Here we are post-Labor Day. I’m not sure about most of you, but my summer was anything but restful. A volatile market trapped beneath bullish headlines kept me on my toes.

For those of you who enjoyed a well-earned respite, welcome back. I’m excited to find some new names for the portfolio before third quarter earnings estimates start leaking out in mid-October.

Just last week I issued buy alerts for call options on stocks that I expected to increase over the coming weeks due to positive sentiment regarding an eventual rebuild of Houston. However, at warp speed, the stocks jumped immediately. Two of the calls opened significantly higher at the open, leaving my buy limits in the dust.

Of the two calls that traded around my limits, I sold the Summit Materials (NYSE: SUM) calls out at a 135% gain in two trading days.  The Granite Construction (NYSE: GVA) December $55 call, which we still own in the portfolio, is up about 56%. I’ll be watching this one closely for an exit point.

As a refresher for subscribers- my options recommendations are all based on fundamental news events. I am not trading based on technical chart patterns or arbitrage mispricings. These are simple bullish or bearish bets usually tied to a future event.

This makes choosing limit prices difficult. Often these options are not very liquid, so I am left working with big spreads and trying to find a limit that will allow subscribers to execute a trade at a reasonable price. I suggest $.05-.10 latitude with my limit parameters.

I believe this is the first time I’ve had to abandon a trade suggestion due to the price running so quickly. Happily, subscribers let me know if they were involved in the two that quickly traded above my limit prices (some stepped up and paid the market price), which allowed me to help track their trades. I don’t expect most options trades to move so quickly but please know I am following the prices closely and will issue updates if I adjust my limit prices.

I sold Ambarella (NSDQ: AMBA) this morning. This has been a tough stock to own. Despite it being up 16% at one point, I held on with expectations that high-end corporate drone and virtual reality demand would lift profits. Instead, low priced drone cameras swamped the market and masked the success the company is seeing with security and automotive customers.

Once estimates start to drift well below my original expectations, I am forced to sell that stock. I hate selling at a low and will almost always give a company a one quarter grace period if it misses estimates. Ambarella has had two disappointing quarters, so it’s being kicked out, albeit at a painful 24% loss. I don’t take these losses casually and am working diligently to get some new names in the portfolio to put your hard earned money to work.

Around the Portfolio:

Gap (NYSE: GPS) was upgraded to Neutral from Sell at Citi.  Analyst Paul Lejuez upgraded the stock citing low expectations and support from the 4% dividend yield.. Concerns of a slowdown at Old Navy appear more priced in at current valuation levels, Lejuez tells investors in a research note. He raised his price target on the shares to $24 from $22.

Retail stocks, in general, have been acting much better with stocks like Movado (NYSE: MOV), Williams Sonoma (NYSE: WSM) and even beaten down teen retailer Abercrombie (NYSE: ANF), coming to life on stronger than expected numbers. Currently, we have just two retail holdings in the portfolio (SHOO and GPS), but I’m looking to add more.

Mueller Water (NYSE: MWA) was upgraded to Outperform from Neutral at Boenning & Scattergood. Analyst Ryan Connors expects sustained demand for basic water infrastructure products due to the positive outlook for home-building, and in particular land development as builders seek to bring new housing supply to market. With over $2/share in cash and an attractive systems business that has significant franchise value while shares trade at a 21% discount to water infrastructure peers.

Steven Madden, Ltd. (NSDQ: SHOO). Two of Madden’s publically traded customers, Shoe Carnival (NSDQ: SCVL) and DSW Inc. (NYSE: DSW) reported strong quarters recently. Most interestingly for Madden, both pointed to stronger women’s sales and athleisure in particular, as drivers of revenue. Indications that price promotions will be cut back this fall bodes well for shoe manufacturer Madden.