We’re entering a bustling earnings season which means more frequent options trades. In the past two weeks, I’ve recommended four new put trades (Sturm & Ruger (RGR), American Outdoor Brands (AOBC), VF Corporation (VFC) and Columbia Sportswear (COLM) and closed out two options positions.

I recommended selling the Sturm & Ruger put today for a quick double in ten trading days. I also sold the Akamai (AKAM) calls (which will expire this Friday) for a 23% one month gain. I recommend holding the rest of the options for now but if the underlying stocks move quickly be prepared for more trades.

Please be sure you’re signed up for text alerts for Profit Catalyst Alert trades. Options prices move incredibly fast, especially when there’s news pushing the price around.

Many of you have asked about limit prices on options trades- It is difficult to pinpoint the best limit price for options trades as most are not super liquid. A rule of thumb is to give $.05 leeway on the limit price. In situations like the Sturm & Ruger, where the options are very thinly traded, I may suggest $.10 of flexibility.

As always, post any questions about trades or portfolio positions on Stock Talk. I try to respond as quickly as possible, especially when there’s a new trade alert.

This month we’ve seen the best and the worst of options. While our 100% gain in the Sturm & Ruger puts can make you feel like a hero, the worthless expiration of Gap (GPS), Church & Dwight (CHD) and Big Five Sporting Goods (BGFV) options is incredibly painful. Gap, in particular, closed just $.15 shy of the $24 strike price required to squeak out a potential profit.

Options trading is not for the faint of heart, so please review your risk tolerance before entering any options trade. The same goes for stock trades, but volatility and risk geometrically expand for options trades.

Around the Portfolio:

Ambarella (NSDQ: AMBA) spiked up briefly on speculation the company is exploring a sale. While this is entirely plausible, my recommendation does not rely on acquisition value. I believe Ambarella will move higher as GoPro, whose business is declining, becomes a less important customer to the company. As GoPro shrinks, the growth of its other customers will be more obvious.

Big Five Sporting Goods (NSDQ: BGFV) continues to get killed as sporting goods competitors report weak sales. Monday morning Hibbett Sports pre-announced a very messy sales number for the quarter ending July. The company specifically noted weak clothing sales.

It is important to note that one of the reasons I like Big Five is that more than half its revenue is from sporting goods hardware- things like camping equipment, kayaks and bats, and balls; products that have been selling well.

Apparel, the culprit for almost every problem with sporting goods retailers right now, comprises less than 20% of Big Five’s sales. Hopefully, the stock will prove its worth when it reports numbers in early August. A firm date has not been set, but I will surely let you know when it does.

VF Corporation (NYSE: VFC) Put position VF Corp reported a mediocre quarter Monday morning. As I suspected, management attempted to put a positive spin on the business, noting that the company has “really good momentum into the second half of the year”.

Of course, that momentum will be felt later than expected. On the call with analysts, management blamed a “timing shift” in orders for its new lower third quarter estimates. This is a trick often seen by promotional managements. It’s called back-end loading, pushing all of the expected annual improvement in earnings off to the final quarter of the year.

VFC’s inventory continues to increase faster than expected and although product margins came in on target, promotional spending rose dramatically. This increase is a sign that VF still needs to prod customers with discounts to get sales moving.

Our puts don’t expire until next January, so we’ve got some time for the bear story to play out. That said, if the stock drops sharply, I may sell the puts and re-enter the trade later.

Vulcan Materials (NYSE: VMC) got knocked around at the beginning of last week due to fears that a newly proposed lumber tariff will impede public and private construction projects. Obviously, lumber is used primarily in housing construction, but Vulcan tends to trade with the bigger construction materials group.

Vulcan’s business is more tightly correlated to road and infrastructure spending. While the hoped for bump in government infrastructure spending from the current administration has yet to appear, Vulcan’s estimates rely on already-funded projects. Look for earnings August 2nd.