Option Investor
Newsletter

Daily Newsletter, Thursday, 12/15/2011

Table of Contents

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

Market Wrap

Economics Overcome Europe

by Jim Brown

Click here to email Jim Brown
Good economic news in the U.S. overcame a steady stream of negative news from Europe to lift the markets slightly higher.

Market Statistics

Europe did not crash the markets but conditions did not improve. Bond yields continued to rise and a new crisis has developed. The Italian government will face a new confidence vote on Friday in reaction to the austerity measures imposed by Mario Monti. That confidence vote is suspected to pass but only because the reforms have been severely watered down. The labor reforms have been almost completely eliminated and the opening of previously closed professions were dropped. Monti is finding it is a lot easier to tell people what needs to be done than to actually get them to make the changes.

Spain sold euro six billion in 10-year bonds at a yield of 5.45%. Demand was about twice the 3.5 billion they expected. The yield was neutral but the demand was positive and helped to calm fears that Italy would contaminate Spain.

In the USA the weekly jobless claims surprised to the downside at 366,000 and a drop of -19,000 from the prior week. Last week was revised only slightly higher from 381,000 to 385,000. The drop over the last two weeks is a major acceleration in the recent trend. The number this week is the lowest level in three years.

HOWEVER, in capital letters, very few terminated people will rush out to apply for a new job only two weeks before Christmas. They don't want to go through the hassle of looking for a job over the holidays. Corporations are not hiring although they may be going through the motions. Most workers would look at being laid off two weeks before the holidays as an opportunity for a vacation. Look for claims to accelerate higher the first week in January.

Jobless Claims Chart

The Philly Fed Manufacturing Survey for December was much stronger than expected at 10.3 compared to the prior month at 3.6 and estimates of 5.0. The Philly Fed is a proxy for the national ISM report due out in early January.

This was the third month in positive territory after dipping to -30.7 in August and the current reading is the highest since April. New orders rose to 9.7 from 1.3 and back orders rose from -1.5 to +7.2.

This was a bullish report and suggests the manufacturing sector is accelerating as we head into 2012.

Philly Fed Chart

The New York Empire Manufacturing Survey for December rose to 9.5 from 0.6 and three times the consensus estimates of 3.0. This was also a very strong report suggesting economic activity is accelerating. New orders rose to +5.1 from -2.1 after being in negative territory for six months. Backorders declined to -15.1 from -7.3 and a surprise given the gains in the other components. The employment component picked up sharply from -3.7 to +2.3. Job growth in the region has improved consumer confidence and that shows in the increased activity.

NY Empire Chart

The November Producer Price Index (PPI) rose by +0.3% compared to estimates of +0.2%. Several analysts had expected it to be flat or down for the month. The spike was related to a big jump in food prices including vegetables, meat and poultry. Excluding food and energy the core rate rose only +0.1%. Prices of core intermediate goods declined and crude goods declined -2.5. The headline gain of +0.3% offset a -0.3% decline in October. Since the headline gain was limited to only a couple components it would appear inflation is going to continue lower.

Industrial production was the black sheep of the economic group today. Production declined -0.2% for November after a +0.7% gain in October. Manufacturing output fell -0.4% and the first decline since April, led by a -3.4% drop in auto production. Floods in Thailand caused parts shortages just as the automakers were recovering from the Japanese quake. Because this was basically a weather event most analysts ignored the production decline.

The SEMI Book-to-Bill for November rose to 0.83 from 0.74. This was the second consecutive monthly gain. For every $100 in product shipped they received $83 in new orders. New orders rose +5.0% and shipments declined -6.7%. Demand for consumer electronics continues to grow with well over 100 million units of phones, tablets, iPods, etc expected to be sold in Q4. Despite the warnings from Texas Instruments it would appear things are looking up in the chip sector. Broadcom (BRCM) raised guidance with earnings this week.

There was an acquisition in the chip sector today with Lam Research (LRCX) acquiring Novellus for $3.2 billion. Novellus shareholders will 1.125 shares of Lam stock for each Novellus share. That represents a 28% premium over Wednesday's closing prices. The acquisition will close in Q2.

Novellus Chart

FedEx (FDX) reported earnings of $1.57 per share compared to 89-cents in the year ago quarter. The earnings beat street estimates of $1.53. Revenue rose +10% to $10.59 billion. The company guided higher for the current quarter. The FedEx guidance roughly corresponded with the National Retail Federation's expectations for holiday sales in Nov and Dec to rise +3.8% to $469.1 billion. That is above the +2.8% forecast made in October. FedEx said it shipped over 17 million packages on Dec 12th. They also announced they were buying 27 new Boeing 767-300 aircraft with the first to arrive in 2014. They will replace some planes as old as 40 years. They also announced they were delaying the purchase of 11 Boeing 777 freighters because of slowing demand in Asia. That is a key factoid that we should remember in future economic discussions. I have reported before that shipments to Europe from Asia had declined -20%. Here is further proof from FedEx.

FedEx Chart

Deckers (DECK) was downgraded to underperform from buy at Sterne Agee. The analyst said channel checks indicate disappointing UGG results. The firm believes there could be order cancellations in Q1 due to high inventory levels. They put a price target of $72 on the $95 stock. DECK declined -$9 on the downgrade to close at $86. Lazard Capital defended Deckers saying their order book was strong.

Deckers Chart

Honeywell (HON) reported earnings and reiterated guidance for all of 2011 at $36.5 billion, an increase of +13% and earnings of $4.03, a +43% increase. Prior guidance was $3.85 to $4.00. Guidance for 2012 rose +6% to 12% to between $4.25 and $4.50. HON shares rose slightly on the positive report.

Research in Motion (RIMM) reported earnings that beat the lowered street estimates but their guidance was negative. RIMM posted earnings of $1.27 compared to estimates of $1.19. Revenue was $5.2 billion compared to estimates of $5.27 billion. They guided for revenue of $4.6 to $4.9 billion compared to analyst estimates of $5.1 billion. They expect to sell 11-12 million devices in the quarter. Analysts said the number of devices should have been 20-25% higher for the holiday quarter. They took a $54 million charge for the outage early in Q4. They also took a huge charge for writing down the value of their Playbook inventory. They also warned they were delaying the shipment of the new QNX-based Blackberry 10 phones until the "latter part" of 2012. They had been expected in Q1. Shares of RIMM declined to $14 after the earnings.

RIMM Chart

Adobe (ADBE) posted earnings after the bell of 67-cents compared to estimates of 60-cents. Revenue was $1.15 billion and a +14% increase. The company said 2012 would be a transition year as it moves away from Flash and shifts toward other types of software including a strong emphasis on the cloud. Adobe guided to 54-59 cents for the current quarter. Shares rose +3% after the report.

Adobe Chart

Zynga priced its IPO after the bell at $10 and the high end of its range. They are selling 100 million shares to raise $1 billion. This values the company around $7 billion, about equal with ERTS but less than ATVI at $14 billion. Zynga has 54 million active customers and more than the next 14 game companies combined. It has not monetized those customers yet and receives only 5% of its revenue from advertising. The ticker symbol will be ZNGA.

The market spiked at the open on the better than expected economic news but that was the high of the day. There was very little interest in trading for the day before option expiration. Volume was light at 6.7 billion shares with only a slight edge for advancers over decliners.

I believe traders are still wary of the support break on the major indexes and the continued problems in Europe. With Friday OpEx and the majority of traders planning to head for the malls next week instead of trading stocks there is little to stimulate trading.

Commodity funds have been sellers. Hedge funds have been sellers. Individuals have been selling. Nobody really believes Europe is fixed and they are just waiting for the next shoe or country to drop. Spain's debt auction today was a positive step but Italy's confidence vote on Friday could be a setback.

I think traders are probably done until after Christmas. They may start bargain hunting again on the 27th but most will likely wait until the new year in hopes of picking up some January bargains.

The S&P spiked to resistance at 1225 and it was rock solid. That killed the day right from the start. It was all downhill from there. Support intraday was 1215 but the conventional wisdom is suggesting a retest of 1200 and quite a few analysts believe it will fail with a retest of 1160 the real target.

Since sentiment has switched from bullish to bearish over the last week the risk is for a counter trend rebound. We did not see any support of that theory today so I would not hold my breath. The Adobe earnings after the close were positive but probably not enough to offset the negative sentiment from RIMM.

I would not be loading up on longs here although I am itching to buy some oil and gold. We may get a chance to buy those lower since critical support levels have been broken. Overall I would suggest shopping at the mall on Friday instead of the stock market.

S&P Chart - 5 min

S&P Chart - 90 Min

The Dow failed to hit 12,000 on the opening spike and while it traded better than the other indexes it was still lackluster. Initial support is now 11,800 and I believe we could easily retest 11,600 on any further negative news from Europe. The key level to watch on the upside is 12,000. It would take a move over that level to produce any real buying interest. The opening gain was +144 and it barely closed positive at +45.

Dow Chart

The Nasdaq failed to make a lower low but the opening spike of +27 points ended the day with a gain of less than two points. Intraday support at 2540 was exactly where the Nasdaq closed and I am surprised it did not close negative.

The chip stocks were weak despite the LRCX/NVLS deal and although tech stocks typically do well in December the worry over the disk drive shortage continues to weigh on the tech sector.

Support at 2530 is the key level to watch. A break there would target 3500 or even 2450.

Nasdaq Chart

Overall I am slightly bearish on the market. I believe we could see a short term rebound but today was definitely not a promise of things to come. However, it was not a down day. It was a consolidation day ahead of option expiration. I believe the volatility of the last week knocked most option traders out of the market. That would definitely be true for any longs. The shorts and put holders will have to bail on Friday and that could produce a positive bounce at the open.

You have to wonder if the weekend event risk will keep what few traders that are left from placing any material bets on Friday. I would think the odds are good it will be a lackluster day unless something happens to cause a new short squeeze. Since that squeeze did not appear on Thursday's opening spike the odds of a strong squeeze on Friday are slim.

If you have to be in the market take small positions and exit early.

The Ultimate Investor Newsletter

We are adding a new publication to the End of Year special this year. Option Investor and Premier Investor have gravitated over the years to shorter term trades. I am launching a different type of newsletter for longer term investors that don't want to be managing trades every day. The types of positions in the Ultimate Investor could last from weeks to months depending on the position. These will be lower volatility "investments" rather than trades.

This newsletter will focus on "story stocks" and special situations that provide us with a low risk opportunity to profit. An example would be a long term call option on Hewlett Packard when they fired their CEO and hired Meg Whitman to turn the company around. That would be a 3-6 month position. Another example would have been taking a position in Yahoo when Carol Bartz was fired and the company put up for sale. We will also take positions in stocks ripe for a takeover as we have seen in the oil sector with Global Industries (GLBL) and Brigham Exploration (BEXP).

Click here for Full Description of Ultimate Investor

Ultimate Investor will use all investment strategies including stocks, options of all types, spreads, etc. The type of strategy used will fit the special situation we are targeting.

This will be an investment newsletter rather than a trading newsletter. If market volatility has gotten you down then maybe something with a longer focus is what you need.

Subscribers to the End of Year Special below will receive six months of the Ultimate Investor Newsletter as well.

Have You Renewed Yet?

Every December we offer the best prices of the year on a renewal package of our top newsletters. If you have been a subscriber for several years you know this is the best price and the best deal of the year.

This year we are offering Option Investor, Premier Investor, Leap Trader, Option Writer and our new newsletter starting in January, Ultimate Investor.

Please follow the link below to see for yourself the EOY subscription special for 2011. You will not be disappointed!

Jim Brown

Send Jim an email


New Option Plays

Agricultural Equipment

by James Brown

Click here to email James Brown

Editor's Note:

In addition to tonight's new candidate, consider these stocks as possible trading ideas:

HITK - shares have been able to maintain their bullish trend. A rally past $39.50 or $40.00 could be a bullish entry point.

CMI - a drop under the November low might be a bearish entry point. My concern is that CMI is already short-term oversold.

FOSL - shares are testing support near $80.00. A breakdown under $79.50 could be used as a bearish entry point.

CYMI - this stock is consolidating sideways above support near $46 and its 200-dma. A rally past $48.50 might be a bullish entry point.

- James


NEW DIRECTIONAL PUT PLAYS

AGCO Corp. - AGCO - close: 40.67 change: -0.75

Stop Loss: 42.75
Target(s): 35.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
AGCO is in the farm and agricultural equipment making business. Unfortunately for shareholders the stock has been struggling with a bearish trend of lower highs since its peak back in April this year. The past couple of months the simple 200-dma has been a lid on the stock price. Now shares are breaking down past their 50 and 100-dma.

More aggressive traders may want to open bearish positions now. I want to see AGCO trade under what could be round-number support at $40.00. I am listing a trigger to buy puts at $39.90. You could argue that AGCO is already short-term oversold so we'll try and limit our risk by keeping position size small. We'll start with a stop loss at $42.75, just above Wednesday's high. Our target is $35.25.

Trigger @ 39.90

- Suggested Positions -

buy the Jan $40 PUT (AGCO1221M40) ask $2.20

Annotated Chart:

Entry on December xx at $ xx.xx
Earnings Date 02/07/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 15, 2011



In Play Updates and Reviews

Oversold Bounce

by James Brown

Click here to email James Brown

Editor's Note:

Stocks produced an oversold bounce thanks to some positive economic data out this morning. Yet stocks seemed to struggle to hold on to their gains.

Our NTAP play has been stopped out. We have exited our December options on TMO and WPI. We need to exit our IWM play by the close tomorrow.

-James

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 70.61 change: +0.67

Stop Loss: 69.25
Target(s): 77.00
Current Option Gain/Loss: -28.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: BA saw a bounce off the bottom of its trading range but shares struggled to reach the $71.00 level I remain cautious here. No new positions at this time. We have a stop at $69.25. More conservative traders may want a stop closer to $69.70 instead.

Earlier Comments:
There is potential resistance at $75.00 and more conservative traders may want to exit there. I am aiming for $77.00. FYI: The Point & Figure chart for BA is bullish with a $79 target.

- Suggested Positions -

Long 2012Jan $75 call (BA1221A75) entry $1.08

12/13/11 trade opened
12/12/11 adjusted stop loss to $69.25
12/12/11 trade did not open, try again.

Entry on December 13 at $71.67
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on December 10, 2011


Phillip Morris Intl. - PM - close: 75.92 change: +1.06

Stop Loss: 73.75
Target(s): 78.50
Current Option Gain/Loss: + 64.2%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
12/15 update: PM displayed some relative strength with a +1.4% gain. Although I remain cautious here. If you look hard enough PM appears like it might be building a trend of lower highs. It's still very short-term at this point. PM still has overhead resistance at $77.00. I am not suggesting new positions at this time.

Earlier Comments:
Our multi-week target is $78.50. FYI: The Point & Figure chart for PM is bullish with a $95 target.

- Suggested Positions -

Long 2012 Jan $75 call (PM1221A75) Entry $1.12

12/05 Call is up +100%, readers may want to exit now!
12/03 new stop loss @ 73.75
11/30 new stop loss @ 71.40
11/23 adjusted stop loss to $69.49
11/22 trade opened. PM opened at $72.11

Entry on November 22 at $72.11
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 7.3 million
Listed on November 19, 2011


Boston Beer Co. Inc. - SAM - close: 102.27 change: +0.27

Stop Loss: 98.75
Target(s): 109.50
Current Option Gain/Loss: -29.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: SAM continues to hover near the $102 level. The stock appears to be churning inside the $100-105 zone, which isn't necessarily a bad thing. Nimble trades can still buy dips or bounces near the $100.00 mark.

Earlier Comments:
Our exit target is $109.50. More aggressive traders may want to aim higher. FYI: The Point & Figure chart for SAM is bullish with a $117 target. NOTE: The most recent data listed short interest at 20% of SAM's extremely small 8.3 million-share float. That's definitely a recipe for a short squeeze.

(small positions) - Suggested Positions -

Long JAN $105 call (SAM1221A105) Entry $2.05

12/03/11 new stop loss @ 98.75
12/02/11 trade triggered at $102.00

Entry on December 02 at $102.00
Earnings Date 03/08/12 (unconfirmed)
Average Daily Volume = 72.3 thousand
Listed on December 01, 2011


Varian Medical Sys. - VAR - close: 63.56 change: +0.47

Stop Loss: 62.49
Target(s): 69.75
Current Option Gain/Loss: -41.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: VAR gapped open higher this morning but then spent the rest of the session churning sideways in a 40-cent range. I remain cautious on the stock.

No new positions at this time.

- Suggested Positions -

Long JAN $65 call (VAR1221A65) entry $2.65

12/14/11 adjust stop loss to $62.49

Entry on December 13 at $65.25
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on December 12, 2011


PUT Play Updates

BMC Software Inc. - BMC - close: 33.56 change: +0.23

Stop Loss: 35.05
Target(s): 30.05
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
12/15 update: BMC followed the market higher but it was a volatile morning. The larger trend remains bearish. I don't see any changes from my prior comments.

I am suggesting a trigger to open bearish put positions at $32.75. We'll start this trade with a wide stop at $35.05. More conservative traders may want to use a tighter stop loss instead. Our target is $30.50. FYI: The Point & Figure chart for BMC is bearish with a $29 target.

Trigger @ 32.75

- Suggested Positions -

buy the 2012Jan $32.50 PUT (BMC1221M32.5)

Entry on December xx at $ xx.xx
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 14, 2011


Check Point Software - CHKP - close: 52.72 change: +0.75

Stop Loss: 55.05
Target(s): 48.00
Current Option Gain/Loss: -16.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: CHKP managed to recoup most of yesterday's decline. Yet the bearish trend of lower highs is still in effect. Readers could look for a move toward the 20-dma in the $53.75-54.00 zone as a new bearish entry point or wait for CHKP to roll over near this area and then consider new positions.

Earlier Comments:
There is potential support near $51.00 but we're aiming for the $48.00 level. More aggressive traders could aim lower. FYI: The Point & Figure chart for CHKP is bearish with a $46 target.

(Small Positions) - Suggested Positions -

Long Jan $50 PUT (CHKP1221M50) Entry $1.20

12/13/11 new stop loss @ 55.05

Entry on December 09 at $53.29
Earnings Date 01/30/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 08, 2011


Fluor Corp. - FLR - close: 48.27 change: -0.04

Stop Loss: 52.05
Target(s): 45.15
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: FLR failed to fully participate in the market's oversold bounce. The stock gapped higher this morning and then faded back toward unchanged. The move looks like a new entry point for bearish positions.

Earlier Comments:
We want to keep our position size small because FLR is arguably already oversold here with a drop from $56 to $50 over the last several days but that doesn't mean it can't get more oversold. FYI: The Point & Figure chart for FLR is bearish with a $43 target.

- Suggested Positions - (Small Positions)

Long 2012Jan $45 PUT (FLR1221M45) entry $1.20

Entry on December 14 at $49.35
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on December 13, 2011


Juniper Networks - JNPR - close: 18.60 change: -0.28

Stop Loss: 20.55
Target(s): 16.75
Current Option Gain/Loss: + 19.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: JNPR is still underperforming the market. Shares also saw their morning rally attempt fade. JNPR ended the session down -1.4%. I am not suggesting new positions at this time.

(small positions) - Suggested Positions -

Long 2012Jan $17.50 PUT (JNPR1221M17.5) entry $0.57

12/14/11 new stop loss @ 20.55
12/12/11 JNPR gapped open lower at $19.58, opening our trade. Stop loss at $20.75

Entry on December 12 at $19.58
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 8.8 million
Listed on December 10, 2011


Monsanto Co - MON - close: 68.41 change: +0.69

Stop Loss: 71.05
Target(s): 60.50
Current Option Gain/Loss: -20.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: I cautioned readers yesterday that the action on Wednesday was a bit troubling if you're bearish on MON. The stock outperformed today with a +1% gain but at this point it's just an oversold bounce. I would probably wait for MON to fall under $67.00 or see a failed rally near $70.00 before considering new positions.

Earlier Comments:
Our target is $60.50. More conservative traders may want to exit near $63.00 instead. FYI: The Point & Figure chart for MON is bearish with a $60 target.

(small positions) - Suggested Positions -

Long 2012Jan $65 PUT (MON1221M65) entry $2.05

Entry on December 14 at $67.35
Earnings Date 01/05/12 (unconfirmed)
Average Daily Volume = 3.7 million
Listed on December 13, 2011


SPDR S&P 500 ETF - SPY - close: 121.74 change: -1.31

Stop Loss: 127.55
Target(s): 120.50
Current Option Gain/Loss: + 9.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: After a -3% decline for the week in three days it's not surprising the S&P 500 (& SPY) see an oversold bounce. Gains faded off the opening pop. There is no change from my prior comments.

The newsletter is planning to exit this position at $120.50. More aggressive traders may want to choose a lower exit target.

I am not suggesting new positions at this time.

Earlier Comments:
We want to keep our position size small to limit our risk.

- Suggested Positions -

Long 2012Jan $120 PUT (SPY1221M120) Entry $2.67

12/02/11 trade opened at $126.12 (gap higher), trigger was 126.00

Entry on December 02 at $126.12
Earnings Date --/--/--
Average Daily Volume = 224 million
Listed on November 30, 2011


Thermo Fisher Scientific - TMO - close: 44.15 change: +0.40

Stop Loss: 46.15
Target(s): 42.75
Current Option Gain/Loss: Dec$45p: +111.1% & Jan$45P: +39.2%
Time Frame: 2 to 4 weeks
New Positions: see below

Comments:
12/15 update: Hmm... did our target just get hit? If you look at an intraday chart it appears that TMO traded down to $42.71 this morning. Yet that must be a bad tick since the quote services I checked both listed today's low at $43.06. The stock's morning weakness was due to an analyst downgrade before the opening bell.

It was our plan to exit our December puts at the open this morning. Those opened with a bid at $0.95 (+111.1%). We still have the January puts and our target is $42.75 but readers may want to aim lower. I am not suggesting new positions at this time.

- Suggested Positions -

(planned exit this morning)
DEC $45 put (TMO1117X45) Entry $0.45 exit $0.95 (+111.1%)

- or -

Long JAN $45 put (TMO1221M45) Entry $1.40

12/15/11 planned exit for Dec. $45 put. bid @ 0.95 (+111.1%)
12/14/11 Prepare to exit Dec. $45 puts at the open tomorrow, current bid on these puts is $1.20 (+166.6%)
12/14/11 new stop loss @ 46.15
12/05/11 TMO gapped open higher at $47.10

Entry on December 05 at $47.10
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on December 03, 2011


Watson Pharmaceuticals - WPI - close: 60.91 change: +0.94

Stop Loss: 64.25
Target(s): 56.00
Current Option Gain/Loss: Dec$60p: -12.5% & Jan$60p: +12.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/15 update: I had cautioned readers that WPI might see a bounce near $60.00. Shares outperformed the market with a +1.5% oversold bounce today. The stock should find resistance at its 10-dma or the $62.00 level.

It was our plan to exit our December puts at the open this morning.

Earlier Comments:
There is potential support at $60.00 but we are aiming for the $56.00 level.

- Suggested Positions -

(planned exit) DEC $60 PUT (WPI1117X60) Entry $0.80 exit $0.70 (-12.5%)

- or -

Long JAN $60 PUT (WPI1221M60) Entry $2.00

12/15/11 planned exit for Dec. $60 puts, bid $0.70 (-12.5%)
12/14/11 Prepare to exit Dec. $60 puts at the open tomorrow, current bid on these puts is $0.65

Entry on December 07 at $61.75
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 03, 2011


Market Neutral Play Updates

iShares Russell 2000 ETF - IWM - close: 71.70 change: +0.66

Stop Loss: n/a
Target(s): TBD
Current Option Gain/Loss: -38.2%
Time Frame: up to December options expiration
New Positions: Must Be Opened on Thursday 12/08

Comments:
12/15 update: The market's oversold bounce produced a +0.9% rebound in the IWM. It looks like the $72 level might be short-term resistance.

Tomorrow is our last day for December options. We're planning to exit at the closing bell.

- Market Neutral Strangle - cost: 2.04 value: 1.26 (-38.2%)

Long DEC $77 call (IWM1117L77) Entry $0.58, current bid/ask $0.00/0.01

- Also Buy the -

Long DEC $73 put (IWM1117X73) Entry $1.46, current bid/ask $1.26/1.37

12/15/11 prepare to exit at the closing bell tomorrow

Entry on December 08 at $73.90
Earnings Date --/--/--
Average Daily Volume = 61 million
Listed on December 07, 2011


CLOSED BULLISH PLAYS

NetApp, Inc. - NTAP - close: 36.28 change: -0.85

Stop Loss: 36.25
Target(s): 39.50
Current Option Gain/Loss: - 3.9%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
12/15 update: The tech-heavy NASDAQ continues to underperform. NTAP was definitely an anchor as the stock underperformed with a -2.2% drop. Shares fell to the $36.00 level this afternoon. Our stop was hit at $36.25.

Earlier Comments:
I do consider a more aggressive trade. We want to keep our position size small to limit risk.

- Suggested Positions - (small positions)

JAN $35 call (NTAP1221A35) Entry $2.51 exit $2.41 (-3.9%)

12/15/11 stopped out at $36.25
12/10/11 new stop loss @ 36.25
12/08/11 new stop loss @ 35.75, more conservative traders may want to exit immediately.
12/03/11 new stop loss @ 34.95

chart:

Entry on November 29 at $35.82
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 9.2 million
Listed on November 28, 2011