Option Investor
Newsletter

Daily Newsletter, Monday, 4/11/2011

Table of Contents

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

Market Wrap

IMF Report, Oil Prices Plague Stocks

by Todd Shriber

Click here to email Todd Shriber
Despite another Monday littered with deal-making, retreating oil prices and a less-than-enthusiastic outlook on the U.S. economy from the International Monetary Fund (IMF) weighed on U.S. stocks, sending the S&P 500 to its third consecutive loss. The Nasdaq and the Russell 2000 followed suit, and in fact, were quite worse, while the Dow Jones Industrial Average managed a meager one-point gain.

Stats Table

In perhaps the most obvious statements we're likely to hear all week, the IMF said that higher oil prices and the slack pace of job growth are factors that will hamper the U.S. recovery. Goldman Sachs was out with a report telling clients that commodities prices may falter and that they should take profits, citing what the bank called ''nascent signs of demand destruction in the United States.'' Yep, $4 gasoline will do that. Personally, I am glad I work from home because you really do not want to know how high gas prices are here in Southern California.

By most technical measures, oil is over-bought and several media outlets have quoted various analysts as saying as much in recent days. If a cease-fire in Libya is reached and if Nigeria's go smoothly, two very big ''If's,''crude will probably be in for a near-term decline. Traders may have started pricing those factors in today as oil equities faltered across the board. I will not run through all the big oil stocks as I have included a chart of the Energy Select Sector SPDR (XLE), but I will mention that CVX and XOM did the Dow no favors today and APC was down 4.3% while OXY was off 3.2%.

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

XLE Chart

While there several M&A announcements, it is pretty easy to surmise why none of them did much to spark the market higher. Add up the price tags of three of the more marquee announcements and you get less than $6 billion with almost all of that total belonging to two deals.

Level 3 Communications (LVLT) will pay $3 billion in stock and debt for rival Global Crossing (GLBC) a deal that will combine two unprofitable telecom companies that had $6.26 billion in revenue last year between the two of them. Endo Pharmaceuticals (ENDP) said it will pay $2.9 billion for American Medical Systems (AMMD), a deal Endo is using to bolster its exposure to the fast growing urology products market.

Not mega deals, but the pace of M&A has been brisk to say the least in 2011. Earlier this year, Citigroup forecast that global M&A will total $2.9 trillion this year, representing 25% growth from 2010. Other firms forecast 35% or better in terms of M&A volume. I included chart that shows M&A revenue as a portion of investment banking revenue. It is from February so it does not reflect some of the big recent deals such as the AT&T (T)/T-Mobile deal or Berkshire Hathaway's (BRK.A, BRK.B) $9 billion deal for Lubrizol (LZ), but it illustrates that we are likely to see plenty more takeovers before the end of the year.

Investment Banking Revenue

Actually, what may be more interesting than the deals that are getting done are the ones that are not. For example, NYSE Euronext (NYX) rebuffed a takeover offer from Nasdaq OMX (NDAQ) and IntercontinentalExchange (ICE), opting to stick with the original takeover bid from Germany's Deutsche Boerse. The Nasdaq/ICE offer, which is higher than Deutsche Boerse's offer, valued NYX at $43.13 a share in cash and stock.

Nasdaq and ICE accurately note that a combination with NYX would create an exchange giant on two fronts: Cash equities and derivatives. Seems like a pretty compelling deal, but NYX apparently feels otherwise, leading Nasdaq and ICE to feel mystified.

''NYSE Euronext’s Board of Directors is depriving its stockholders of the benefits of a superior proposal, disregarding the fundamental corporate governance principles that it has espoused for the rest of corporate America. The feedback we have received from NYSE Euronext stockholders is very positive, and we would expect NYSE Euronext would, at the very least, meet with us and our advisors to discuss the merits of the proposed combination,'' Nasdaq CEO Robert Grefield said in a statement.

NYSE Euronext Chart

It is the first Monday of a new earnings season and you know what that means: Dow component Alcoa (AA) delivered its first-quarter results after the close today. Since I usually have the privilege of reviewing Alcoa's report, I always say that while it is newsworthy, it probably will not do much for the Dow one way or the other because it is one of the lowest-priced stocks in a price-weighted index. Actually, Alcoa is the Dow's third-lowest priced stock. Bank of America gets the dubious distinction of having the Dow's lowest price tag.

As for Alcoa, the company posted a profit of $308 million, or 27 cents a share, compared with a net loss of $201 million, or 20 cents a share, a year earlier as revenue jumped to $5.96 billion from $4.9 billion. The profit is of course better than a loss, but analysts were expecting a profit of 27 cents a share on revenue of $6.19 billion. Excluding one-time items, Alcoa earned 28 cents a share.

While Alcoa shares were down more than 3% in the after-hours session, there were some positive sentiments from the largest U.S. aluminum producer. CEO Klaus Kleinfeld reiterated that his company is comfortable with a 12% increase in global aluminum demand this year.

''Our outlook for the rest of 2011 and beyond remains very positive,'' Kleinfeld said in a statement. The company also said its average selling price for aluminum jumped 15% in the first quarter to $2,682 per metric ton.

Alcoa Chart

Looking at the charts, the S&P 500's small drop on Monday was enough to take the index back below 1325, so it could be pivotal for buyers to step in and buy this dip. If 1320 does not hold has as support, a retreat back to 1300 could be seen. Nothing has changed in terms of upside resistance looming at 1333 and again at 1340. Going forward, earnings had better be good. If they disappoint, there will be no better excuse for the market to sell off.

S&P 500 Chart

There was not too much excitement with Dow's end-of-day result today and support at 12,320 did not come into play today. I am not convinced that Alcoa alone could drag the Dow down there tomorrow, but JPMorgan Chase (JPM) reports before the bell on Wednesday and Bank of America (BAC) chimes in on Friday, so there will be some more noteworthy catalysts (perhaps) for the Dow later this week.

Dow Chart

The Nasdaq is probably the most concerning of the three major indexes at this point, closing just a point above support 2770, indicating the index needs to patch together some closes above 2780 or it could be in for more downside. Even a close above 2780 is not the most bullish of signs because resistance is stout at 2800. Google (GOOG), the largest U.S. Internet search provider, reports Thursday after the close.

Nasdaq Chart

For as good as the Russell 2000 was looking a couple of weeks ago, it is looking very ugly right now. A couple of failed attempts to really break through that old resistance from 2007 have sent the index careening back to the 830 area. If that does not hold as a support, the next stop could be the 50-day moving average at 817.

Russell 2000 Chart

For the most part, S&P 500 constituents should treat investors to some good news regarding first-quarter earnings, but that news is probably priced in at this point. As I mentioned earlier, any disappointments on the profit front provide the perfect excuse for a sell-off. Another decent excuse is higher raw materials costs whether those costs are attributable to oil, corn or copper prices, they have the potential to result in some gloomy sentiment for full-year outlooks.

Something else to consider is that while so many companies are flush with cash, it appears one of the preferred methods for spending that cash is M&A. That is great for the bankers, but acquisitions rarely lead to job creation and at some point, the market will probably want to see some upside surprises in the monthly jobs reports.

Today's fun fact is one I came up with on my own and should be considered as entertainment, not investment advice, nor is it a slight against South Africa. Charles Scwartzel, a South African, won the green jacket at Augusta National yesterday. The average yearly return for the S&P 500 in the previous four years a South African has won the Masters is -7.5%. In all fairness, it should be noted that statistic is skewed by a 37% drop for the index in 2008 when South African Trevor Immelman won.


New Option Plays

Oil Stocks Look Vulnerable

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Whiting Petroleum Corp - WLL - close: 71.43 change: -2.50

Stop Loss: 64.40
Target(s): 69.75, 74.00
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks maybe
New Positions: Yes, see trigger

Company Description

Why We Like It:
Oil and oil stocks could be poised for a correction. We want to be ready to buy the dip near support. WLL has spent the last week struggling with resistance near $75.00. When it pulls back I'm looking for a dip toward the $65.00 area.

I am suggesting a buy-the-dip entry point at $66.50 with a stop loss at $64.40. More conservative traders could wait for a dip closer to the $65.00 mark. Aggressive traders might want to consider buying puts with a stop above $75.00 and a target near the 50-dma. Then switching to calls. If triggered our targets are $69.75 and $74.00. We do not want to hold over the late April earnings report but so far the date is unconfirmed.

Trigger @ $66.50

- Suggested Positions -

Buy the May $70 call (WLL1121E70) current ask $4.30

Annotated Chart:

Entry on April xxth at $ xx.xx
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on April 11th, 2011


In Play Updates and Reviews

BIDU Soars on Facebook Deal

by James Brown

Click here to email James Brown


CALL Play Updates

Caterpillar Inc. - CAT - close: 109.07 change: -0.75

Stop Loss: 107.40
Target(s): 109.00, above $112 for Aprils, $114.90 for Mays
Current Option Gain/Loss: + 23.5%, and + 3.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/11 update: There is no change from my weekend comments. I am not suggesting new positions and readers will want to strongly consider an early exit now to lock in gains. If CAT sees another bounce over $112.00 we will exit the rest of our April calls early. Please note that I am raising our final target for the May calls to $114.90, from $114.00 (FYI: the high on Monday, April 4th was $113.93).

- 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: 73.91 change: -0.37

Stop Loss: 72.75
Target(s): 79.50
Current Option Gain/Loss: -24.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/11 update: Shares of CHRW continued to dip on Monday with the stock now down three days in a row. Traders did buy the dip near technical support with a convergence of moving averages. The 20, 30, 40 and 50-dma are all converging near $73.00-73.50 and CHRW bounced at $73.30. With oil reversing lower today this dip in CHRW could be used as a new bullish entry point. I would keep your position size small to limit your risk.

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.

- Suggested Positions -

Long the May $75.00 calls (CHRW1121E75) Entry @ $2.25

04/09 New stop loss @ 72.75

Entry on April 7th at $74.50
Earnings Date 04/26/11(confirmed)
Average Daily Volume = 1.2 million
Listed on April 2nd, 2011


CSX Corp. - CSX - close: 76.21 change: -0.71

Stop Loss: 74.90
Target(s): 79.90, 83.75
Current Option Gain/Loss: -96.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/11 update: CSX slipped to $75.93 intraday. I have been suggesting readers buy calls on a dip near the $76.00-75.00 zone. Just remember, that if you're buying calls now, we don't have much time left. CSX is due to report earnings on April 19th and we plan to exit ahead of the announcement. I'm adding the May $80 calls as a second position.

The simple 50-dma has risen to $74.96. I am raising our stop loss to $74.90. Our final target remains the $83.75 mark.

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

Buy the May $80 calls (CSX1121E80) current ask $1.13

04/11 Entry point to buy calls near $76.00.
04/11 New stop loss @ 74.90
04/05 New stop loss @ 74.45
03/28 1st Target Hit @ 79.90, Option @ $1.90 (+79.2%)

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


Fortune Brands - FO - close: 63.61 change: +0.41

Stop Loss: 61.75
Target(s): 67.50, 69.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
04/11 update: FO was showing some relative strength today and looks poised to rally higher. Aggressive traders may want to buy calls now. I am suggesting a trigger to buy calls at $64.00. If triggered our targets are $67.50 and $69.75. I would aim higher but we do want to exit ahead of the late April earnings report.

FYI: A move past $64.00 would create a brand new quadruple top breakout buy signal.

Trigger @ $64.00

- Suggested Positions -

Buy the May $65.00 call (FO1121E65) current ask $1.25

Entry on April xxth at $ xx.xx
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 973 thousand
Listed on April 5th, 2011


SPDR Gold ETF - GLD - close: 142.62 change: -1.02

Stop Loss: 137.00
Target(s): 149.50, 154.50
Current Option Gain/Loss: - 7.6%, and - 6.7%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
04/11 update: A bounce in the dollar sparked a little profit taking in gold. The GLD almost erased Friday's gains. There is no change from my weekend comments. I would still launch new positions on dips in the $142.00-140.00 area. Our targets are $149.50 and $154.50 within the next six to twelve weeks.

FYI: The Point & Figure chart for GLD is bullish with a $172 target.

- Suggested Positions -

Long the May $145 call (GLD1121E145) Entry @ $1.84

- or -

Long the June $150 call (GLD1118F150) Entry @ $1.33

Entry on April 6th at $142.40
Earnings Date --/--/--
Average Daily Volume = 12.5 million
Listed on April 5th, 2011


Goldman Sachs - GS - close: 161.47 change: +0.51

Stop Loss: 157.00
Target(s): 169.75
Current Option Gain/Loss: - 58.1%
Time Frame: about two weeks
New Positions: see below

Comments:
04/11 update: Lack of follow through on Friday's bearish reversal pattern is positive but I remain very cautious here. Readers may still want to abandon ship and exit early. I am not suggesting new positions at this time. Our target is $169.75.

CORRECTION: Previously I wrote that April options expire after April 20th. That's not true. April options actually expire after Friday, April 15th. We will need to exit these April calls ahead of Friday.

- Suggested Positions -

Long the April $165.00 call (GS1116D165) Entry @ $1.10

Entry on April 7th at $162.50
Earnings Date 04/19/11 (confirmed)
Average Daily Volume = 4.3 million
Listed on April 6th, 2011


Honeywell Intl. Inc. - HON - close: 58.26 change: -0.04

Stop Loss: 56.99
Target(s): 62.75
Current Option Gain/Loss: -15.4%
Time Frame: less than two weeks
New Positions: Yes, see below

Comments:
04/11 update: Monday was a quiet session for HON. Shares opened at $58.35, bounced near $58.00 again, and closed almost unchanged on the day. I want to reiterate that the major indices look vulnerable so we will want to use small positions with this HON play. I'm suggesting an entry now but you could wait for a rally past $59.00, which would break the short-term bearish trend of lower highs. Our upside target is $62.75 but we will plan on exiting ahead of the April 21st earnings report.

- Suggested Positions -

Long the May $60.00 call (HON1121E60) Entry @ $1.10

Entry on April 11th at $58.35
Earnings Date 04/21/11 (confirmed)
Average Daily Volume = 4.0 million
Listed on April 9th, 2011


Jones Lang Lasalle Inc. - JLL - close: 102.76 change: -0.40

Stop Loss: 97.90
Target(s): 102.50, 109.00
Current Option Gain/Loss: - 2.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
04/11 update: There is no change from my weekend comments on JLL. Time is almost up. We have four days left before April options expire. It's time to start looking for an exit on this JLL trade. Right now I am tempted to exit early on any bounce back into the $104.50-105.00 area. Officially our exit target is $109.00 but we are almost out of time. No new positions at this time.

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: 45.21 change: -0.39

Stop Loss: 43.95
Target(s): 49.75, 53.50
Current Option Gain/Loss: -28.5%, and -39.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/11 update: The early morning rally in NE failed under resistance again. Readers may want to exit early now or raise their stops closer to the $44.50 level. I would wait for a breakout past $46.50 before considering new bullish positions. However, we have to keep in mind that time is running short. NE reports earnings on April 20th.

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.

- 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 (confirmed)
Average Daily Volume = 4.5 million
Listed on March 30th, 2011


Norfolk Southern - NSC - close: 67.66 change: -0.03

Stop Loss: 65.70
Target(s): 72.00, 74.90
Current Option Gain/Loss: - 90.0%, and -32.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/11 update: There is no change from my weekend comments. NSC spent Monday's session drifting sideways. Aggressive traders may want to buy calls on this bounce. Or you could wait for a dip closer to the $66.00 level, which should be stronger support. I am raising our stop loss to $65.70. 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

04/09 New stop loss @ 65.70

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


Panera Bread Co. - PNRA - close: 120.50 change: +0.33

Stop Loss: 119.00
Target(s): 129.50, 134.50
Current Option Gain/Loss: - 90.2%, and -43.2%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
04/11 update: PNRA is trying to bounce but it's not making much progress. Aggressive traders may want to buy May calls here or wait for a move over $122.00 again.

Our second and final target is $134.50. We do not want to hold over the April 26th earnings report.

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%)

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


Praxair Inc. - PX - close: 101.37 change: -0.92

Stop Loss: 97.90
Target(s): 104.75, 109.00
Current Option Gain/Loss: -10.2%, and -17.8%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
04/11 update: We have been expecting PX to pull back toward the $100 level. Shares broke down under their 10-dma today and could hit $100 tomorrow. Wait for a dip near $100 before considering new bullish positions.

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

04/09 new stop loss @ 97.90

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


Sohu.com - SOHU - close: 94.74 change: -1.61

Stop Loss: 87.40
Target(s): 99.90, 107.50
Current Option Gain/Loss: + 1.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/11 update: SOHU fell to its simple 10-dma this morning before paring its losses. The stock has been churning sideways for five days now. I am not suggesting new positions at this time. Readers might want to raise their stop loss. Please note that I am raising our first target to exit from $99.00 to $99.90.

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

04/11 Adjusted first exit target to $99.90

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: 90.35 change: +0.65

Stop Loss: 86.75
Target(s): 93.50, 98.50
Current Option Gain/Loss: +20.0%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
04/11 update: SRCL displayed a little bit of strength today. I'd still wait for a dip closer to $88.00 before considering new bullish positions. Readers might want to adjust their stop losses closer to the $88.00 level. 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 04/27/11 (confirmed)
Average Daily Volume = 479 thousand
Listed on March 29th, 2011


Vertex Pharmaceuticals - VRTX - close: 48.22 change: +0.06

Stop Loss: 45.95
Target(s): 51.85, 58.50
Current Option Gain/Loss: - 4.0%
Time Frame: about 2, maybe 3 weeks
New Positions: see below

Comments:
04/11 update: The early morning strength in VRTX faded but traders bought the dip near lunchtime. I remain bullish on VRTX and would still consider positions here but keep in mind that this is a very aggressive trade.

Our first target is $51.85. Our second, much more aggressive target is $58.50 but again, we don't have a lot of time so we may have to exit early. I am listing our stop at $45.95, under last week's lows.

- Very Small Bullish Positions -

Long the May $50.00 calls (VRTX1121E50) Entry @ $2.50

Entry on April 10th at $48.28
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on April 9th, 2011


Whole Foods Market Inc. - WFMI - close: 63.16 change: +0.26

Stop Loss: 59.90
Target(s): 64.75, 69.00
Current Option Gain/Loss: - 73.8%, and + 3.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
04/11 update: I'd like to think the correction in WFMI is over. Yet the short-term trend is still down even though shares eked out a bounce today. I would wait for a bounce near $62 before considering new bullish positions. Readers might want to raise their stop loss closer to the $62 area. 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: 69.25 change: +0.30

Stop Loss: 67.45
Target(s): 72.25, 74.75
Current Option Gain/Loss: -77.4%, and -34.6%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
04/11 update: There is no change from my weekend comments on WLP. The stock delivered a bounce but remains inside the $68.50-70.00 trading range. I would prefer to see a rally past the $70.00 mark before considering new bullish positions. 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

04/09 New stop loss @ 67.45
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


CLOSED BULLISH PLAYS

Baker Hughes - BHI - close: 69.31 change: -2.26

Stop Loss: 68.75
Target(s): 76.50, 79.75
Current Option Gain/Loss: -95.0% and -52.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
04/11 update: Energy stocks were big under performers on Monday thanks to a sharp decline in oil prices. BHI underperformed its peers with a -3.1% drop. Shares have broken down under what should have been support near $70.00 and the 50-dma. The low today was $69.16. I am suggesting an early exit now.

- Suggested Positions -

April $75 calls (BHI1116D75) Entry @ $1.00, Exit @ 0.05 (-95%)

- or -

May $75 calls (BHI1121E75) Entry @ $2.61, Exit @ 1.24 (-52.4%)

04/11 Exit Early on Breakdown. Options @ -95% and -52.4%
04/02 New stop loss @ 68.75

chart:

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: 145.68 change: +3.80

Stop Loss: 132.40
Target(s): 139.00, 147.50
Current Option Gain/Loss: +423.4%, and +196.0%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
04/11 update: Target achieved. News that Facebook Inc. has signed an agreement with Baidu.com, China's largest search engine, to introduce a new social networking website in China. Currently Facebook's service is banned in China. Inking a deal with BIDU would grant Facebook access to more than 450 million Chinese Internet users. This news launched shares of BIDU higher. The stock opened at $147.41 and hit $148.92 before paring its gains. Our second and final profit target to exit was hit at $147.50 early this morning.

Note: Over the weekend I suggested readers exit our April calls early. It was pure luck that BIDU gapped open higher for us on Monday morning. The April $130 call was trading with a bid near $16.75 (+423.4%) and the May $135 call was trading with a bid near $15.10 (+196%).

- Suggested Positions -

April $130 calls (BIDU1116D130) entry @ $3.20, Exit @ $16.75 (+423%)

- or -

May $135 calls (BIDU1121E135) entry @ $5.10, Exit @ 15.10 (+196%)

04/11 Final Target Hit @ 147.50, May option @ 15.10 (+196%)
04/11 Correction: April option exit @ 16.75 (+423%)
04/09 New stop loss @ 132.40, Exit April Calls Now (+275%)
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

chart:

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


Quality Systems Inc. - QSII - close: 83.10 change: -1.91

Stop Loss: 82.95
Target(s): 87.00, Aprils-89.50, Junes-94.00
Current Option Gain/Loss: - 85.1%, and - 5.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
04/11 update: The correction in QSII continued and shares fell for the fourth day in a row. Our stop loss was hit at $82.95 early this morning.

- Suggested Positions -

April $85 calls (QSII1116D85) Entry @ $1.35, Exit @ 0.20 (-85.1%)

- or -

June $85 calls (QSII1118F85) Entry @ $3.40, Exit @ 3.20 (-5.8%)

04/11 Stopped out @ 82.95, Options @ -85.1% & -5.8%
04/05 New stop loss @ 82.95
04/05 New exit target for our April options at $89.50
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