Option Investor
Newsletter

Daily Newsletter, Monday, 3/14/2011

Table of Contents

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

Market Wrap

New Headline Risk

by Todd Shriber

Click here to email Todd Shriber
For weeks, the headline risk stocks have had to contend with has come courtesy of the Middle East, a corner of the globe where the U.S. can find few friends. Now, the issue du jour comes from Japan, one of America's strongest allies. The aftermath of Japan's largest-ever earthquake shook U.S. stocks today with a broad swath of sectors feeling some pain due to Asia exposure. While the losses were worse earlier in today's trading session, the S&P 500 couldn't muster enough upside to close the day positive and slipped for the third day in four. The Nasdaq lost half a percent and the Dow barely missed doing the same.

Stats Table

If you believe that markets have a tendency to overreact in both directions, this was certainly a day that would fortify that belief and the uranium sector would serve as one place as where overreaction was easy to find. That is understandable as Japan is the third-largest user of nuclear power in the world behind the U.S. and France and the earthquake and ensuing tsunami have put the country on the brink of nuclear disaster.

The suddenly fragile position of nuclear power in Japan had traders speculating that plans to expand nuclear power use here in the U.S. would be imperiled and that emerging economies such as China and India that have said they too would like to expand their use of nuclear power would reconsider.

The result was a very bloody Monday for the uranium sector. There may be more, but I counted nine uranium-related stocks that trade on U.S. exchanges and the best performer of the group today was USEC (USU), which was down 11%. Cameco (CCJ), the biggest of the group by market value, shed 13% and from there it gets significantly worse as the next best performance is Global X Uranium ETF (URA) which lost over 17%.

I think the feeling someone somewhere had a crystal ball because URA had been under what I would call unjust selling pressure before the earthquake in Japan and with a real excuse to sell, URA was taken to the woodshed. In the essence of disclosure, I started a small long position in the ETF today.

Uranium ETF

On the other hand, it can be said that the solar sector overreacted positively to the negative events in Japan. There was a host of analyst chatter out today on various solar stocks, hardly any of it positive, yet even the names that were the objects of less-than-favorable analyst comments moved higher as the market started treating the solar sector as if it was the only source of energy available to the entire world.

That is some hyperbole, but not much. First Solar (FSLR) gained over 5% despite Credit Suisse noting Japan uses a different variety of solar technology than what the company specializes in. JA Solar (JASO) was up 6% and Trina Solar (TSL) and Yingli Green Energy (YGE) were both up 7%, but all three were downgraded by Piper Jaffray today. MEMC Electronic Materials (WFR) jumped 11% on speculation the companies semi wafers would be a hot item following Japan's nuclear issues.

In mergers and acquisitions news, the deal of the day came by way of Warren Buffett's Berkshire Hathaway (BRK-A, BRK-B). Buffett, who recently said in his letter to Berkshire shareholders that the company's ''elephant gun has been reloaded'' and that his ''trigger finger is itchy'' made good on those comments with the announcement that Berkshire will acquire Lubrizol (LZ), the world's largest maker of chemical additives for $9 billion in cash.

The deal values Ohio-based Lubrizol at $135 a share, a 28% premium to where the shares closed on Friday. Berkshire's acquisition of Lubrizol is its second-largest acquisition in the past five years behind last year's purchase of railroad operator Burlington Northern Santa Fe for which Berkshire paid almost $27 billion. Prior to acquiring BNSF, Berkshire's biggest buy was the $16 billion purchase of reinsurance firm General Re in 1999 for $16 billion.

Buffett already had some exposure to the specialty chemicals business through a $3 billion investment in Dow Chemical (DOW) preferred shares that was made in 2009 to help the company finance its controversial acquisition of rival Rohm & Haas. So it can be said that Lubrizol fits the mold of a business that Buffett would find attractive: A company operating in a prosaic industry that offers high margins and a business model that Buffett can easily wrap his head around.

''Lubrizol is exactly the sort of company with which we love to partner – the global leader in several market applications run by a talented CEO, James Hambrick,'' Buffett said in a statement. Hambrick will stay on to run Lubrizol following the deal, which is expected to close in the third quarter.

I am not going to get on my soapbox about this, at least not too much, but some readers may remember that I highlighted some unusual options activity in AirTran last fall before Southwest (LUV) announced its takeover of the company. Well, the same thing can be said for Lubrizol. Call trading surged to 2,931 contracts on March 9, and open interest for the April $110 calls jumped to 2,654 from 41, Bloomberg News reported.

A block of almost 2,200 April $110 Lubrizol calls traded on March for $2.35 a piece, Bloomberg noted. Those calls are now worth almost $25. Adding to the intrigue here is the fact that four-week average for Lubrizol options is just over 400 contracts. Draw your own conclusions, but Bloomberg did quote one source that called the activity in Lubrizol options ''more than suspicious.''

Lubrizol Chart

There is more M&A drama on the horizon and this news broke while the market was open today. Nasdaq OMX (NDAQ) is reportedly close to securing $5 billion in financing to make a competing offer for NYSE Euronext (NYX), operator of the New York Stock Exchange. Germany's Deutsche Boerse and NYX announced $10 billion merger plans last month and exchange consolidation has been heating up in international markets as well, but Nasdaq has been left out in the cold.

Nasdaq is reportedly working with IntercontinentalExchange (ICE) on the deal. ICE would acquire Euronext's European businesses, according to the Financial Times, and probably the derivatives business, too, as has been previously speculated, while Nasdaq would control NYX's equities trading business here in the U.S. All of that assuming NYX even entertains the offer.

Bank of America Merrill Lynch is among a group of four banks that would supply Nasdaq with $5 billion in financing and the exchange operator would raise another $5 billion through asset sales to fund its offer for NYX, the FT reported. Obviously, it remains to be seen how successful Nasdaq's bid will be or even if it materializes, but I think it is reasonable to assume a Nasdaq/NYSE combination would face some heavy antitrust scrutiny.

NYSE Euronext Chart

Perhaps lost in all the Japan-related headlines was news about the debut of the iPad 2 over the weekend. Depending on what set of analyst estimates one chooses to believe, sales for the new tablet device were either ''really good'' or ''flat-out amazing.'' Deutsche Bank and Piper Jaffray said 500,000 iPads sold over the weekend, but a couple of other research firms put their estimates at close to 1 million.

Piper Jaffray analyst Gene Munster said in a note to investors on Sunday that channel checks are turning up no availability for the new generation of the wildly popular tablet device. Munster said Apple (AAPL) will probably surpass his early prediction that 5.5 million iPads would be sold this quarter, Bloomberg reported.

What is truly noteworthy is that most estimates say that the bulk of iPad 2 buyers this weekend were first-time buyers of the device, something in range of 65%-70%. That says word traveled fast about how cool the first generation was and buyers were either ditching tablets made by rival firms in favor of or making their first-ever tablet buy the iPad 2. Speaking of rivals, at this point it appears Apple really does not have a Pepsi to its Coke in the tablet wars. Not only is the iPad 2 viewed as the superior tablet device, it also costs less than comparable products such as the Xoom made by Motorola Mobility (MMI). No wonder the iPad is expected to account for higher percentages of Apple's revenue going forward.

Tablet Revenue Chart

Looking at the charts, the S&P 500 did violate support at 1295 today, but it was able to eke out a close above that level. A close above 1300 would have been nice, but that was not to be had and now the 1305 area is looking like resistance. Tuesday's big scheduled event is the release of the FOMC minutes. Good news on that front and any improvement in Japan would probably lead the market higher.

S&P 500 Chart

An after-lunch rally helped the Dow pare its losses for the day and get close to 12,000, but support at 11,950 was violated intraday. Only seven of the 30 stocks in the Dow closed higher today, negating a 2% Japan-related jump for Caterpillar (CAT). GE was hammered on nuclear power fears and every financial stock in the stock index closed lower.

Dow Chart

Despite the bullish iPad 2 sales news, Apple barely moved today and the Nasdaq lost almost 15 points to close at the psychologically important 2700 figure. Just as 1275 on the S&P 500 will test the buy the dips crowd, 2675 on the Nasdaq will do the same. It would be bearish to see a close under that level for the Nasdaq.

Nasdaq Chart

Obviously, the FOMC minutes tomorrow are a critical event and if I was a betting man, I would bet that there is simply no way Chairman Bernanke even hints at the withdrawal of monetary stimulus. Not with the specter of $100 oil still an issue the market's dour reaction to the events in Japan. I get the impression that the shorts are squandering opportunities here. What should be triple-digit losses on the Dow get cut in half before the end of the day despite plenty of ammunition from Libya, then Japan, etc.

The good news for the bulls is that these issues have shelf lives. While most of probably aren't fans of the current regime in Libya, odds are that it will stay in place and that would stabilize oil prices. I am just telling you what the odds at Intrade.com will confirm. As for Japan, this too will pass. This is one of the most technologically advanced countries in the world populated by a prideful, resilient people that will not want a nuclear disaster on their hands.


New Option Plays

You Might Think

by James Brown

Click here to email James Brown

Editor's Note:

Readers may want to keep an eye on shares of Under Armour Inc. (UA). The stock has been holding up pretty well. Investors might want to buy calls on a breakout past last week's high near $70.70. Keep in mind that rival Nike (NKE) reports earnings on March 17th and NKE's results could have a big influence on trading in UA.

The FOMC meeting on Tuesday could spark another bout of volatility. Nimble traders may want to plan ahead and consider some sort of market neutral trade like a straddle or strangle on the major index's ETFs. If you don't see a big move following the report or Wednesday then get out quickly.

- James


NEW DIRECTIONAL CALL PLAYS

Polaris Industries, Inc. - PII - close: 80.12 change: -0.11

Stop Loss: 78.49
Target(s): 84.95, 89.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 7 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
One might think that if the market was worried about consumer spending and how high gasoline prices might impact retail sales then a stock like PII would not be performing so well. Yet PII is holding up pretty good. Shares are consolidating near resistance in the $80-82 zone and closed virtually unchanged on today's market weakness. If the market doesn't breakdown then PII could be poised to outperform.

I am suggesting a trigger to open bullish positions at $82.25. If triggered our targets are $84.95 and $89.00. FYI: The Point & Figure chart for PII is bullish with a $98 target.

Trigger @ 82.25

- Suggested Positions -

Buy the April $85 calls (PII1116D85) current ask 1.50

Annotated Chart:

Entry on March xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 396 thousand
Listed on March 14th, 2010


In Play Updates and Reviews

Inching Lower

by James Brown

Click here to email James Brown

Editor's Note:

Stocks posted widespread losses on Monday but declines could have been worse as traders bought the dip midday. Our small cap ETF trades have been stopped out. Our FDS play was closed as planned. Our SRCL call play has been triggered.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 353.56 change: +1.57

Stop Loss: 344.00
Target(s): 364.00, 379.00
Current Option Gain/Loss: + 4.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/14 update: AAPL managed to outperform the major averages. Shares rallied +0.44% versus widespread losses for the market. The stock gapped open at $353.18 but the initial rally didn't make it very far. Readers may want to wait for a dip into the $350-345 zone as your bullish entry point.

This is an aggressive, higher-risk trade so we want to keep our position size small to try and limit our risk. FYI: The Point & Figure chart for AAPL is bullish with a $448 target.

- Small Bullish Positions -

Long the April $365 calls (AAPL1116D365) Entry @ $6.00

Entry on March 14th at $353.18
Earnings Date 04/19/11 (unconfirmed)
Average Daily Volume = 18 million
Listed on March 12th, 2010


Cerner Corp. - CERN - close: 103.53 change: +0.33

Stop Loss: 99.45
Target(s): 104.85, 109.00
Current Option Gain/Loss: -11.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: CERN was showing relative strength this morning thanks to an analyst upgrade. The stock came close to testing recent resistance at the $105.00 level. I am not suggesting new positions at these levels. Wait for a breakout over $105.00 or look for a dip near $102.00-101.50.

Our second and final target is $109.00.

FYI: I want to point out that the most recent data (as of Feb. 15th) listed short interest at 13.9% of CERN's 70-million share float. That definitely seems like a high amount of shorts and fuel for a short squeeze. Plus, the Point & Figure chart for CERN is bullish with a $115 target and what appears to be a relatively fresh quadruple top breakout buy signal.

- Suggested Positions -

Long the April $105 calls (CERN1116D105) Entry @ $2.70

03/12 New stop loss @ 99.45
03/04 1st Target Hit @ $104.85, Option @ $3.15 (+16.6%)

Entry on March 3rd at $102.62
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 600 thousand
Listed on March 2nd, 2010


Cognizant Technology Solutions - CTSH - close: 75.37 change: -1.00

Stop Loss: 74.75
Target(s): 82.25, 84.75
Current Option Gain/Loss: -55.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/14 update: We had a close call with CTSH today. The market's weakness pushed shares of CTSH down to $74.79. Our stop loss is at $74.75. The fact that CTSH didn't show more weakness is a positive sign. We can still buy calls at these levels but given the market weakness readers may want to wait.

FYI: The Point & Figure chart for CTSH is bullish with a $105 target. Plus, a breakout past $78 would produce a new quadruple top breakout buy signal.

- Suggested Positions -

Long the April $80 calls (CTSH1116D80) Entry @ $1.80

Entry on March 9th at $78.25
Earnings Date 05/04/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on March 8th, 2010


Citrix Systems Inc. - CTXS - close: 71.06 change: -0.68

Stop Loss: 67.90
Target(s): 77.00, 79.90
Current Option Gain/Loss: -27.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/14 update: Monday brought more of the same for CTXS. Shares continue to bounce around the $70-72 zone. The fact that shares held the $70.00 level is a bullish sign in my book but if the market continues to sink CTXS will likely follow it lower. Readers may want to raise their stops toward Thursday's low of $69.61.

I do consider this a slightly more aggressive trade. Our targets are $77.00 and $79.90. The Point & Figure chart for CTXS is bullish with a $94 target.

- Small Bullish Positions -

Long the April $75 calls (CTXS1116D75) Entry @ $2.20

03/12 New stop loss @ 67.90

Entry on March 7th at $71.89
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on March 5th, 2010


Fastenal Co. - FAST - close: 61.25 change: -0.57

Stop Loss: 59.90
Target(s): 67.25
Current Option Gain/Loss: - 100%, and -55.5%
2nd Position Option Gain/Loss: - 100%, and -34.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/14 update: FAST flirted with a breakdown under its 50-dma but managed a rebound by the close. Shares could still be headed for recent support near the $60.00 level. The low today was $60.49. I would still consider new positions on dips near $60.

Readers may want to keep in mind that the most recent data listed short interest at 13.6% of the 132 million-share float.

- Suggested Positions -

Long the March $65 calls (FAST1119C65) Entry @ $0.85

- or -

Long the May $65 calls (FAST1121E65) Entry @ $2.25

-2nd Entry as of listed 2/24, Entered 2/25-

Long the March $65 calls (FAST1119C65) Entry @ $0.20

- or -

Long the APRIL $65 calls (FAST1121D65) Entry @ $0.99

02/24 Buy the dip. New Entry (2nd position).
02/23 New entry point @ 60.96. March $65 call @ 0.25, May $65 call @ $1.45
02/22 Entry @ 62.99, NEW STOP @ $59.90
02/19 Adjusted entry point. Buy calls now. Very small positions
02/12 New trigger @ 61.55, new stop loss @ 59.40

Entry on February 22nd at $62.99
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 8th, 2010


Fossil, Inc. - FOSL - close: 82.43 change: -0.12

Stop Loss: 79.40
Target(s): 82.00, 88.00
Current Option Gain/Loss: +103.5%, and + 92.3%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: FOSL ended the session with a minor loss. Traders bought the dip near $80.50 and shares look poised to raise from here. I would use this afternoon bounce as a new entry point to buy April calls. However, I would keep positions small because the market still looks vulnerable to more selling pressure. Our final target is $88.00.

- Suggested Positions -

Long the March $80 calls (FOSL1119C80) Entry @ $1.40

- or -

Long the April $80 calls (FOSL1116D80) Entry @ $2.60

03/09 New stop loss @ 79.40
03/05 New stop loss @ 76.75
03/05 1st Target Hit @ $82.00, Options @ +142% and +92.3%
03/03 new stop loss @ 74.75

Entry on February 28th at $76.75
Earnings Date 05/11/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 26th, 2010


Jones Lang Lasalle Inc. - JLL - close: 98.54 change: -1.42

Stop Loss: 93.85
Target(s): 102.50, 109.00
Current Option Gain/Loss: -45.7%, and + 2.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: The action in JLL was not that bad considering the stock had stalled at resistance and the market witnessed a widespread decline. While I'm not suggesting new positions JLL still looks poised to move higher.

JLL has see a lot more volatility in the last month so let's keep our position size small to reduce our risk. Our targets are $102.50 and $109.00. FYI: March options are likely to be very volatile.

- Suggested Positions - (Small Positions)

Long the March $100 calls (JLL1119C100) Entry @ $1.75

- or -

Long the April $100 calls (JLL1116D100) Entry @ $3.40

03/10 New stop loss @ 93.85

Entry on February 28th at $97.96
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 386 thousand
Listed on February 26th, 2010


3M Co. - MMM - close: 91.02 change: -0.59

Stop Loss: 88.75
Target(s): 94.50, 99.00
Current Option Gain/Loss: - 12.0%, and + 1.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: Once again traders bought the dip near $90.00 and its 50-dma. The afternoon bounce looks like another entry point to buy calls. However, since the major market indices look vulnerable to more selling readers may want to wait for a move over $92.00 before considering new positions in MMM. More conservative traders might want to raise their stops toward Friday's low (89.71). March calls expire in five trading days.

- Suggested Positions -

Long the March $90 calls (MMM1119C90) Entry @ $1.75

- or -

Long the April $95 calls (MMM1116D95) Entry @ $0.78

Entry on February 25th at $89.75
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on February 24th, 2010


Nike Inc. - NKE - close: 86.21 change: -0.96

Stop Loss: 84.80
Target(s): 88.00, 91.50
Current Option Gain/Loss: + 14.8%, and + 34.0%
2nd Position Gain/Loss: - 25.0%, and - 32.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: Ouch! It's painful watching our gains in NKE wilt lower. Fortunately traders bought the dip in NKE near technical support at its 50 and 100-dma. The late afternoon bounce could be used as a new entry point to buy calls. However, we're almost out of time. Earnings are due on March 17th. More conservative traders may want to raise their stops toward today's low (85.36).

We will plan on exiting Thursday at the close to avoid holding over earnings.

- Suggested Positions - (Small Positions Only!)

Long the March $85 calls (NKE1119C85) Entry @ $2.09

- or -

Long the April $90 calls (NKE1116D90) Entry @ $0.94

2nd position, buy the bounce from $85.50

Long the March $85 calls (NKE1119C85) Entry @ $3.20

- or -

Long the April $90 calls (NKE1116D90) Entry @ $1.86

02/25 New stop loss @ 84.80
02/24 New entry point, buy the bounce from $85.50, Add 2nd position
02/19 Adjusted final target to $91.50
02/18 1st Target Hit @ 88.00. March $85 call @ 3.75 (+79.4%)
02/18 1st Target Hit @ 88.00. April $90 call @ 1.80 (+91.4%)

Entry on February 15th at $85.25
Earnings Date 03/17/11 (confirmed)
Average Daily Volume = 2.2 million
Listed on February 9th, 2010


Norfolk Southern Corp. - NSC - close: 65.93 change: -0.60

Stop Loss: 63.90
Target(s): 69.75, 74.00
Current Option Gain/Loss: + 2.0%, and -21.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: The lack of follow through on Friday's bullish breakout is a little concerning but given the widespread losses across the global equity markets I'm not surprised NSC opened lower. Shares gapped open at $65.84 and dipped toward the $65 level before rebounding. I would use this bounce from $65 as a new entry point to buy calls. However, given the market's recent weakness we will want to keep our position size small to limit our risk.

- Suggested Positions -

Long the April $65 calls (NSC1116D65) Entry @ $2.50

- or -

Long the April $70 calls (NSC1116D70) Entry @ $0.70

Entry on March 14th at $65.84
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 3.1 million
Listed on March 12th, 2010


Quality Systems Inc. - QSII - close: 81.39 change: -0.63

Stop Loss: 77.90
Target(s): 87.25, 94.50
Current Option Gain/Loss: -18.5%, and - 2.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: Monday was another quiet day for QSII. Shares slowly faded lower and look like they are headed for short-term support near $80 and the 30-dma. Look for a new entry point there. More conservative traders might want to raise their stops closer toward $80.

Prior Comments:
FYI: Readers will be interested to note that the most recent data listed short interest in QSII at almost 28% of the very small 17.5 million-share float. That's definitely a recipe for a short squeeze. Plus, the Point & Figure chart for QSII is bullish with a $119 target.

- Suggested Positions -

Long the April $85 calls (QSII1116D85) Entry @ $1.35

- or -

Long the June $85 calls (QSII1118F85) Entry @ $3.40

Entry on March 4th at $81.44
Earnings Date 05/31/11 (unconfirmed)
Average Daily Volume = 154 thousand
Listed on March 3rd, 2010


Stericycle Inc. - SRCL - close: 87.92 change: +1.05

Stop Loss: 84.95
Target(s): 94.00, 99.00
Current Option Gain/Loss: - 9.6%, and -13.0%
Time Frame: 6 to 8 weeks
New Positions: see trigger

Comments:
03/14 update: SRCL was showing relative strength today. Shares slowly climbed toward resistance near $88.00 and hit $88.28 late in the day. Our trigger to buy calls was hit at $88.25. Readers may want to wait for a little bit confirmation and look for a move to $88.30 before initiating new positions now. Or more nimble traders could try and buy a dip near the $86 area. Our targets are $94.00 and $99.00. The $90 level could be round-number resistance but after four weeks of consolidating sideways I'm not expecting $90 to be an issue. Let's keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

Long the April $90 calls (SRCL1116D90) Entry @ 1.55

- or -

Long the May $95 calls (SRCL1121E95) Entry @ 1.15

chart:

Entry on March 14th at $88.25
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 481 thousand
Listed on March 9th, 2010


Waters Corp. - WAT - close: 84.73 change: -0.64

Stop Loss: 83.40
Target(s): 86.00, 89.90
Current Option Gain/Loss: + 22.2%, and + 25.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
03/14 update: WAT spent the session bouncing around the $86-84 zone. The fact that WAT held support near $84.00 is encouraging. I'm a little hesitant to launch new positions here but you could do it and just place your stop close to $84.00. Our final target is $89.90.

FYI: The March calls will likely be very volatile.

- Suggested Positions -

Long the March $85 calls (WAT1119C85) Entry @ $0.90

- or -

Long the April $85 calls (WAT1116D85) Entry @ $1.75

03/12 New stop loss @ 83.40
03/10 New stop loss @ 82.80
03/05 New stop loss @ 81.80
03/04 1st Target Hit @ $86.00. Options @ +100%, and +57.1%
The March $85 was bid near $1.80, the April $85s near $2.75.

Entry on February 28th at $82.61
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 876 thousand
Listed on February 26th, 2010


Wynn Resorts Ltd. - WYNN - clos: 123.99 change: +0.20

Stop Loss: 119.75
Target(s): 129.75, 137.50
Current Option Gain/Loss: + 7.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/14 update: Our new play in WYNN is off to a good start. Shares opened at $122.48 and dipped toward Friday's low near $120.50 before rebounding. That's close enough to support near $120.00 and WYNN's rising 50-dma for me. The move looks like a mini-double bottom (bullish) pattern. I would still consider calls on this bounce. However, I want to remind you that this is an aggressive, higher-risk trade. We want to keep our position size small to limit our risk. We'll start with a stop loss at $119.75.

- small bullish positions -

Long the April $130 calls (WYNN1116D130) Entry @ $2.84

Entry on March 14th at $122.48
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on March 12th, 2010


PUT Play Updates

Joy Global Inc. - JOYG - close: 90.61 change: +0.05

Stop Loss: 94.25
Target(s): 85.25
Current Option Gain/Loss: -12.4%
Time Frame: 3 to 6 weeks
New Positions: see below r

Comments:
03/14 update: Hmm... JOYG rallied toward the next level of resistance near $92 and its 50-dma and failed. Is this a new bearish entry point? It almost looks like one but I wouldn't mind waiting for a little more follow through lower before initiating new positions. More conservative traders may want to lower their stops toward the $92.50 area.

Our target is $85.25. Aggressive traders could aim for the $84 lows or a drop closer to $80.

- Suggested Positions -

Long the April $85 puts (JOYG1116P85) Entry @ $2.50

Entry on March 11th at $90.00
Earnings Date 06/02/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on March 10th, 2010


CLOSED BULLISH PLAYS

FactSet Research Systems - FDS - close: 102.16 change: -0.27

Stop Loss: 99.95
Target(s): 109.50
Current Option Gain/Loss: -65.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
03/14 update: Our time has run out. We wanted to exit today at the closing bell to avoid holding over FDS' earnings report due out tomorrow morning. Shares didn't see much action. The stock tagged a new two-week low only to bounce back to almost unchanged. It was our plan to keep our position size small to limit our risk.

small positions - Suggested Positions -

March $105 calls (FDS1119C105) Entry @ $2.15, Exit @ 0.75 (-65.1%)

03/14 Planned exit at the closing bell. Option @ -65.1%
03/12 Prepare to exit on Monday.

chart:

Entry on March 1st at $105.01
Earnings Date 03/15/11 (confirmed)
Average Daily Volume = 213 thousand
Listed on February 26th, 2010


Proshares Ultra(long) Russell 2000 - UWM - close: 44.07 change: -0.45

Stop Loss: 43.49
Target(s): 49.75, 54.00
Current Option Gain/Loss: -61.8%, and -48.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Small Positions - UWM Position -

April $48 calls (UWM1116D48) Entry @ $2.75, Exit @ 1.05 (-61.8%)

-2nd position (entry 2/25)-

April $47 calls (UWM1116D46) Entry @ $2.50 Exit @ 1.30 (-48%)

03/14 Stopped out at $43.49, Options @ -61.8% & -48%
02/26 New stop loss @ 43.49
02/25 April $47 call opened at $2.50
02/24 Add another position, April $47 calls
02/14 UWM opened at $46.90. Option opened @ $2.75

chart:

iShares Russell 2000 - IWM - close: 79.75 change: -0.43

Stop Loss: 79.20
Target(s): 84.95, 87.25
Current Option Gain/Loss: -64.5%, and -44.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/14 update: Huge losses in Japan, widespread losses in Europe both teamed up to lead the U.S. market lower on Monday morning. The small caps were no exception. Both the UWM and IWM hit our stop losses this morning before paring their declines.

Prior comments:
We wanted to keep our position size small to limit our risk.

Small Positions - IWM Position -

April $84 calls (IWM1116D84) Entry @ $1.92, Exit @ $0.68 (-64.5%)

-2nd position (entry 2/25)-

April $82 calls (IWM1116D82) Entry @ @ $2.35, Exit @ $1.30 (-44.6%)

03/14 Stopped out @ 79.20, Options @ -64.5% & -44.6%
02/26 New stop loss @ 79.20
02/25 April $82 call opened at $2.35
02/24 Add another position (April $82 calls)
02/14 IWM opened @ 82.11. Option opened @ 1.92

chart:

UWM Entry on February 14th at $46.90
IWM Entry on February 14th at $82.11
Listed on February 12th, 2010