Option Investor
Newsletter

Daily Newsletter, Monday, 1/23/2012

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
By the skin of its teeth, the S&P 500 was able to muster a higher close as the market seemed please that European policymakers were once again at work trying to find a solution to the continent's sovereign debt woes. The Nasdaq suffered a small loss as did the Dow Jones Industrial Average where 18 of 30 constituents closed lower on the day.

Market Stats

At the stock-specific level, energy names were the big headline generators on the day for a variety of reasons. Natural gas futures spiked, if you can believe it, after Oklahoma-based Chesapeake Energy (CHK), the second-largest U.S. natural gas producer behind Exxon Mobil (XOM), snapped out of lengthy slide. The company said it will pare natural gas production and look for ways to boost its liquids (oil) output.

Chesapeake had 75 gas rigs operating in 2011 and that number has already fallen to 47, but the company is planning to cut that figure in half to 24. The company said it plans to raise to 85% the portion of its capital budget devoted to liquids exploration. To its credit, Chesapeake has been shedding billions of dollars worth of shale assets for a couple of years now. The problem is shares of Chesapeake have been waxed in recent months and the chart looks similar to the one of nat gas futures that I included below.

Nat Gas Chart

Speaking of stocks that snapped out of prolonged slumps, for one day at least, there is Petrobras (PBR), Brazil's state-controlled oil company. Petrobras ADRs surged 4.3% on better than double the average daily volume on news that Jose Sergio Gabrielli will be replaced as CEO, perhaps as soon as next month. Maria das Gracas Foster, 58, will replace Gabrielli, 62. Give Brazil credit for being somewhat progressive. A female president and a woman running the country's largest oil company. A lot of other countries cannot boast of one of those factoids let alone both.

I digress. When I saw this news break on Sunday I suspected Petrobras would go up today. I say that because while Gabrielli oversaw Petrobras making some of the most impressive oil discoveries the world has seen in decades, the stock has been dead money for two years. In fact, even BP (BP) has outperformed Petrobras by a wide margin in that time and that time includes the Gulf spill.

Investors apparently like the new leadership Petrobras is getting.

Petrobras Chart

There was also some activity on the mergers and acquisitions front in the energy sector as Apache (APA) said it will pay $2.85 billion for privately held Cordillera Energy Partners III LLC, a deal that will boost Apache's presence in the Anadarko Basin of Texas and Oklahoma. Cordillera and its investors will receive $600 million in Apache shares and the rest of the deal price will be paid in cash funded by debt. The effective date of the transaction is Sept. 1, 2011, with closing anticipated in the second quarter, Apache said in a statement.

The deal will give Apache access to 14,000 new potential drilling locations in the Anadarko Basin along with proved reserves of 71.5 million barrels of oil equivalent and current production of 18,000 barrels per day. Apache said it was producing 40,000 barrels per day in the central region at the end of 2011 and that the deal to buy Cordillera could triple that number and that is likely one reason why Apache said the transaction will be accretive to earnings this year.

Cordillera has substantial operations that include approximately 254,000 net acres in the prolific Granite Wash, Tonkawa, Cleveland and Marmaton plays in western Oklahoma and the Texas Panhandle, according to the statement.

Bank of America put a $160 price target on Apache today, which as you can see, is well above current levels.

Apache Chart

In other energy news of the rumor variety, the Sunday Times of London reported that BP (BP) may be interested in Cove Energy. Cove has been on the market for a few weeks now after a making a major gas discovery off the coast of Mozambique.

The Sunday Times also reported, and the story was picked up by some U.S. sources, that Anadarko Petroleum (APC) was looking to make move on Rockhopper, a U.K.-based explorer that has found as much as 700 million barrels of oil off the coast of the Falklan Islands. The Houston Business Journal reported Anadarko has agreed to make a $1.6 billion provisional investment in Rockhopper.

ConocoPhillips (COP), the third-largest U.S. oil company, fell slightly today after UBS downgraded the stock to "sell." The bank said Conoco's plans to spin-off its downstream business could impair the valuation and that the E&P company may face ''low organic free cash flow limiting future buybacks without asset sales & potential risk to dividend/growth in the event of a cyclical oil price pullback.''

In earnings news, shares of the world's second-largest provider of oilfield services, gave up 2% after the company said its fourth-quarter profit jumped 50% to $906 million, or 98 cents per share, from $605 million, or 66 cents per share, a year earlier. Revenue rose almost 37% to $7.06 billion. On an adjusted basis, Halliburton earned $1 a share. The company said it expects global revenue to increase this year.

My best guess regarding why Halliburton was off today, and I think I am correct, is the company's natural gas exposure. As in investors think the company is not oily enough.

Halliburton Chart

While Petrobras was benefiting from a change at the helm, one stock that was not was downtrodden BlackBerry maker Research In Motion (RIMM). RIM slid almost 8.5% today on volume that was better than double the daily average after the company named Thorsten Heins as its new CEO replacing co-CEOs Mike Lazaridis and Jim Balsillie.

This is probably a case of too little too late. After quarter upon quarter of disappointing analysts and investors, missing on already lowered earnings estimates and getting its butt kicked by basically all of its key rivals, it is going to take a lot more than an executive change to get investors interested in RIM again. Personally, I have no problem with RIM or its products. I am not long nor I am short the stock, but I get the impression only an acquisition will save this company from more market share and stock price declines.

RIM Chart

After-hours, stocks on the move include CSX (CSX). The railroad operator is a down almost 2.5% at this writing after saying it earned 43 cents a share in the fourth quarter while analysts were expecting 44 cents. Revenue was $3 billion, which was inline with Wall Street estimates. The problem was volumes. CSX said coal volume was off 8% while agricultural products and chemicals, fell 7% and 8%. Ag products and chemicals are CSX’s two largest segments.

CSX Chart

Semiconductor maker Texas Instruments (TXN) was up over 3% in after-hours trade despite forecasting a first-quarter profit of 16-24 cents a share on revenue of $3.02 billion to $3.28 billion. Analysts were expecting $3.22 billion and 32 cents. TI said it will shutter two factories, one in Japan and one in Texas, and layoff 1,000 workers as a result.

For the fourth quarter, TI posted a profit of $298 million, or 25 cents a share, compared with a profit of $942 million, or 78 cents a share, a year earlier. Revenue fell to $3.42 billion from $3.53 billion.

Texas Instruments Chart

Looking at the charts, the S&P 500's piddly move today does not change things from a technical perspective. There is still plenty of room to run to overhead resistance around 1345-1350. Support can be found in the 1295-1300 area. From there, next support is 1250-1260. There is an absolute avalanche of earnings reports this week with about 25% of the S&P 500 reporting, so even if Europe remains calm, and hopefully it will, there should be enough activity to spark some decent moves in the S&P 500.

S&P 500 Chart

Same goes for the Dow as not much changed today. Support is 12,600 and resistance is 12,750. Much of Friday's gains were attributable to IBM, but 12 Dow stocks, including many of the high-priced ones, step up to the earning plate this week. MCD gets the ball rolling tomorrow and Thursday could be an interesting day for the Dow with CAT and MMM reporting. CVX reports Friday.

Dow Chart

As for the Nasdaq, support is 2700 and resistance can be spotted at 2875. Of course, the big deal is Apple (AAPL) reporting tomorrow after the bell. The Nasdaq has held up pretty following Google’s (GOOG) big disappointment last week, but I do not if it can withstand a sequel from Apple. Hopefully, that will not be a situation we have to contemplate tomorrow.

Nasdaq Chart

Apologies for cutting this wrap short, but today is my birthday and I am going to do some mild celebrating in a few minutes.

Todd Shriber


New Option Plays

Discount Stores & Apparel

by James Brown

Click here to email James Brown

Editor's Note:

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

WPI - Shares continue to look weak and I'm tempted to buy puts on the stock with a stop above Friday's high.

NOV - Oil stocks were showing strength today. I would be tempted to buy calls on NOV if shares traded at $76.55 or higher.


NEW DIRECTIONAL CALL PLAYS

Dollar Tree Inc. - DLTR - close: 85.79 change: +1.33

Stop Loss: 83.75
Target(s): 89.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DLTR continues to show relative strength. Last week the stock broke out past key resistance in the $84-85 zone. Shares have since retested this area as new support. The bounce today looks like a new bullish entry point.

I am suggesting new positions at the open tomorrow but only if both DLTR and the S&P 500 index open positive. More conservative traders may want to wait for DLTR to trade at a new high ($86.55) before initiating positions. Our target is $89.75. More aggressive traders may want to aim higher. FYI: The Point & Figure chart for DLTR is bullish with a $113 target.

Do not enter position unless DLTR and the S&P500 are both positive at the open

- Suggested Positions -

buy the Feb $87.50 call (DLTR1218B87.5) current ask $1.30

Annotated Chart:

Entry on January xx at $ xx.xx
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on January 23, 2012


NEW DIRECTIONAL PUT PLAYS

Abercrombie & Fitch - ANF - close: 44.23 change: -0.28

Stop Loss: 46.05
Target(s): 40.00 or 37.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of this apparel company stock are really struggling. ANF is not participating in the market's rally. The stock has been consolidating sideways along the bottom of its two-month trading range with a bearish trend of lower highs. Now ANF looks poised to breakdown to new lows. More aggressive traders may want to buy puts now. I am suggesting a trigger to buy puts at $43.40 (new relative low). I am listing two different targets. I'd look to exit at $40.00 or $37.00. Keep in mind the $40.00 level could offer some round-number support. FYI: The Point & Figure chart for ANF is very bullish with a long-term $12 target.

Trigger @ 43.40

- Suggested Positions -

buy the Feb $43 PUT (ANF1218N43) current ask $1.97

Annotated Chart:

Entry on January xx at $ xx.xx
Earnings Date 02/15/12 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on January 23, 2012



In Play Updates and Reviews

IOC Hits Our Target

by James Brown

Click here to email James Brown

Editor's Note:

Oil stocks were showing relative strength today and IOC hit our bullish target. Meanwhile LH and DECK hit our entry triggers. I've adjusted the entry strategy on PVH.

Current Portfolio:


CALL Play Updates

Berkshire Hathaway Inc. - BRK.B - close: 79.15 change: -0.76

Stop Loss: 76.75
Target(s): 83.50
Current Option Gain/Loss: - 5.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: After three up days in a row BRK.B hit a little profit taking under resistance near $80. I am suggesting readers look for a dip in the $78.50-78.00 zone before considering new positions. Our multi-week target is $83.50. We do not want to hold over the late February earnings report.

- Suggested Positions -

Long Feb $80 call (BRKB1218B80) entry $0.90

01/18/12 triggered at $78.75
01/14/12 adjusted entry point strategy to use a trigger @ 78.75
01/13/12 BRK.B gapped lower, negating our entry point. Trade did not open.

Entry on January 18 at $78.75
Earnings Date 02/27/12 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on January 12, 2012


Cognizant Technology - CTSH - close: 70.61 change: +0.44

Stop Loss: 68.75
Target(s): 76.50
Current Option Gain/Loss: Unopened
Time Frame: exit prior to the Feb. 8th earnings
New Positions: Yes, see below

Comments:
01/23 update: CTSH displayed some relative strength today with a +0.6% gain but failed to breakout past the $71.00 level. We want to use a trigger to buy calls at $71.05. If triggered our target is $76.50. We do not want to hold over the Feb. 8th earnings report. FYI: The Point & Figure chart for CTSH is bullish with an $85 target.

Trigger @ $71.05

- Suggested Positions -

buy the Feb $75 call (CTSH1218B75)

Entry on January xx at $ xx.xx
Earnings Date 02/08/12 (confirmed)
Average Daily Volume = 2.3 million
Listed on January 21, 2012


Flowserve Corp. - FLS - close: 107.21 change: +0.03

Stop Loss: 104.75
Target(s): 114.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
01/23 update: Our trade on FLS is not open yet. The stock opened lower this morning. It quickly reversed higher but failed to hit a new relative high before sinking back to almost unchanged. I don't see any changes from my prior comments. Although more conservative traders may want to wait for a rally past $108.50 before initiating new positions.

We are setting our stop loss at $104.75, just under Wednesday's low. I am setting our target at $114.50 but cautious traders may want to exit at $112.00 instead. FYI: The Point & Figure chart for FLS is bullish with a $139 target.

Do not enter position unless FLS and the S&P500 are both positive at the open

- Suggested Positions -

buy the FEB $110 call (FLS1218B110)

- or -

buy the APR $115 call (FLS1221D115)

Entry on January xx at $ xx.xx
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 400 thousand
Listed on January 21, 2012


Starwood Hotel & Resorts - HOT - close: 54.01 change: +0.46

Stop Loss: 49.75
Target(s): 55.75
Current Option Gain/Loss: +69.4%
Time Frame: exit prior to earnings
New Positions: see below

Comments:
01/23 update: HOT managed to outperform the major indices with a +0.8% gain today. If you're looking for a new entry point I'd wait for a dip or a bounce near $52.00 or its 10-dma. More conservative traders may want to start raising their stop loss.

Don't forget that we plan to exit prior to the Feb. 2nd earnings.

- Suggested Positions -

Long Feb $52.50 call (HOT1218B52.5) entry: 1.67

01/18/12 new stop loss @ $49.75
01/13/12 Triggered on a dip at $51.00
01/10/12 initial entry point did not work. New strategy: buy a dip at $51.00.

Entry on January 13 at $51.00
Earnings Date 02/02/12 (confirmed)
Average Daily Volume = 2.4 million
Listed on January 09, 2012


iShares Russell 2000 ETF - IWM - close: 78.15 change: -0.10

Stop Loss: 75.45
Target(s): 82.50
Current Option Gain/Loss: -25.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: After a little volatility this morning the IWM drifted back toward the $78.00 level. The low today was $77.55. I am suggesting readers wait for a dip near $77.00 before considering new positions.

Earlier Comments:
You may want to consider a stop closer to the 10-dma instead (currently 75.95). Our multi-week target is $82.50. Keep in mind the $80.00 level might offer some overhead resistance. FYI: The Point & Figure chart for IWM is bullish with a $90 target.

- Suggested Positions -

Long Feb $80 call (IWM1218B80) Entry $1.14

01/19/12 IWM gapped open higher at $78.13

Entry on January 19 at $78.13
Earnings Date --/--/--
Average Daily Volume = 40 million
Listed on January 18, 2012


iShares Transportation - IYT - close: 93.40 change: -0.68

Stop Loss: 91.40
Target(s): 94.75 or 98.50
Current Option Gain/Loss: Jan$95c: - 100% & Feb$95c: -20.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/23 update: Simple profit taking pushed the IYT back down toward its rising 10-dma. If the market dips again tomorrow I would look for the IYT to test the $92 area.

- Suggested Positions -

Long Feb $95 call (IYT1218B95) entry $1.45
target 98.50

01/21/22 new stop loss @ 91.40
01/21/12 January $95 calls have expired.
01/12/12 new stop loss @ 89.45
01/07/12 new stop loss @ 88.75
01/03/12 IYT gapped open higher at $91.20, above our trigger at $90.75

Entry on January 03 at $91.20
Earnings Date --/--/--
Average Daily Volume = 582 thousand
Listed on December 22, 2011


Laboratory Corp. - LH - close: 88.91 change: +0.27

Stop Loss: 86.90
Target(s): 94.75
Current Option Gain/Loss: + 0.0%
Time Frame: up to the Feb. 10th earnings report.
New Positions: see below

Comments:
01/23 update: Traders bought the dip in LH this morning and shares managed to trade over resistance at $89.00 late this afternoon. Our trade has been opened. If you're still looking for an entry point consider waiting for a rally past $89.15 next.

We do not want to hold positions over the Feb. 10th earnings report. Our target is the $94.75 mark. FYI: The Point & Figure chart for LH is bullish with a $105 target.

- Suggested Positions -

Long Feb $90 call (LH1218B90) Entry $1.50

01/23/12 trade triggered at $89.00
01/21/12 new stop loss at $86.90. Still waiting for LH to hit our entry point at $89.00.

Entry on January 23 at $89.00
Earnings Date 02/10/12 (confirmed)
Average Daily Volume = 564 thousand
Listed on January 10, 2012


Mohawk Industries - MHK - close: 63.00 change: -0.30

Stop Loss: 59.90
Target(s): 67.50
Current Option Gain/Loss: -53.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: MHK is still correcting lower. Shares look headed for what should be support in the $62.00-61.00 zone. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $67.50 but we do not want to hold over the February earnings report. More aggressive traders could aim higher.

Investors will be interested to note that the most recent data listed short interest at 5% of the 57 million share float. That's not excessive but it's a bit high and could boost any new gains as bears cover their shorts. FYI: The Point & Figure chart for MHK is bullish with a $90 target.

- Suggested Positions -

Long Feb $65 call (MHK1218B65) Entry $2.48

01/17/12 MHK gapped open higher at $63.99

Entry on January 17 at $63.99
Earnings Date 02/21/12 (unconfirmed)
Average Daily Volume = 621 thousand
Listed on January 14, 2012


Northrop Gruman - NOC - close: 60.49 change: -0.90

Stop Loss: 58.75
Target(s): 64.00
Current Option Gain/Loss: -17.6%
Time Frame: up to NOC's early February earnings report.
New Positions: see below

Comments:
01/23 update: Defense and aerospace names hit some profit taking on Monday. NOC gave up -1.4%. Shares look headed for round-number support at $60.00 or short-term technical support at the 10-dma (near $59.65). Wait for this dip or a bounce before considering new positions.

We plan to exit prior to NOC's earnings report in early February. FYI: The Point & Figure chart for NOC is bullish with a $71 target.

- Suggested Positions -

Long Feb $60 call (NOC1218B60) Entry $1.70

01/21/12 new stop loss @ 58.75

Entry on January 19 at $60.34
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on January 18, 2012


Omnicom Group - OMC - close: 46.71 change: -0.98

Stop Loss: 45.45
Target(s): 49.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: OMC continues to correct lower. The saw a little volatility this morning with a drop from the $46.80 area down to the $45.75 level before paring its losses. Currently we have a stop loss at $45.45. More aggressive traders might want to put their stop under the $45.00 mark instead. I am not suggesting new positions at this time.

Our target is $49.00. We do not want to hold over the mid February earnings report. FYI: The Point & Figure chart for OMC is bullish with a $64 target.

- Suggested Positions -

Long Feb $45 call (OMC1218B45) entry $1.80

01/19/12 new stop loss @ 45.45, readers may want to take profits now (+66%)
01/18/12 new stop loss @ 44.75

Entry on January 12 at $45.75
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on January 11, 2012


PVH Corp. - PVH - close: 76.28 change: -0.36

Stop Loss: 74.75
Target(s): 83.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
01/23 update: Our PVH trade is still not open yet. The stock opened lower, spiked toward its recent highs and then reversed again. I am adjusting our entry point strategy. We will use a trigger at $77.60 to open small bullish positions and we'll raise the stop loss to $74.75. FYI: The Point & Figure chart for PVH is bullish with a $92 target.

Buy calls at $77.60, keep positions small.

- Suggested Positions -

buy the Feb $77.50 call (PVH1218B77.5)

- or -

buy the Mar $80 call (PVH1217C80)

01/23/12 trade still not open
new entry point strategy to use a trigger at $77.60, stop loss at $74.75
01/21/12 trade not open yet. try again.

Entry on January xx at $ xx.xx
Earnings Date 03/28/12 (unconfirmed)
Average Daily Volume = 867 million
Listed on January 19, 2012


Teva Pharmaceuticals - TEVA - close: 45.83 change: -0.00

Stop Loss: 43.75
Target(s): 49.50
Current Option Gain/Loss: + 8.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: TEVA spent the day churning sideways and closed unchanged on the session.

Our target is $49.50 but we'll plan to exit prior to the earnings report in early February. FYI: The Point & Figure chart for TEVA is bullish with a $57 target.

(Small Positions)- Suggested Positions -

Long Feb $45 call (TEVA1218B45) entry $1.50

01/18/12 TEVA has rebounded. Use it as a new entry point.
01/17/12 Be careful. TEVA hit our trigger and reversed to close back under $45.00

Entry on January 17 at $45.25
Earnings Date 02/08/12 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on January 14, 2012


TJX Companies - TJX - close: 66.59 change: +0.01

Stop Loss: 64.75
Target(s): 68.50
Current Option Gain/Loss:(Jan$65c: +85.0%) & Feb$65c: +31.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/23 update: It was a relatively quiet day for TJX with the stock closing virtually unchanged on the session. There is still a good chance that TJX will dip into the $65.50-65.00 area. I am not suggesting new positions at this time.

Earlier Comments:
On January 5th, management announced a 2-for-1 stock split payable on February 2nd, 2012.

- Suggested Positions -

Long Feb $65 call (TJX1218B65) Entry $1.75

01/18/12 adjusted exit target to $68.50
01/18/12 closed Jan $65 calls @ $1.85 (+85.0%)
01/17/12 prepare to exit January calls at close tomorrow
01/17/12 new stop loss @ 64.75
01/12/12 new stop loss @ 63.75
01/07/12 readers may want to take profits now (Jan$65call +90%, Feb$65call +57%)
01/05/12 new stop loss @ 63.25, TJX announced strong same-store sales and a 2:1 split.
12/31/11 new stop loss @ 62.75

Entry on December 22 at $64.10
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on December 21, 2011


PUT Play Updates

Deckers Outdoor Corp. - DECK - close: 81.38 change: -2.49

Stop Loss: 85.25
Target(s): 77.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: Our aggressive put play on DECK has been triggered. The stock underperformed the market with a -2.9% decline. Our trigger to buy puts was hit at $82.75. Our plan was to keep our position size small to limit risk. DECK can be a volatile stock.

Earlier Comments:
Our target is $77.00. We want to keep our position size small because any unexpected rally might spark some short covering. The most recent data listed short interest at 14% of the relatively small 37.1 million-share float.

(Small Positions) - Suggested Positions -

Long FEB $80 PUT (DECK1218N80) Entry $3.10

Entry on January 23 at $82.75
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 21, 2012


CLOSED BULLISH PLAYS

InterOil Corp. - IOC - close: 66.55 change: +3.25

Stop Loss: 58.40
Target(s): 66.00
Current Option Gain/Loss: + 7.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/23 update: Target hit.

Oil stocks were showing relative strength today. IOC surged to an intraday high of $66.90 this morning. Our target was hit at $66.00. Readers may want to keep an eye on it for another entry point if shares see a correction. Although honestly, we may not trade IOC again. We caught a $5.00 move in the stock and the option rallied less than a $1.00. Back out the option spread and our gains were not worth the risk.

- Suggested Positions -

Feb $65 call (IOC1218B65) Entry $5.60*, exit $ 6.00 (+7.1%)

01/23/12 target hit at $66.00
01/18/12 new stop loss @ 58.40
* entry price is an estimate based on when IOC hit our trigger.

chart:

Entry on January 18 at $61.00
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 537 thousand
Listed on January 17, 2012