Option Investor
Newsletter

Daily Newsletter, Thursday, 2/6/2014

Table of Contents

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

Market Wrap

Big Move Big Expectations

by Thomas Hughes

Click here to email Thomas Hughes
The major indices make their biggest moves of the year ahead of the NFP report.

Introduction

Futures trading began positive on what turned out to be a pretty good day for the markets. The S&P 500, Dow Industrials and Nasdaq all made their biggest moves since mid-December 2013. positive statements from the BOE and the ECB, economic data and earnings all helped, along with an understated expectation for tomorrow's NFP. The BOE and ECB both held rates steady, maintained their accomodative postures and reaffirmed improving conditions. Here at home a string of semi-positive economic data and better than expected earnings helped the markets gain traction. Futures were steady around +5 for the S&P 500 up into the open of today's trading. After the open the indices opened in the green and then moved steadily higher into the early afternoon. The S&P, Dow and Nasdaq all closed near the highs of the session.


After hours trading was filled with action as well. Numerous earnings reports were released that will impact trading in the morning. Linkedin reported earnings that beat estimates and then guided the full year lower. Shares fell on the news but found support before the the end of trading. Expedia beat on the top and bottom line, sending the stock up about 10% in the after hours. Newscorp really blew away estimates, beating by more than 50% of the consensus regardless of lighter than expected estimates.

The Economy

Lots of data today. First on the list is the Challenger, Grey and Christmas survey of planned lay-offs. The company reported that January planned lay-offs jumped by 47% from December. December's number was a 13 year low. The report cited increased lay-off's in the retail sector driven by the weak December sales. The increases in planned lay-offs due to the post-Holiday lull in retail is not unexpected.

Initial claims for unemployment fell by 20,000, more than expected, to 331,000. The previous weeks number was revised up by 3,000 for a net drop of 23,000 from last weeks report. The four week moving average of claims rose by 750. Claims are at relative low levels but still basically flat for the past year. The spike in claims last week could be attributable to the forecast jump in lay-offs reported by Challenger. I would like to see this number stabilize more and begin to move lower again. Within the report there are 20 states reporting a drop in initial claims for a total near -55,000. Only two states reported an increase in claims greater than 1,000, Indiana and Massachussetts, for a total near +6,500. Declines of lay-offs in retail, contruction, manufacturing and many others were cited by many of the states. Based on this data and the Challenger report it looks as if last weeks spike in initial claims is directly related to post-Holiday lay-offs and that those lay-offs are diminishing or over. Seasonal adjusting is also still weighing heavily on the data as well. I have started to track the unadjusted figures and will be providing them in the near future.


Continuing claims gained 15,000 from a mild lower revision to last weeks figures. The gain puts this weeks number of continuing claims at 2.964, basically flat from last weeks report. This is down from the peak we saw just after the Holiday season but still off the lows seen last fall. If initial claims remain in the 330K range or lower this number could fall as well, until then it bears watching for signs of increases in total unemployment.


Total claims fell once again, due to the expiration of the Emergency Unemployment Compensation program as stated in the report. Claims fell by over 115,000 to reach a new low under 3.5 million. The decline is good in a sense but does not reflect an improvement in the jobs picture. Once we can be assured that declines are not due, or are not only due, to expiring benefites, we can get a better picture of the long term unemployment situation. One question I have concerning this is “How will the drop in claims/expiration of benefits affect the participation rate?”


Tomorrow we will get the “all important” Non-Farm Payrolls report. Last months NFP report was a shock, especially after the ADP report revealed that over 230K new jobs had been added. This month's ADP suggests that job creation is still strong...no guarantee that it the NFP will be the same. Almost as important as the new data will be any revisions. Last months NFP was far off of the ADP figure I am expecting a fairly large revision. A big revision to last months numbers could help the market shake off the near term doldrums it is experiencing but a strong number for this month will be needed as well.


The trade balance widened in December a little more than expected. The deficit expanded by 12% in December but remained at a 5 year low in 2013. Total 2013 trade deficit totalled $471.5 billion, the lowest level since 2009. The gap widened on fewer exports, a fact that has caused some analysts to suggest it could affect 4th quarter GDP negatively.

Non-Farm Productivity climbed by over 3.2% in the fourth quarter. This is ahead of expectations and just off of the previous quarters gain of 3.6%. Unit labor costs fell at the same time, also more than expected. Costs declined by over 1.5%, versus the expected 0.5%.


The Dollar

The Dollar Index fell back below the 81 level today. A policy meeting of the ECB and statements from Mario Draghi helping to boost the euro, driving the euro heavy index lower. The ECB held interests steady at 0.25% as expected, and indicated that further easing or other actions would be taken as needed. The ECB sees inflation low for an extended period of time and that there is no risk of deflation currently. The move and statements helped to boost European stocks as well as the euro. The Dollar Index has been trending sideways around the 81 level for over 3 months now. Short term indicators are without direction at this time. Longer term indicators are currently bullish but also without any hint of clear direction. Currently resistance is around $81.25 with support at the 80 level.


The ECB stance and statements from Mr. Draghi were bullish for the euro, at least for today. The bank sees no signs of deflation at this time and will remain accomodative for as long as neccesary to get the region back on firmer footing. The reassurances the bank would do whatever was needed and would “take action as required” did a lot to support the market in light of weakening data from China. The EUR/USD moved up form support at 1.3500 but was capped at the short term 30 day EMA around the 1.3600 level. These two levels are coincident with longer term support/resistance lines and could keep the pair contianed until the NFP release tomorrow. The pair seems to be gaining some support around the 1.3500 level but indications are still weak and unclear.


The economic data and expectations, hopes maybe, that tomorrow's NFP will be good helped to lift the dollar versus the yen. This pair was able to regain a support level breached earlier in the week but indicators remain bearish. The MACD is only mildly bearish and in decline but that could change if the pair is not able to remain above the 101.60 level. Stochastic is making a bearish cross into oversold territory, which indicates that more weakness could come. I am still a longer term bull on this pair but I think the NFP could have a big impact on the pair tomorrow. Weaker than expected could hurt the dollar versus the yen and bring the pair back below support, possibly triggering a bigger correction back to the 97.50 level.


The Gold Index

Gold prices popped initially this morning but fell back after the open of equities trading. After the initial gain of $10 (0.80%) prices retreated into the red. Expectations for tomorrow's NFP are affecting trader outlook's on the metal. A strong report would put the labor trend back on track which is taper/dollar positive and a possible reason to expect a drop in gold prices. Gold has been trading sideways for over two weeks, testing resistance around the $1265-$1275 region. The Gold Index has also been trading to the side but with a bit of a downward bias. The index is moving down under perceived pressure of the long term down trend and has crossed back under the short term moving average for the first time in nearly a month. Both indicators are bearish and consistent with a downward movement in a down trend. The index is currently trading at a possible support zone with next support around the long term lows near $82.50. Resistance is just above the current level along the long term trend line.


The Oil Index

West Texas Intermediate, Brent and natural gas prices all hit new highs todays amidst a flurry of events. U.S. jobs data, the ECB statements and supply disruptions in Libya helped to lift crude prices while the record cold across the U.S. has led to a shortage of propane and other home heating fuels. Natural gas prices retreated from long term highs set yesterday (over $5.50) but remained above the $5 handle. Supply of natural gas and other products due to the cold snap is hurting prices in the short term. Supply should come back in line as soon as infrastructure catches up, however there is growing chatter about hedge funds betting on a major shortfall in supply. Texas governor Perry has lifted some regulation already in order to prevent delivery delays for the near term at least.

The Oil Index has not been trending up. The prolonged period of low prices, decreased production levels and narrowing margins produced a string of dissapointing earnings reports from the oil sector. The Oil Index moved higher today, but from a new five month low set yesterday. This low is below my previous target for the index, which is now resistance. Momentum is bearish and getting stronger, pointing to at least a retest of the recent low. There is a notable convergence of MACD in the shorter and longer term analysis of the indicator. The current peak consists of three waves, each bigger than first while at the same time the entire peak is larger than the previous bearish peak made in December. Resistance is currently at 1400 with support near 1375 and 1350.


Story Stocks

The wires were buzzing with story stocks today. Earnings, guidance and M&A were all present. GM reported a big earnings miss. The company reported earnings of only $0.67 per share versus the expected $0.88. Europe was a big problem for them, producing a loss for company while restructuring costs for the region are also growing beyond previous expectations. Other reasons for the miss include lower margins, higher tax rates and cold weather. The flipside is that North American operations were up over 40% for the period. The stock opened at a new four month low but buyer quickly stepped in to bring prices back above yesterday's close.


Kohl's cut its earnings outlook to below the expected range. The new target is fourth quarter earnings of $1.53 versus the previous range of $1.59-$1.74 and consensus around $1.62. Guidance was lowered due to weaker than expected January sales which led to a 2% decline in comps. Low traffic was one reason, a lack of clearance merchandise another. The company is scheduled to report earnings on February 27th. Today the stock jumped more than 4% on the news and then created a really nice doji.


Coca Cola announced a $1.3 billion stake in Green Mountain Coffee Roasters. The move is part of a deal that will allow Coke to enter the in-home beverage arena. The plan has a ten year time horizon that will make Coca Cola products available through a Kuerig cold beverage system in development. The stake is worth about 10% of Green Mountain which said it would use the money on a substantial share repurchase program in order to alleviate dillution. The move puts the partnership in direct competition with Soda Stream. Shares of GMCR jumped 25%, COKE only about 1%.


The VIX

The VIX is up near relative high levels but appears to have peaked for now. The next step is to see where the next valley forms. Looking back over the last year the index retreats pretty fast once the long erm up trend in the S&P 500 resumes. That is the question now. The S&P is currently below trend and testing long term support. Tomorrow's NFP report has a lot of importance. It could be the piece of information confirming the bearish outlook provided by the last month of weak data. Or it could provide reassurances that the long term trend in the labor market is still OK. The indicators are currently consistent with a peak in the index; bullish MACD is not overly strong and receding quickly, stochastic is rolling over right at the overbought line. If the index does not fall back to the previous low levels there could be some more volatility ahead.


The Indices

The S&P 500 has corrected to the long term trend line and then some. It broke my line earlier this week but has not confirmed the break with enough force to be definitive. Today the index made a strong upward movement to test the line for resistance. Declining bearish MACD and the oversold stochastic, in light of the long term uptrend, could be pointing to another buy-the-dip opportunity. This does however depend on your outlook and the NFP numbers tomorrow. A good number will mean that the labor market is still firm and that the state of recovery is OK. A bad number could mean the economy may have a bad quarter and the correction continues. I'll be watching this line for a break back above it or not. A failure to regain the trend could lead to more selling or at least a drifting market until something else changes. Support targets if the index continues to fall are around 100 points lower near the 1675-1685 region.


If the markets do continue lower a corresponding move on the Dow would take it very near its long term trend line around 14,750. The Dow also has a corresponding resistance line, the top of the trading range the index broke out of last November. Momentum in the short term is still bearish but is declining, along with the oversold conditions could be indicating the bottom of a dip, but could also lead to further weakness. Dow traders are waiting for the NFP tomorrow too. Even if you discount the debated importance of the number as an indicator of the economy, it is still a high profile monthly indicator with the power to reassure, scare or provoke the market into moving. Near term resistance for the index is around 15,750 with support near the long term tred line about 1,000 points lower.


This correction could be a bigger roller coaster than I previously expected. It may not be over yet. The possible catalyst to reverse or extend the pull back is the Non Farm Payrolls and Unemployment reports released tomorrow before the bell. The numbers, and the revisions to last month, are going to have a big affect on labor market outlook which is already under pressure. There are also quite a few economic releases on the schedule for next week and earnings to consider as well. Earnings for the the past quarter continue to come in, on average, ahead of expectations while guidance is weak, adding downward pressure. For now, the trend is up and the next hurdle to jump is the NFP.

Until then, remember the trend!

Thomas Hughes


New Option Plays

Fine Tuned

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Harman Intl. - HAR - close: 103.11 change: +2.85

Stop Loss: 102.45
Target(s): 114.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
HAR is in the consumer goods sector. The company manufacturers audio and infotainment systems for the home, theater, and automobile industries. The stock has been an outperformer this year thanks in large part to a post-earnings report rally in late January. HAR reported earnings that were 14 cents above the 95-cent estimates. Q4 revenues soared +25.8% to $1.33 billion, which also beat estimates. Management then guided higher for 2014, one of the few companies to offer bullish guidance. The stock soared to new highs on this news. Since the post-earnings pop HAR has managed to maintain its gains. Traders are actually buying the recent dips and HAR is poised to hit new highs.

I am suggesting small positions to limit our risk. The intraday high for HAR is $105.58. I am suggesting a trigger to buy calls at $105.75. If triggered our target is $114.00.

Trigger @ 105.75

- Suggested Positions -

buy the APR $110 call (HAR1419D110) current ask $2.80

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 1.2 million
Listed on February 06, 2014



In Play Updates and Reviews

Best Day of 2014 (So Far)

by James Brown

Click here to email James Brown

Editor's Note:

Thursday's +1.2% bounce in the Dow Jones Industrial Average marked the best day of 2014 for that particular index. The rest of the major U.S. indices closed higher with most up more than +1%.

Our LMT call play was triggered. Our MCD put play was stopped out.

The market could be volatile tomorrow in reaction to the January jobs report. Analysts are expecting +175,000 new jobs but the real number could be a lot lower. December's jobs report was huge miss that market pundits blamed on the weather. Well January's weather was just as bad as December's (if not worse) and many are expecting the BLS numbers tomorrow to miss the estimate.


Current Portfolio:


CALL Play Updates

Salesforce.com - CRM - close: 61.70 change: +0.07

Stop Loss: 59.40
Target(s): 67.50
Current Option Gain/Loss: - 3.0%
Time Frame: Exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/06/14: CRM delivered a disappointing session on Thursday. The stock spiked higher this morning only to pare its gains by the close and barely close in positive territory. Traders may wan to wait for a new move above $62.25 or 62.75 before initiating new positions.

Earlier Comments:
Our target is $67.50. However, we will plan on exiting prior to CRM's earnings report in late February (no confirmed date yet). FYI: The Point & Figure chart for CRM is bullish with an $82 target.

- Suggested Positions -

Long Mar $62.50 call (CRM1422C62.5) entry $3.30*

02/05/14 triggered @ 61.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on February 05 at $61.75
Average Daily Volume = 4.8 million
Listed on February 01, 2014


iShares Russell 2000 ETF - IWM - close: 109.51 change: +0.86

Stop Loss: 103.75
Target(s): 113.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
02/06/14: The small caps bounced with the rest of the market yet the Russell 2000 index (and the IWM) underperformed their big cap rivals. The IWM stalled at round-number resistance near $110.00.

Currently the plan is to buy calls on a dip at $106.00.

Trigger @ $106.00, stop loss @ 103.75.

- Suggested *SMALL* Positions -

Buy the Mar $110 call (IWM1422C110)

02/03/14 STRATEGY adjustment: New trigger buy the dip at $106.00,
move the stop loss to $103.75, change the option strike.
02/01/14 remove trigger at $110.30. Adjust stop loss higher.
02/01/14 *Use small positions to limit risk*
01/29/14 adjust stop on buy-the-dip entry point to 108.65
01/28/14 add a secondary entry point to buy calls at $114.15
01/27/14 adjust the entry point trigger to $110.30 and move the stop loss to $108.85.

Entry on January -- at $---.--
Average Daily Volume = 31.7 million
Listed on January 25, 2014


Lockheed Martin - LMT - close: 151.74 change: +1.35

Stop Loss: 147.00
Target(s): 165.00
Current Option Gain/Loss: -12.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/06/14: Our new trade on LMT has been triggered. With a cooperative market to help it shares of LMT rallied to new two-week highs above short-term resistance near $152.00. Our trigger to buy calls was hit at $152.25. I am a little bit concerned to see LMT fail twice near the $152.60 level midday. While our trade has been opened if you're looking for a new entry point I would consider waiting for a new rally above $152.70 before initiating positions.

Earlier Comments:
Our multi-week target is $165.00. That is a little bit aggressive since the $158-160 zone could be overhead resistance. Plus our stop loss is a little bit wide at $147.00. Use small positions to limit risk.

- Suggested *small* Positions -

Long MAR $155 call (LMT1422C155) entry $2.23

02/06/14 triggered at $152.25

Entry on February 06 at $152.25
Average Daily Volume = 2.4 million
Listed on February 05, 2014


SBA Communications - SBAC - close: 92.00 change: +0.28

Stop Loss: 89.90
Target(s): 99.50
Current Option Gain/Loss: - 23.0%
Time Frame: Exit PRIOR to earnings on February 25th
New Positions: see below

Comments:
02/06/14: Hmm... SBAC didn't perform very well today. Shares only added +0.3% versus a +1.2% gain in the S&P 500 and +1.1% bounce in the NASDAQ. I am not suggesting new positions at the moment. P> FYI: The Point & Figure chart for SBAC is bullish with a $107 target. A move above $93.00 would produce a new buy signal.

- Suggested Positions -

Long MAR $95 call (SBAC1422C95) entry $1.95

01/31/14 triggered at $93.05

Entry on January 31 at $93.05
Average Daily Volume = 1.3 million
Listed on January 30, 2014




PUT Play Updates

Cardinal Health - CAH - close: 66.27 change: +0.90

Stop Loss: 66.25
Target(s): 60.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/06/14: The stock market's widespread bounce on Thursday produced a +1.3% rebound in CAH. Shares remain below their 50-dma. I do not see any changes from our new play description on Wednesday night.

Earlier Comments:
The failure in late January looks like a bearish double top pattern. The pullback has left shares flirting with support near $65.00. Today's low was $64.78. I am suggesting a trigger to buy puts at $64.65. If triggered our target is $60.25. I would keep a wary eye on the simple 100-dma (currently near $61.60), which could be temporary support.

FYI: The Point & Figure chart for CAH is bearish with a $60 target.

Trigger @ 64.65

- Suggested Positions -

Buy MAR $65 PUT (CAH1422o65)

Entry on February -- at $---.--
Average Daily Volume = 2.9 million
Listed on February 05, 2014


CommVault Systems - CVLT - close: 65.39 change: +1.15

Stop Loss: 66.75
Target(s): 60.15
Current Option Gain/Loss: -30.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/06/14: CVLT managed to build on yesterday's oversold bounce. The stock outperformed the major indices with a +1.79% gain. The high today was $66.25. If this rebound continues we could see CVLT hit our stop loss at $66.75. I am not suggesting new positions at this time.

Earlier Comments:
We will aim for $60.15 because the $60.00 level could be support. More aggressive investors may want to aim lower since the Point & Figure chart for CVLT is bearish with a $48.00 target.

- Suggested Positions -

Long MAR $60 PUT (CVLT1422o60) entry $1.95*

02/05/14 trade opened with a gap down at $63.68
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on February 05 at $63.68
Average Daily Volume = 1.1 million
Listed on February 04, 2014


Intl. Business Machines - IBM - close: 174.67 change: +1.38

Stop Loss: 176.55
Target(s): 161.00
Current Option Gain/Loss: -34.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/06/14: Bears and put option buyers need to be careful here. Today's bounce in IBM technically confirms yesterday's bullish reversal candlestick pattern. The only good thing about today's bounce in IBM was how shares failed to breakout past resistance near $175.00 for the second day in a row. Traders may want to abandon ship or lower their stop closer to $175.00. I would wait for a new low under $172.00 before initiating new positions.

If the market rallies on the jobs data tomorrow we will likely see IBM hit our stop.

Earlier Comments:
I am suggesting we limit our risk by using small positions. If triggered our target is $161.00. FYI: The Point & Figure chart for IBM is bearish with a $156 target.

- Suggested *small* Positions -

Long MAR $170 PUT (IBM1422o170) entry $3.50

02/05/14 triggered on gap down at $172.19

Entry on February 05 at $172.19
Average Daily Volume = 6.0 million
Listed on February 03, 2014


Restoration Hardware - RH - close: 56.09 change: +0.13

Stop Loss: 58.25
Target(s): 51.00
Current Option Gain/Loss: -13.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/06/14: RH briefly traded above technical resistance at its 10-dma but eventually pared its gains. I am not suggesting new positions at this time. More conservative traders may want to lower their stop. Today's high was $57.43.

Earlier Comments:
Please note that I do consider this a somewhat more aggressive, higher-risk trade because RH does have above average short interest (about 10% of the 34 million-share float). Our multi-week target is $51.00. More aggressive traders could aim lower. The Point & Figure chart for RH is bearish with a $43 target.

*Small Positions* - Suggested Positions -

Long MAR $55 PUT (RH1422o55) entry $3.00*

02/03/14 new stop loss @ 58.25
01/29/14 trade opened this morning. RH gapped down at $56.47.
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 29 at $56.47
Average Daily Volume = 981 thousand
Listed on January 28, 2014


Sears Holding - SHLD - close: 35.82 change: +1.47

Stop Loss: 38.55
Target(s): 30.25
Current Option Gain/Loss: + 2.4%
Time Frame: exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/06/14: Thursday's widespread market bounce fueled some short covering and SHLD outperformed the major indices with a +4.2% bounce. The stock is near short-term resistance at $36.00 and its 10-dma. I am not suggesting new positions at this time. More conservative investors may want to adjust their stop loss lower.

Earlier Comments:
I do consider this a more aggressive trade because there is so much short interest. The shorts are probably right on this stock but SHLD could still see short-term spikes if some of the weaker shorts rush to cover on any unexpected good news. The most recent data listed short interest at 54% of the 50.7 million share float.

Our target is $30.25. More aggressive traders could aim lower since the Point & Figure chart for SHLD is bearish with a $20 target. However, I would not hold over the earnings report expected in late February.

- Suggested Positions -

Long MAR $30 PUT (SHLD1422o30) entry $1.63

01/31/14 triggered @ $35.85

Entry on January 31 at $35.85
Average Daily Volume = 2.6 million
Listed on January 29, 2014


The J.M.Smucker Company - SJM - close: 93.59 change: +0.77

Stop Loss: 96.55
Target(s): 90.50
Current Option Gain/Loss: +38.1%
Time Frame: Exit PRIOR to earnings on Feb. 14th
New Positions: see below

Comments:
02/06/14: SJM gapped open higher this morning but spent the rest of the session drifting sideways. More conservative traders may want to move their stop loss lower. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $90.50. More aggressive traders could aim lower since the Point & Figure chart for SJM is bearish with an $86 target. However, our target at $90.50 may already be too optimistic. SJM is scheduled to report earnings on February 14th and we do not want to hold over the report. We have two weeks. Nimble traders might want to use the February options. I am suggesting the March $95 put.

- Suggested Positions -

Long MAR $95 PUT (SJM1422o95) entry $2.75

02/05/14 new stop loss @ 96.55
02/03/14 triggered @ 96.25

Entry on February 03 at $96.25
Average Daily Volume = 896 thousand
Listed on February 01, 2014


CLOSED BEARISH PLAYS

McDonald's Corp. - MCD - close: 94.94 change: +1.36

Stop Loss: 94.05
Target(s): 88.00
Current Option Gain/Loss: -30.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/06/14: Our MCD put play has been stopped out at $94.05.

I don't see any reason for the outperformance in shares of MCD today. As a matter of fact the stock should have been weak thanks to news that its Japan division saw its profits plunge -53% in 2013 thanks to a -6.2% drop in same-store sales. McDonald's Japan expects 2014 sales to fall for the sixth year in a row. That's hardly bullish. Yet shares of MCD spiked higher this morning and hit our stop loss at $94.05. Chart readers will note the rally stalled at its bearish trend of lower highs.

- Suggested Positions -

APR $90 PUT (MCD1419P90) entry $1.62* exit $1.13** (-30.2%)

02/06/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
02/05/14 triggered at $92.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on February 05 at $92.50
Average Daily Volume = 5.9 million
Listed on February 04, 2014