I see a significant pullback in the stock and the position reaches a profit of $3150 I will close half the position and let the remaining 15 contracts ride. This will depend on the velocity of the downside move however and I may elect to hold the position for max profit. Standby for SMS and email updates as conditions dictate.

Eject Criteria - I will eject from this trade in order to retain the $300 credit received and will set up this Exit Plan according on the TradeMonster paper trading platform.

Bottom Line - FB's current value is also well understated. Therefore we may look to employ this position out to December and/or January. The company sprinkles stock on employees like there's no end and if one takes this into account FB's 2013 PE rises to over 50. The stock is overvalued, has placed user experience below profit, cannot monetize its growing base of mobile users and is led by a CEO that wears a hoodie.

Enough said.

The result? That market rallies. Makes sense right? It should. If it doesn't you need to knock out some options trading training asap.

Notice we didn't say options trading education. As Calvin Coolidge said "…the world is full of educated derelicts." One pops into our mind immediately…but we digress…

We see many options trading newsletters apologizing for their poor performance. These are the same ones that claimed 'How to Get Rich' in little to no time with no effort. You don't even need the basics! No "Options for Dummies" required! It's easy!

They blast out poor options strategies in their options newsletters, not smart enough to know that they don't understand what a 'strategy' or a 'tactic' is, and their lack of knowledge can get a retail trader wiped out. An option strategy is a misnomer. At Top Gun Options we employ options tactics. A strategy is higher level, an overarching goal like - managing risk, portfolio protection, short term income generation, saving for retirement, capital growth. An options strategy is not to get rich, or easy online money or how to earn money online.

Options tactics support the particular strategy. For example, if a trader wants to manage risk in this volatile environment, the tactics they could potentially employ in this low volatility environment include:

Buying puts on the [[SPY]] or SPX

Buying in-the-money (ITM) calls on the VIX, or selling bull put spreads (credit spreads), buying bull call spreads (debit spreads)

Hedging a portfolio by employing a long term diagonal on the yellow metal gold using the GLD

Preparing for Mid-East conflict by employing a bullish double vertical on USO

Trading options is not necessarily difficult. Options trading can be very easy…IF you are teamed up with the right team and properly trained. Option trading can help an investor manage risk and employ leverage to potentially profit whether the market is moving up, down, or sideways. Trading options allows you to profit in any market condition.

Here's the bottom line - You do NOT need a special trading system or trading systems. You don't need any special trading software. Period.

The only trading system or software you need is the 7 inches of gray matter in between your 2 ears.

The trading platform we use in our Primary Live Trade Brief is Trade Monster. The live trading tools are some of the best we've seen - they rival professional level trading systems. But at Top Gun Options this is the equipment we simply use to execute. An F/A-18 Hornet sitting on the deck of an aircraft carrier is useless. It needs a naval aviator - one that is trained and equipped with the mentality and attitude to succeed.

At Top Gun Options our skill-based live trading, trade alerts, and professional coaching empower traders and investors of all skill levels to take their options trading to the next level.

For example - a one day gain of over $21,000 today

A 7 month gain of nearly 170%, or nearly $90,000 on an average of $50,000 in haircut.

What are you waiting for?

Get airborne on a test trial today…before it's too late… You're journey to financial independence starts NOW - http://topgunoptions.com/ta-ltb-services/

Target: LULU Trading @ $66.78

Commit Criteria: (LULU) Lululemon has its Implied Volatility in the near term options at an excessively high 140%. The Oct expiration options have an IV of roughly 52%. Right after the Earnings Announcement on Sept 7th the IV of LULU will drop significantly. By selling a position in the next weekly expiration and protecting ourselves with the Oct expiration options we should be able to capture the crash in IV while keeping moderately protected from price movement. We are looking for possible price movement but for it to stay roughly between the $60 to $72.50 price range until the exit of this trade on Friday, Sept 7th. We will likely hold this trade until the short positions expire, giving us the max profit.

Our goal is to capture the high IV of the options expiring right after the earnings announcement while protecting ourselves with the Oct exp options at the same strikes.

Tactical employment:

1. Selling to Open 15 LULU Sept 7th Weekly 72.50 Calls
2. Selling to Open 15 LULU Sept 7th Weekly 60 Puts
3. Buying to Open 15 LULU Oct Monthly 72.50 Calls
4. Buying to Open 15 LULU Oct Monthly 60 Puts
5. As a Custom Trade (Dual Calendar)
6. For a net Debit of $2.72 per Dual Calendar ($272 per position for a total of $4080)
7. Maximum Gain: ~$3000 (estimate)
8. Maximum Loss: $4080

Profitability Target: We will allow the short position to expire worthless and capture our profits while closing our long protective position near the close on Fri Sept 7th

Mid-Course Guidance & Exit tactics:

1. If we hit a 15% profit before the earnings announcement then exit early. Position value of $3.13.
2. On Friday, Sept 7th exit for a profit if LULU trades close to $60 or $72.50.
3. If at any point LULU trades below $60 or above $72.50 close trade as a stop loss.
4. Allow short positions to expire worthless and immediately close the long protective positions near expiration on Friday.

Disclosure: I am short [[LULU]].

Additional disclosure: We are looking to enter this position in our Advanced Model Portfolio at Top Gun Options.