Option Investor
Newsletter

Daily Newsletter, Monday, 4/4/2011

Table of Contents

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

Market Wrap

Not A Manic Monday

by Todd Shriber

Click here to email Todd Shriber
A minor dip by the Nasdaq following a glum report from the Semiconductor Industry Association was overshadowed by another round of deal-making on Monday as the Dow Jones Industrial Average and the S&P 500 eked out small gains. Small-caps continue to shine as the Russell 2000 just missed a close at 850, but is still trading near all-time highs.

Stats Table

It was another day at the office for oil prices as black gold ascended to another 30-month high with the Libya situation leading the way. Some carryover effect from last Friday's jobs report probably helped a bit, too, as traders speculated that the U.S. economic recovery will be strong enough to support increased oil demand.

Al Jazeera reported that forces loyal to embattled Libyan Dictator Muammar Qaddafi bombed an oilfield in the southern part of the country. One analyst quoted by Bloomberg said ''It's becoming increasingly clear that the situation in Libya will be prolonged.'' I should say so. Feb. 15 marks the start of violence in Africa's third-largest oil producer and here we are eight weeks later with no end in sight and oil trading at levels not seen since 2008.

Oil's rise has been so swift that Farouk Al-Zanki, the CEO of Kuwait Petroleum, said today that prices are now a concern and that they are too high. Kuwait, an OPEC member, apparently has a preference for oil prices in the $90-$100 range.

Oil Chart

In news pertaining directly to oil equities, the Interior Department would like the world to know that BP (BP) has not in fact received approval to resume deepwater drilling projects in the Gulf of Mexico. News broke on Sunday that Europe's second-largest oil company had approached regulators about getting back to work in the Gulf and it appeared the two sides were at least discussing the situation, but nothing has come of those talks yet.

''There is no agreement with respect to BP, nor will there be any agreement with respect to BP or anybody else that isn't within the normal process that we have,'' Interior Secretary Ken Salazar said, according to Bloomberg News.

Following the Gulf spill, BP has said it remains committed to the Gulf and the region is certainly necessary for the company to retain its title as the biggest oil and gas producer in the U.S., which it claims to be on its Web site. With that, it may be reasonable to think BP is getting a little antsy about its Gulf situation after seeing rivals RDS-A, XOM and CVX all win permits for deepwater projects in recent weeks.

Between the deal with OAO Rosneft being blocked, reports about executives possibly facing manslaughter charges and now the clear declaration that it does not have an agreement to get back to work in the Gulf, the recent news flow for BP has been challenging. Good thing oil prices are going up to prop up the stock.

For more news and commentary on the energy sector, head over to OilSlick.com and register for the free daily newsletter (HERE).

BP Chart

As I mentioned earlier, there was deal-making in the air today, but I am not going to start with the biggest deal in dollar terms. In fact this deal is small in price, but in the metaphorical sense, it is a ''big deal.'' Molycorp (MCP), the largest U.S.-based rare earths miner, said it will acquire 90% of Estonia-based AS Silmet for $89 million.

You might be wondering why an $89 million dollar deal is worth writing about. Well, that is pretty easy to answer: Because the rare earths sector is probably one of the few, heck, it might be the only industry where an $89 million purchase helps the buyer's shares surge 12% in a day. That is exactly what happened with Molycorp today.

The deal represents Molycorp's first move into Europe and is made all the more significant by the fact that it will help the company double its annual output of rare earths oxide production capacity. The acquisition will double Molycorp's annual output of rare earths oxides to 6,000 tons from 3,000 tons. There are just two rare earths processing facilities in Europe and one belongs to AS Silmet.

Molycorp's acquisition is good news on two fronts. First, it will allow the company to boost production and meet demands from rare earths consumers that are looking to buy from non-Chinese dealers. Second, Molycorp could enhance its position as a supplier of rare earths to China when the company becomes a net importer of the 17 elements in the next few years. Good thing JPMorgan raised its price target on Molycorp to $74 from $66 last week. The stock closed about $66 today and the chart makes it look like $74 could be a thing of the past sometime pretty soon.

Molycorp Chart

The truly big deal of the day in terms of size was announced after the close when Texas Instruments (TXN), the second-largest U.S. semiconductor maker, said it will acquire rival National Semiconductor (NSM) for $6.5 billion in cash, a deal that values Nat Semi at $25 a share, a robust 78% premium to where the shares closed on Monday.

TI, which has long been a dominant maker of analog chips, is expanding that dominance with the deal to acquire National Semiconductor. Analog chips are found in everyday products such as mobile phones and are key components in more exotic fare, such as missile guidance systems. Combined , the two companies will have a portfolio of 42,000 products for their analog chips.

Dallas-based TI is funding the deal with a combination of cash on hand and debt. The company had almost $3.1 billion in cash on hand as of the end of last year. The market for analog semiconductors was $42 billion in 2010. TI is the market leader with 2010 analog revenue of $6.0 billion, or 14% of the market. National's revenue in calendar year 2010 was about $1.6 billion, or 3% of the market, according to a statement issued by the companies. The transaction is expected to close in six to nine months.

Over the past month, shares of both companies have been slammed, but both are still moderately positive on a year-to-date basis.

National Semiconductor Chart

As an interesting (I hope) aside, I was having a conversation with another party that I do research and write for, and he said to me “Please find me some value among energy and commodities ETFs.” No small task given oil's recent ascent, soaring grain prices and silver's almost daily encounters with multi-decade highs.

In the course of my research, I found a nifty chart, courtesy of Bespoke Investment Group, that highlights the 30 ETFs are currently the most overbought. Not surprisingly, more than a third (12 to be precise) are energy- or commodities-related. Count the Market Vectors Russia ETF (RSX) as an energy ETF, which it basically is, and the iShares MSCI South Africa Index Fund (EZA) as a precious metals play, which it is, and the number jumps to 14.

Overall, only two of the 30 ETFs in the chart aren't exposed to commodities, emerging markets or energy.

Overbought ETFs

Looking at the charts, anything that I am about to say about the S&P 500 will not represent much of a departure from Jim's comments in the weekend wrap simply because a gain of less than a half a point to just below 1333 does not give me a lot of material to work with. In addition, the intraday move was less than eight points, so the action was pretty dull.

A close at 1333 is not a true breakout above the resistance at 1331 and support is all the way back at 1310. The big thing this week is the index's ability to challenge and surpass resistance in the 1340 area.

S&P 500 Chart

The Dow closed just barely over 12,400 and if that level holds tomorrow, shorts may be forced to do some more covering on their losing positions. On the other hand, traders may opt to take it slow this week leading up to the start of earnings season next Monday. An argument can be made that the Dow is or is getting to close to being overbought. The 12,250 area should be the first support zone for the Dow. Dow Chart

The Nasdaq lagged at the end of last week and did so again today, being turned away at 2800 once again. Maybe the TXN/NSM news will be a positive catalyst for the Nasdaq, but that is a stretch as both are NYSE-listed. I get the feeling that the Nasdaq needs a bullish catalyst and needs it soon or we could see a close below 2775 and that would make support at 2750 an issue in the near-term.

Nasdaq Chart

The Russell 2000 gained just 2.6 points today, but the Index is still looking the most bullish and does not need much help to surpass round-number resistance at 850. That is all that resistance is anyway because real resistance is the 855 high from 2007. That is also an all-time high and if the Index can breakout above that level this week, it would clearly be a bullish sign. Support can be found at 830.

Russell 2000 Chart

Historically, April is a good month for stocks. In the past 60 years, the S&P 500 has risen in 40 Aprils and declined in 21. One of those 21 declines includes last April, though from April 1-30, 2010, the index lost a mere point. On the dividend increase front, April is only so-so compared to January and February, but several Dow components with lengthy streaks of dividend increases usually raise their payouts in April, KO, JNJ and PG among them. Barring any surprises, I think the market will be pretty docile this week leading up to first-quarter earnings next week.


New Option Plays

A Growing Watch List

by James Brown

Click here to email James Brown

Editor's Note:

No new trades tonight. I am still watching ROP, GWW and GS. I'd like to see ROP dip back toward the $87-86 zone. GWW has broken out past $140 but with the market looking short-term overbought I'm not sure the stock can hold above this level. With GS I'm watching for a breakout above $162 or the 50-dma.

- James


In Play Updates and Reviews

Chinese Stocks Outperform

by James Brown

Click here to email James Brown

Editor's Note:

Chinese stocks were showing relative strength on Monday. Meanwhile we had two bullish candidates hit our profit targets. SOHU has hit our trigger to open positions.

-James

Current Portfolio:


CALL Play Updates

Baker Hughes - BHI - close: 72.62 change: +0.21

Stop Loss: 68.75
Target(s): 76.50, 79.75
Current Option Gain/Loss: -30.0% and - 2.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/04 update: The stock market traded sideways on Monday with a lack of catalysts to get things moving. BHI hover near the $72.50 level most of the session. There is no change from my prior comments. I would still consider new positions now or you could wait for a potential dip toward the $70.00 level. Our first target is $76.50. Our second target is $79.75. More aggressive traders could aim higher.

- Suggested Positions -

Long the April $75 calls (BHI1116D75) Entry @ $1.00

- or -

Long the May $75 calls (BHI1121E75) Entry @ $2.61

04/02 New stop loss @ 68.75

Entry on March 24th at $72.35 *gap higher*
Earnings Date 05/03/11 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on March 23rd, 2011


Baidu, Inc. - BIDU - close: 143.11 change: +4.28

Stop Loss: 129.75
Target(s): 139.00, 147.50
Current Option Gain/Loss: +318.7%, and +156.8%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
04/04 update: The Chinese stock markets delivered strong gains on Monday and that helped push BIDU to a +3% gain and another new high. The breakout past the $140 level is bullish. I am raising our stop loss to $129.75. More conservative traders may want to raise their stop even higher. Our final target is the $147.50 level. I would not open new positions here. BIDU remains overbought.

We will plan to exit ahead of BIDU's late April earnings report. BIDU can be a volatile stock so I would consider this a more aggressive, higher-risk trade.

- Suggested Positions -

Long the April $130 calls (BIDU1116D130) entry @ $3.20

- or -

Long the May $135 calls (BIDU1121E135) entry @ $5.10

04/04 New stop loss @ 129.75
04/02 New stop loss @ 127.50
04/01 1st Target Hit @ $139.00. Options @ +201% & +100.9%
03/26 New stop loss @ 124.00

Entry on March 22 at $127.00
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 6.0 million
Listed on March 21st, 2010


Caterpillar Inc. - CAT - close: 113.38 change: +0.26

Stop Loss: 107.40
Target(s): 109.00, 114.00
Current Option Gain/Loss: +151.4%, and +92.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/04 update: CAT almost hit our final target today. Shares rallied to $113.93 this morning. Our final exit is $114.00. However, more aggressive traders may want to aim higher. While CAT is short-term overbought and due for a pull back shares are not showing any sign of weakness. You could aim for $115, $117.50 or the $120 level but if you do I strongly suggest a tighter stop loss. The newsletter will plan on exiting at $114.00, which could happen tomorrow. More conservative traders will want to seriously consider an early exit now to lock in gains. Please note our new stop loss at $107.40. I am not suggesting new positions at this time.

- Suggested Positions -

Long the April $105 calls (CAT1116D105) Entry @ $3.40

- or -

Long the May $110 calls (CAT1121E110) Entry @ $3.15

04/04/11 New stop loss @ 107.40.
04/02/11 New stop loss @ 104.75, Consider an early exit now
03/26/11 New stop loss @ 103.75
03/25/11 1st Target Hit @ 109.00, Options @ +58.8%, +37.7%

Entry on March 18th at $104.99 (gap higher)
Earnings Date 04/29/11 (unconfirmed)
Average Daily Volume = 7.4 million
Listed on March 17th, 2010


CH Robinson Worldwide Inc. - CHRW - close: 75.64 change: +0.74

Stop Loss: 71.90
Target(s): 79.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see Trigger

Comments:
04/04 update: Transportation stocks continued to inch higher. CHRW actually outperformed the sector index with a +0.9% gain. Aggressive traders may want to open positions now. I'd rather not chase it. The plan is to buy calls on a dip at $74.50.

We do not want to hold over the late April earnings report. FYI: The Point & Figure chart for CHRW is bullish with a $91 target.

Trigger @ $74.50

- Suggested Positions -

Buy the May $75.00 calls (CHRW1121E75) current ask $2.40

Entry on April xxth at $ xx.xx
Earnings Date 04/26/11(confirmed)
Average Daily Volume = 1.2 million
Listed on April 2nd, 2011


Capital One Financial - COF - close: 51.82 change: -0.27

Stop Loss: 49.49
Target(s): 54.75, 59.00
Current Option Gain/Loss: -16.7% and -84.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/04 update: I am growing more concerned with our COF trade and I've decided to put a time limit on it. If we don't see COF show some improvement by the closing bell on Wednesday we will drop it from the newsletter. I am not suggesting new positions at this time. More conservative traders may want to up their stop loss closer to the $51.00 level. Our targets are $54.75 and $59.00.

- Suggested Positions -

Long the April $50 call (COF1116D50) Entry @ $2.63

- or -

Long the April $55 call (COF1116D55) Entry @ $0.65

03/24 New stop loss @ 49.49

Entry on March 16th at $51.08
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on March 15th, 2010


CSX Corp. - CSX - close: 78.91 change: -0.48

Stop Loss: 73.45
Target(s): 79.90, 83.75
Current Option Gain/Loss: -24.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/04 update: Shares of CSX were downgraded to a "hold" this morning. The stock gapped down on the news but did not see much follow through and spent the day moving sideways. I'm not giving up on CSX but I'm not suggesting new positions at this time. Our final target remains the $83.75 mark.

Don't forget that we plan to exit before CSX reports earnings in two or three weeks.

Our plan was to keep our position size small to limit our risk. FYI: The Point & Figure chart for CSX is bullish with a $98 target.

- Small Bullish Positions -

Long the April $80 calls (CSX1116D80) Entry @ $1.06

03/28 1st Target Hit @ 79.90, Option @ $1.90 (+79.2%)

Entry on March 21 at $77.25
Earnings Date 04/13/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on March 19th, 2010


Jones Lang Lasalle Inc. - JLL - close: 104.15 change: +0.31

Stop Loss: 97.90
Target(s): 102.50, 109.00
Current Option Gain/Loss: +44.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
04/04 update: The fact that JLL did not see any profit taking after Friday's big gains is encouraging. I don't see any changes from my weekend comments. Our second and final target is $109.00 but we do not want to hold over the late April earnings report. If you're looking for a new entry point look for dips in the $102.50-102.00 area.

Prior Comments:
We wanted to keep our position size small to limit our risk. Our targets are $102.50 and $109.00.

- Suggested Positions - (Small Positions)

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

04/02 New stop loss @ 97.90
04/01 1st Target hit @ 102.50, Option @ +2.9%
03/30 new stop loss @ 96.40
03/24 New stop loss @ 95.40
03/17 Exited March calls @ open, Estimated exit @ 0.10 (-94.2%)
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


Noble Corp. - NE - close: 46.10 change: +0.81

Stop Loss: 43.95
Target(s): 49.75, 53.50
Current Option Gain/Loss: - 1.3%, and - 8.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/04 update: Crude oil futures posted another day of gains but trading in the energy sector was mixed. NE displayed some strength this morning but couldn't get past its recent highs. Shares ended the day up +1.7%. More conservative traders might want to wait for NE to trade past the March 22nd high of $46.72 before initiating positions.

Our targets are $49.75 and $53.50. I would expect the $50.00 level to offer some resistance and it could take NE a little while to break through it. We will plan to exit ahead of the April 20th (unconfirmed) earnings report.

- Suggested Positions -

Long the May $46.00 calls (NE1121E46) Entry @ $2.17

- or -

Long the May $48.00 calls (NE1121E48) Entry @ $1.37

Entry on March 31st at $46.25
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 4.5 million
Listed on March 30th, 2011


Norfolk Southern - NSC - close: 69.58 change: +0.26

Stop Loss: 64.90
Target(s): 72.00, 74.90
Current Option Gain/Loss: + 50.0%, and +32.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/04 update: NSC continues to churn under resistance at the $70.00 level. There is no change from my weekend comments. The stock looks a little bit overbought here so I wouldn't buy calls now. Look for a dip into the $68-66 zone as an entry point. More aggressive traders could buy a breakout past $70.00. Our targets are $72.00 and $74.90. We do not want to hold past NSC's late April earnings report.

- Suggested Positions -

Long the April $70 calls (NSC1116D70) Entry @ $0.50

- or -

Long the May $70 calls (NSC1121E70) Entry @ $1.40

Entry on March 25th at $67.84
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 3.0 million
Listed on March 24th, 2011


Polaris Industries, Inc. - PII - close: 88.00 change: +0.98

Stop Loss: 81.75
Target(s): 84.95, 89.00
Current Option Gain/Loss: +75.0%
Time Frame: 4 to 7 weeks
New Positions: see below

Comments:
04/04 update: PII displayed some strength today with a +1.1% gain. The stock is inching closer to our final target at $89.00. I am not suggesting new bullish positions at this time. More conservative traders might want to consider a tighter stop loss (maybe near $84.00).

Our plan was to keep our position size small. FYI: The Point & Figure chart for PII is bullish with a $98 target.

- Small Positions -

Long the April $85 calls (PII1116D85) Entry @ 2.00

03/30/11 New stop loss @ 81.75
03/26/11 New stop loss @ 79.75
03/25/11 1st Target Hit @ 84.95, Option @ $2.10 (+5%)

Entry on March 18th at $82.25
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 396 thousand
Listed on March 14th, 2010


Panera Bread Co. - PNRA - close: 128.67 change: +0.80

Stop Loss: 119.00
Target(s): 129.50, 134.50
Current Option Gain/Loss: +129.2%, and +55.2%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
04/04 update: Target achieved. PNRA continues to rally and shares hit $129.99 intraday. Our first target to take profits was hit at $129.50. The options were trading with a bid near $$4.82 for the April $125s and with a bid of $5.25 for the May $130s. The $130.00 level could be round-number, psychological resistance. I would expect PNRA to see a pull back here, maybe to the $125 area. No new positions at this time. Our second and final target is $134.50. We do not want to hold over the late April earnings report but that date is currently unconfirmed.

FYI: PNRA is currently trading over the $120 area. The last time the company had a stock split it was back in June 2005 with shares in the $120s. You never know when they might announce a split although if they do it would probably be with their earnings report.

- Suggested Positions -

Long the April $125 call (PNRA1116D125) Entry @ $2.05

- or -

Long the May $130 call (PNRA1121E130) Entry @ $3.35

04/04 1st Target Hit @ 129.50. The April option was at $4.82 (+135.1%) and the May option was at $5.25 (+56.7%)

chart:

Entry on March 29th at $123.55
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 363 thousand
Listed on March 26th, 2011


Praxair Inc. - PX - close: 102.39 change: +0.41

Stop Loss: 97.40
Target(s): 104.75, 109.00
Current Option Gain/Loss: + 5.1%, and - 0.0%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
04/04 update: PX spent Monday consolidating sideways on either side of $102.00. I am still expecting a dip toward the $100 area and would prefer to launch new positions on a little pull back. Our first target to take profits is at $104.75. Our second and final target is $109.00. We will plan to exit ahead of the late April earnings report.

Open bullish positions now, above $100

- Suggested Positions -

Long the May $100 call (PX1121E100) entry @ $3.90

- or -

Long the May $105 call (PX1121E105) entry @ $1.40

Entry on March 30th at $101.54
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on March 29th, 2011


Quality Systems Inc. - QSII - close: 86.57 change: +1.45

Stop Loss: 79.90
Target(s): 87.00, 94.00
Current Option Gain/Loss: +74.0%, and +52.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
04/04 update: Target achieved. The rally in QSII continues and shares hit $87.75 intraday. Our first target to take profits was hit at $87.00. The options were trading with a bid near $2.45 (+81.4%) for the April $85 calls and near $5.30 (+55.8%) for the June $85 calls. The stock does look a little bit overbought here so I wouldn't be surprised to see a dip back toward the $85-84 zone. More conservative traders may want to up their stops toward the $82-83 area. I am not suggesting new positions at current levels. Our second and final target is $94.00.

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

04/04 1st Target Hit @ 87.00. Options @ +81.4% and +55.8%
04/02 New stop loss @ 79.90, Adjusted targets to $87.00 and $94.00
03/24 New stop loss @ 78.60

chart:

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


Sohu.com - SOHU - close: 97.30 change: +6.42

Stop Loss: 87.40
Target(s): 99.00, 107.50
Current Option Gain/Loss: +41.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/04 update: Good news! Not only did we not have to wait very long for SOHU to hit our trigger but the stock has soared to new all-time highs. Widespread gains back home in the Chinese stock markets helped power the Chinese stocks here in the U.S. SOHU gapped open higher at $91.75 and quickly hit our trigger to buy calls at $92.50. Now that the trade is open our first target to take profits is at $99.00. Bear in mind that the $100.00 level is normally round-number, psychological resistance. SOHU could tag the $100 mark and then pull back. I am not suggesting new bullish positions at these levels. We'll have to wait for a dip if you missed the entry point this morning.

We will plan to exit before the earnings report in late April. I want to reiterate that this is an aggressive, higher-risk trade. I'm suggesting we keep our position size small to limit our risk. FYI: The Point & Figure chart for SOHU is bullish with a $120 target.

Triggered

- Suggested Positions -

Long the May $100 call (SOHU1121E100) Entry @ $4.25

Chart:

Entry on April 4th at $92.50
Earnings Date 04/25/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 2nd, 2011


Stericycle Inc. - SRCL - close: 92.22 change: +1.19

Stop Loss: 86.75
Target(s): 93.50, 98.50
Current Option Gain/Loss: +60.0%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
04/04 update: SRCL continues to show strength and hit new highs at $92.29. If you're looking for a new entry point I'd wait for a dip into the $91-90 zone. Please note that I'm upping our stop loss to $86.75. Our targets are $93.50 and $98.50.

We will plan to exit ahead of the late April earnings report.

- Suggested Positions -

Long the May $90 calls (SRCL1121E90) Entry @ $2.50

04/04 New stop loss @ 86.75
04/02 New stop loss @ 85.75

Entry on March 30th at $88.93
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 479 thousand
Listed on March 29th, 2011


Whole Foods Market Inc. - WFMI - close: 66.10 change: -0.63

Stop Loss: 59.90
Target(s): 64.75, 69.00
Current Option Gain/Loss: +175.3%, and +75.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/04 update: WFMI suffered a little bit of profit taking on Monday. That's not surprising and shares remain short-term overbought and due for more of a pull back. More conservative traders may want to lock in gains now. I am not suggesting new positions at this time. Our final target is the $69.00 level. FYI: The Point & Figure chart for WFMI is bullish with an $86 target.

- Suggested Positions -

Long the April $65 calls (WFMI1116D65) Entry @ $0.65

- or -

Long the May $65 calls (WFMI1121E65) Entry @ $2.25

04/02/11 new stop loss @ 59.90
03/30/11 1st Target Hit @ 64.75, April $65 call @ 1.25 (+92.3%)
May $65 call @ 3.50 (+55.5%)
03/29/11 new stop loss @ 59.49
03/26/11 New stop loss @ 58.49

Entry on March 21 at $61.55
Earnings Date 05/11/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on March 19th, 2010


Wellpoint Inc. - WLP - close: 70.61 change: -0.14

Stop Loss: 66.75
Target(s): 72.25, 74.75
Current Option Gain/Loss: -10.3%, and - 5.7%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
04/04 update: There is no change from my weekend comments on WLP. I would still consider new positions now or you can wait for a dip closer to $70.00, which should be new support. We do not want to hold over the late April earnings report.

FYI: Readers may want to keep their position size small.

- Suggested Positions -

Long the April $70 call (WLP1116D70) Entry @ $1.55

- or -

Long the May $70 call (WLP1121E70) Entry @ $2.80

04/02 new stop loss @ 66.75

Entry on April 1st at $70.25
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on March 26th, 2011