Option Investor
Newsletter

Daily Newsletter, Tuesday, 2/8/2011

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Different Day, Same Result

by Jim Brown

Click here to email Jim Brown
A rate hike by China and demonstrations at the Suez Canal knocked the markets lower at the open but the dip was bought once again. The bears were dumbfounded again.

Market Statistics

China started the morning off with a thud after it raised interest rates +25 basis points. The benchmark 1-year deposit rate rose to 3.0% and the 1-year lending rate rose to 6.06%. The increases are effective immediately. The last increase was on Christmas Day when those rates were also raised a quarter point.

With the "official" inflation rate at 5.1% but food inflation at 15% to 20% China has to keep applying the pressure. In China, where there is a very large underclass, the cost of food is 25% to 35% of income. China has to slow inflation or risk some serious civil unrest.

The knee jerk reaction to China's rate hike was a sudden drop in the futures and commodities. Crude oil in the U.S. declined sharply to $85.88 and Brent crude declined to $97.51. Later in the day both rebounded sharply on news from Egypt.

The news from China pushed the markets into negative territory at the open but the bulls were eager to rush into the dip. The dip lasted an entire 21 minutes before the S&P turned positive again on its way to a new closing high.

In the U.S. the Job Openings Labor Turnover Survey (JOLTS) showed a slight decline in the labor market. This survey straddles the period between the December and January nonfarm payroll reports. The number of job openings declined from 3.202 million in November to 3.063 million in December. New hires declined from 4.214 million to 4.184 million.

This minor decline was not unexpected after the weakness in the payroll reports. Hiring was still slightly higher than separations but the gain was slight at 22,000 jobs. Few companies hire in December and there is a wave of terminations of seasonal workers in the last week of December. This report was mostly ignored on a headline basis but there was a bright side. It is further confirmation the economy is still not ready to walk on its own and the Fed will continue to provide stimulus through QE2 at least through June.

The weekly chain store sales snapshot exploded higher at +2.2% as the blizzard shut-ins busted out of house and into the malls. Pent up buying translated into solid gains.

The only reports due out on Wednesday are the Mortgage Applications and Oil Inventories.

Economic Calendar

There were still a few earnings reports today and the picture was mixed. Teva Pharmaceuticals (TEVA) said profits more than doubled to $1.25 per share. Analysts were expecting $1.28. Teva projected full year profits of $4.90-$5.20 and analysts were looking for $5.28. Teva shares declined -5.4% on the news.

Avon Products (AVP) needs a makeover. The company reported earnings of 59-cents that missed estimates of 66-cents. Supply problems in Brazil, poor sales in Russia and rising costs for raw materials forced the decline in profits. About 80% of Avon's revenue comes from overseas. Shares of AVP lost -3%.

Avon Chart

Disney (DIS) reported earnings after the close of 68-cents compared to estimates of 56-cents. The results were due to higher advertising revenue at ESPN and ABC, stronger performance at its theme parks and cost cutting at its movie studio. Revenue grew +10% to $10.7 billion. Revenue at ABC and ESPN grew by +11% but operating profits surged +47% to $1.1 billion. Shares of DIS, already at a 52-week high surged after the close.

Disney Chart

McDonalds (MCD) reported same store sales that spiked +5.3% for January. In Europe sales rose +7% compared to estimates of +3.7%. U.S. sales rose +3.1% compared to estimates of +4.4%. Europe contributes more than 40% of McDonald's revenue. McDonalds said new products and longer hours helped to stimulate sales. McDonalds has been raising prices to offset the higher prices of food commodities. MCD shares were up +$2.

The price of oil in the U.S. declined under $86 on the news from China on fears of lower demand as China clamps down on inflation. The price quickly rebounded after news broke of a worker demonstration at the Suez Canal in Egypt. Around 3,000 workers in companies owned by the Canal authorities and based in Ismailia and Suez had gone on strike on Tuesday over pay and working conditions. Workers in Canal owned companies in Port Said will go on strike on Wednesday. A senior official said the canal traffic was operating normally and the sit down strikes over pay would not affect Suez Canal operations and ship movement.

WTI Crude Oil Chart

Brent Crude Futures

Note the difference in the two crude charts above. The price of Brent light crude rose to $103 last week and after a brief decline it closed over $100 again today. Triple digit oil prices are with us again despite the $86 price on U.S. WTI today. The difference in the prices is related to the lack of available storage in Cushing OK and no place to put new oil. It is even worse than it appears because light Bakken crude was selling for $81 last week. Prices for WTI should continued to be pressured until some new pipelines are built or demand accelerates to deplete inventories at Cushing. Get used to paying higher prices for gasoline despite the weakness in WTI. AAA predicted a $3.15 average price for gasoline for 2011. About one third of global oil sales are priced off the WTI contract and two-thirds indexed to the Brent contract.

The Fed inflation hawks Jeffrey Lacker and Richard Fisher were both talking down QE2 today. Richmond Fed President Lacker said the Fed should seriously review their commitment to the QE2 program. He believes the sudden acceleration of economic indicators suggests the Fed seriously needs to reconsider its actions. Lacker has been an inflation hawk for quite a while so his stance it not new. It is however growing in intensity although he still believes inflation is benign today. It is future inflation he is worried about. Lacker is not a voting member of the FOMC in 2011.

Richard Fisher, president of the Dallas Fed, is a voting member and he vowed on Tuesday to vote against any additional bond-buying programs once the QE2 program expires. Bernanke held out the hope for investors last week that a QE3 program was a possibility. Fisher said he expects to be at the forefront of the effort to push the Fed to cut back on its Treasury holdings and tighten economic policy at the "earliest sign" of inflation moving out of the commodity markets and into consumer prices.

Bernanke may want to keep interest rates low by buying treasuries but the market appears to be in disagreement. The current yield curve from the two-year to thirty-year is the steepest it has ever been. This suggests the market believes the economy is getting dramatically better and the Fed will have to end its QE programs sooner rather than later.

Interest rates are rising and rising quickly. The bull market in bonds is over. The constant rally in equities is sucking money out of bonds and forcing yields (rates) higher. On the chart below we saw the two months of consolidation while the Fed tried to talk the market lower but the positive economics of the last few days has ended that possibility. The only way Bernanke could lower rates now would be an even larger QE3 program announcement and that is not going to happen.

While some see this as a failure for Bernanke I see the opposite. Sure he would have liked for rates to stay low for the rest of the year to support the housing market but there is another view to consider. Rates are going up because the economy is improving. Rising rates is driving money out of the bond market and back into equities. The stock market is soaring and the wealth effect for 70 million U.S. investors is improving daily. This was a major goal of Bernanke all along. Push the equity markets higher by driving investors out of bonds. The rising wealth effect means more homebuyers, more consumer spending, more new businesses and higher employment. Some people are ridiculing Bernanke for being unable to restrain rates but they should be giving him credit for reflating the equity market and the economy.

Ten Year Treasury Yield Chart

Option Investor readers should be applauding Ben Bernanke and thanking him for the current bull market. His QE2 program has done what countless stimulus programs over the last three years have been unable to do. Of course they all helped and did set the stage for Bernanke's big move. He just seized the opportunity and made the play.

We will have mother of all hangovers when Bernanke takes the punchbowl away this summer but for the time being the party is in full swing.

The S&P-500 rallied to close at the high of the day and well over resistance at 1320. This is one more bullish signal that suggests the markets still want to go higher. The quick rebound out of the opening dip was frustrating for those who were hoping for something a little more dramatic in the way of a buying opportunity. Support is now in the 1290-1300 range and rising.

The S&P has risen for four consecutive days so we do need to start looking for a down day in the not too distant future. The Dow is up seven days. Any decent dip should take the S&P back to the blue uptrend line for support AND it would be a buying opportunity.

S&P-500 Chart

The chart of the Dow is amazing. After two months of minor moves in a stair step pattern of growth it has turned into a mean, green breakout machine. The converging resistance at 12,000 managed to hold it in check for two weeks but those chains are no longer holding the Dow back. It has broken free and in breakout mode.

While this is a great chart it is also a warning that things can't continue this way forever. Once unbridled enthusiasm takes hold we are only a day or two away before something rains on our parade. I would love to believe that trees grow to the sky and I do expect higher numbers on the Dow but I am now concerned there should be a temporary pullback in our immediate future.

Real support is 12,000 and that is way back in the rear view mirror today. That means some other number will likely appear and 12,150 is a good candidate.

Dow Chart

The Nasdaq continues to lag the Dow and S&P and remains below long-term resistance. Initial resistance at 2810 should be tested on the next decent move higher and that uptrend resistance was solid back on January 27th. After four days of gains we should expect a pullback possibly later this week. In theory 2780 and 2765 should be support.

As long as Apple keeps getting new price targets in the $500 range the Nasdaq should maintain its forward progress. Apple has seen five upgrades in the last two weeks with price targets between $425 and $550. The high one was from Ticonderoga. The other three were in the $450 range. Apple has gained $10 this week and with a 20% weighting in the Nasdaq that is powerful support for the index.

Nasdaq Chart

The Russell finally found some traction and broke out over 800 this week and did it with gusto to close at 813 today. That puts the Russell over the 807 resistance high from January and in breakout mode. Future resistance is at the 825 and 835 levels.

The blue chips were leading the charge last week and the Russell was lagging but it caught up today and appears to taking the lead again. I was starting to get worried small cap sentiment was fading but it looks like it was only temporary. The difference in the chart from Friday through today is amazing.

Russell Chart

The biggest problem is the volume at only 6.8 billion shares for the last two days. There is a serious lack of conviction suggesting the majority of retail traders and quite a few institutional firms are still not onboard with the rally. Every day that passes they see the additional gains and become more frustrated. The 21 minute dip at the open is a key indicator they are looking for any opportunity to come off the sidelines but they are refusing to buy the breakouts. At least they WERE refusing. The market action over the last two days suggests they may be ready to panic.

In summary I believe the markets were in breakout mode today but the angle of the trajectory suggests there will be a bout of profit taking in our near future. I still believe it will be another buying opportunity and we have several more weeks of decent gains before traders begin to really worry about the Fed taking away the punchbowl. The sell off in bonds means more money moving into the equity markets and despite the strong bond selling over the last week I think we are just getting started. Bonds are going to be dead money and equities are where the action will be.

Don't fight the Fed, buy the dips instead!

Jim Brown

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New Option Plays

Construction Supplies

by James Brown

Click here to email James Brown

Editor's Note:

In addition to tonight's new candidate shares of NKE and BHP caught my eye. I would consider bullish positions on NKE if shares dipped toward $85 and positions in BHP on a dip near $92.50.

- James


NEW DIRECTIONAL CALL PLAYS

Fastenal Co. - FAST - close: 62.54 change: +0.56

Stop Loss: 58.70
Target(s): 64.75, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Company Description

Why We Like It:
Shares of this construction supply company have broken out to new all-time highs. After several weeks of consolidating sideways on either side of $60 the stock should be rested and ready for another leg higher, especially with shorts running for cover. The most recent data listed short interest at 11.4% of the 132 million-share float.

I am suggesting we wait for a dip and use a trigger at $61.00 to open bullish call positions. If triggered we'll use a stop loss at $58.70. Our targets are $64.75 and $67.25. FYI: The Point & Figure chart for FAST is bullish with a $73 target.

Trigger @ 61.00

- Suggested Positions -

Buy the March $60 calls (FAST1119C60) current ask $3.30

- or -

Buy the March $65 calls (FAST1119C65) current ask $0.75

Annotated Chart:

Entry on February xxth at $ xx.xx
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 8th, 2010


In Play Updates and Reviews

Small Caps at 3-year Highs

by James Brown

Click here to email James Brown

Editor's Note:

Strength in the small caps is encouraging if you're bullish on the market. The Russell 2000 closed near its best levels of the day at three-year highs. On our plays list we had a planned exit in CMP. FDS hit our final exit target. AAP hit our stop loss.

-James

Current Portfolio:


CALL Play Updates

Caterpillar Inc. - CAT - close: 100.61 change: +0.14

Stop Loss: 93.90
Target(s): 99.90, 104.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/08 update: CAT traded under $100 this morning but managed to eke out a small gain by the close. The short-term trend is up but CAT is looking a little bit overbought here. We want to buy calls on a dip. Right now I am aiming to buy calls at $96.50. Our targets are $99.90 and $104.00.


The Point & Figure chart for CAT is bullish with a $112 target.

Trigger @ 96.50

Buy the March $100 calls (CAT1119C100) current ask $2.92

Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 5th, 2010


Coach Inc. - COH - close: 57.21 change: +1.32

Stop Loss: 53.49
Target(s): 58.50, 62.00
Current Option Gain/Loss: +47.6%, and + 94.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/08 update: COH is performing very well with another strong session. Shares added +2.3% and will soon be challenging its 2010 highs near $58.50. Don't forget our first exit target is $58.50. Please note that I am raising our stop loss to $53.49. I would still consider new positions here or on a dip back toward $55.00. Keep in mind that the $60.00 level could end up being round-number, psychological resistance.

- Suggested Positions -

Long the 2011 March $55.00 calls (COH1119C55) Entry @ $2.10

- or -

Long the 2011 March $57.50 calls (COH1119C57.5) Entry @ $0.85

02/08: New stop loss @ 53.49

Entry on February 7th at $55.35
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on January 31st, 2011


Costco Wholesale Corp. - COST - close: 74.80 change: +0.55

Stop Loss: 72.95
Target(s): 79.75
Current Option Gain/Loss: Unopened
Time Frame: 3+ weeks
New Positions: Yes, see Trigger

Comments:
02/08 update: COST extended its gains on Tuesday and closed with a new 52-week high. Shares are quickly nearing resistance at the $75.00 area. I would be tempted to buy calls right now but COST has significant resistance near $75.00 dating back to early 2008. The old high was $75.23. I am suggesting we use a trigger to buy calls on a breakout at $75.50. If triggered our target is $79.75. However, we will plan to exit ahead of COST's early March earnings report. That gives us three or four weeks.

The Point & Figure chart for COST is bullish with an $88 target.

Trigger @ 75.50

- Suggested Positions -

Buy the March $75 calls (COST1119C75) current ask $1.39

Entry on February xxth at $ xx.xx
Earnings Date 03/02/11 (confirmed)
Average Daily Volume = 5.8 million
Listed on February 7th, 2010


Donaldson Company, Inc. - DCI - close: 59.93 change: +0.37

Stop Loss: 57.40
Target(s): 62.50, 64.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/08 update: Shares of DCI appear to be gathering up steam for a bullish breakout through resistance near $60.00. I am suggesting a trigger to buy calls at $60.35. If triggered we'll use a stop at $57.40. Our targets are $62.50 and $64.75. We will plan to exit ahead of the late February earnings report.

Trigger @ 60.35 (Small Positions)

- Suggested Positions -

Buy the 2011 March $60 calls (DCI1119C60) Current ask $1.75

02/05 Switched from puts to calls. Trigger @ 60.35

Entry on February xxth at $ xx.xx
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 208 thousand
Listed on January 31st, 2011


PACCAR Inc. - PCAR - close: 51.49 change: +0.52

Stop Loss: 49.45
Target(s): 53.85
Current Option Gain/Loss: +30.0%, and +14.2%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/08 update: The bounce in PCAR is improving. Shares added +1% on slightly above normal volume. I would still buy calls on another bounce from the $50.00 level. Our exit target is $53.85. This should be a short-term trade. Aggressive traders could use February calls. I'm listing both February and March. Just remember that Februarys expire in two weeks.

Note: A lot of the option strikes are odd. PCAR must have had some sort of dividend.

Open Small Positions Now

Long the February $49.70 call (PCAR1119B49.7) Entry @ $1.50

- or -

Long the March $55 call (PCAR 1119C55) Entry @ $0.35

Entry on February 7th at $50.60
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on February 5th, 2010


CBOE Market Volatility Index - VIX - close: 15.81 change: -0.47

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -53.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/08 update: The VIX saw a sharp spike lower on Tuesday morning and hit 14.86, which was a new multi-year low. The VIX has not traded that low since summer of 2007. I have been suggesting that we could open new positions near the 15.50 area. Now we have a new low as a reference point and traders could place their stop loss under 14.86. I would start with very small positions.

Earlier Comments:
Just because the VIX bounced near the 15.00-15.50 level in the past doesn't mean it can go crashing through it but that would be a good area to speculate on a rebound. I will point out that between 2005 and 2006 the VIX was pretty much dead, limping along the 10.00 area for two years.

We have two targets to take profits at 24.00 and at 28.00.

- Suggested Positions -

Long the 2011 March $22.50 calls (VIX1116C22.5) Entry @ $1.60

Entry on January 26th at $17.00
Earnings Date --/--/--
Average Daily Volume =
Listed on January 25th, 2010


Wynn Resorts - WYNN - close: 120.18 change: +2.17

Stop Loss: 115.80
Target(s): 129.00, 135.00
Current Option Gain/Loss: -16.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/08 update: Our call play on WYNN has been opened. Positive analyst comments helped lift WYNN to an early high of $122.89. We had a trigger to buy calls at $122.00. Given the late afternoon bounce off its lows I would still consider new positions now. Our targets are $129.00 and $134.50.

Upon further review it looks like our stop loss is a little too tight. I'm moving our stop to $115.80, which gives WYNN about 5% wiggle room.

- Suggested Positions -

Long the March $130 calls (WYNN1119C130) Entry @ 2.75

02/08 New stop loss @ 115.80, triggered at $122.00

chart:

Entry on February 8th at $122.00
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 3rd, 2010


PUT Play Updates

Citrix Systems - CTXS - close: 65.67 change: -0.66

Stop Loss: 68.05
Target(s): 60.10, 58.00
Current Option Gain/Loss: -84.2%, and -55.0%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
02/08 update: CTXS underperformed the NASDAQ today with a -0.99% decline. Yet I would hesitate to launch new bearish positions. Our initial plan was to start with small (half-sized) positions to limit our risk.

- (small positions) -

Long the Feb. $60 PUTs (CTXS1119N60) Entry @ $0.95

- or -

Long the Mar. $60 PUTs (CTXS1119O60) Entry @ $2.00

02/05 Adjusted stop loss to $68.05

Entry on January 31st at $63.43
Earnings Date 01/26/11
Average Daily Volume = 3.2 million
Listed on January 29th, 2010


Google Inc. - GOOG - close: 618.38 change: + 4.09

Stop Loss: n/a
Target(s): n/a
Current Option Gain/Loss: see below
Time Frame: 1 month
New Positions: No

THIS IS A STRANGLE TRADE (not a simple put play)

Comments:
02/08 update: GOOG is bouncing back toward short-term resistance near $620 but this has no impact on our strangle trade. At this point our strangle trade is dead in the water and has very little hope before expiration. We've got two weeks left before February options expire? What are the odds that GOOG is going to move more than +/- 7% in the next two weeks?

No new strangle positions at this time.

STRANGLE TRADE: Buy an out of the money CALL and PUT

STRANGLE #2 (February) initial cost $15.10, currently: $0.40 (-97.3%)

2011 February $680 call (GOOG1119B680) Entry @ $6.20

- AND -

2011 February $580 put (GOOG1119N580) Entry @ $8.90

01/22: Exit the January strangle at the open.

Entry on January 20th at $626.77
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on January 19th, 2010


iShares Russell 2000 Index - IWM - close: 81.23 change: +0.57

Stop Loss: --.--
Target(s): 75.00
Current Option Gain/Loss: -100.0%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
02/08 update: If you're bullish then the relative strength in the small caps is encouraging. I've been suggesting nimble traders buy calls on a move over $80.00 or $80.75. Now we might want to buy calls on a dip near $80.00 instead. Our put play has been dead for a couple of days now so we'll ride it out through expiration and see what happens.

I am not suggesting new bearish plays at this time.

Small Position only

Long the 2011 February $77 puts (IWM1119N77) Entry @ $1.65

02/03 Remove the stop loss
01/29 New stop loss @ 80.25

Entry on January 20th at $78.14
Earnings Date --/--/--
Average Daily Volume = 38 million
Listed on January 19th, 2010


CLOSED BULLISH PLAYS

Compass Minerals - CMP - close: 94.40 change: +0.21

Stop Loss: 91.90
Target(s): 94.75, 99.00
Current Option Gain/Loss: + 60.0%, and +50.0%
Time Frame: a few days
New Positions: See below

Comments:
02/08 update: Our time for this trade has expired. It was our plan to exit option positions at the close today to avoid holding over earnings. CMP reported results that were in-line with expectations and I have not noticed any afterhours action in the stock price.

Readers may want to keep CMP on their watch list. Another bounce near $90.00 could be another bullish entry point.

- Suggested Positions -

2011 February $95.00 calls (CMP1119B95) Entry @ $1.25, Exit @ 2.00 (+60%)

- or -

2011 March $95 calls (CMP1119C95) Entry @ $2.00, Exit @ 3.00 (+50%)

02/08 Planned exit. Options @ +60% and +50%
02/07 New stop loss @ 91.90
02/05 Two days left. Plan to exit on Feb. 8th at the close
02/03 New stop loss @ 89.90
02/01 Target Hit @ 94.75. Feb. call @ $2.50 (+100%)
Mar. call @ $3.30 (+65%)
02/01 New stop loss @ 89.85

chart:

Entry on January 28th at $91.00
Earnings Date 02/08/11 (confirmed)
Average Daily Volume = 210 thousand
Listed on January 27th, 2010


FactSet Research Systems - FDS - close: 103.57 change: +0.74

Stop Loss: 97.40
Target(s): 99.90, 103.50
Current Option Gain/Loss: +122.4%, and +178.5%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/08 update: Target achieved. FDS is still melting higher and shares hit $103.73 today. Our official exit target was hit at $103.50. I would keep FDS on your watch list as another dip or bounce near $98 could be another entry point.

FYI: Sadly the Feb. $100 calls have extremely wide spreads. You might be able to profit a better gain if you place your limit order to exit inside the spread instead of a market order but you run the risk of not getting filled. (today's spread was $1.95 bid/$4.10 ask) Earlier the bid on the Feb. $100 call was higher.

Small Positions

2011 February $95 call (FDS1119B95) Entry @ $2.90, Exit @ 6.45 (+122.4%)

- or -

2011 February $100 call (FDS1119B100) Entry @ $0.70, Exit @ 1.95 (+178.5%)

02/08 Target hit @ 103.50. Options @ +122% and +178%
02/07 New stop loss @ 97.40
02/02 Consider locking in gains now (Options @ +124% and +242%)
01/29 Consider an Early Exit now!
01/27 New stop loss @ 95.75
01/27 1st Target Hit @ 99.90. Feb. $95 call @ $4.25 (+46.5%)
01/27 1st Target Hit @ 99.90. Feb. $100 call @ $1.45 (+107%)

chart:

Entry on January 25th at $96.64
Earnings Date 03/16/11 (unconfirmed)
Average Daily Volume = 181 thousand
Listed on January 24th, 2010


CLOSED BEARISH PLAYS

Advance Auto Parts Inc. - AAP - close: 64.90 change: +0.40

Stop Loss: 65.05
Target(s): 60.25, 58.00
Current Option Gain/Loss: - 50.0%
Time Frame: 6 trading days
New Positions: see below

Comments:
02/08 update: AAP tagged a new relative high and briefly traded above its 50-dma. Shares hit $65.23 intraday, which was enough to hit our stop loss at $65.05.

- Suggested Small Positions -

2011 Feb. $60.00 puts (AAP11N60) Entry @ $0.50, Exit 0.25 (-50%)

02/08 Stopped out @ 65.05. Option @ -50%
02/02 New stop loss @ 65.05

chart:

Entry on February 1st at $64.22
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on January 31st, 2011