Option Investor
Newsletter

Daily Newsletter, Tuesday, 12/16/2014

Table of Contents

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

Market Wrap

Maximum Volatility

by Jim Brown

Click here to email Jim Brown

The market gave traders a volatility headache with the Dow dropping -99 at the open rebounding to +246 midday and then crashing back to close at -112. That is fine if you were day trading but terrible for investors.

Market Statistics

You can blame today's volatility on Russia. The ruble has turned into rubble despite extreme measures by the Russian central bank. Russia is in a full blown currency crisis. After a -10.5% decline on Monday the ruble fell another -19% intraday today. This came despite the central bank hiking interest rates +6.5% to 17% and the injection of $80 billion in a failed effort to support the ruble. The next step in this scenario would be capital controls to prevent money from leaving the country or being converted into dollars or euros. The central bank pushed 3.1 trillion rubles into the banking system using 7 day repos in the second biggest auction since May.

The ruble has fallen from 38 to the dollar to a low of 80 to the dollar at Tuesday's lows. The value of the ruble has fallen -52% this year alone with a -14% drop this week alone. The -49% drop in oil revenue is a killer for the Russian economy. Russia gets 65% of its revenue from oil and the budget is based on $100 oil so they are in a world of pain. The central bank said the Russian economy could decline -4.7% in 2015 if oil prices remained below $60. Net capital outflows for 2014 could reach $134 billion and twice last year's total.

Traders said there were no bids to buy rubles and the decline was likely to continue. Multiple currency dealers halted trading in rubles because of the wild swings.

Apple halted sales of iPhones in Russia because of the currency decline. The online website disappeared and was replaced with a one line message saying "we will be back" and no other information.

Companies with operations in Russia could be expected to report significant hits to earnings as a result of the currency fluctuations. Those companies and their annual revenue from Russia include GM $7 billion, Pepsi $5 billion, Ford $3 billion, Mcdonalds $2.5 billion, John Deere $1.7 billion, Mondelez $1.2 billion, Citigroup $1.0 billion, Abbot Labs $525 million and Visa $471 million. Obviously that list only scratches the surface but suffice to say Russia is going to cause a significant ripple in the Q4 earnings stream.

The sharp decline in the ruble means far less exports into Russia and falling consumer sales as prices are hiked to offset the cheaper currency. With the ruble falling -52% in value over the last year that means the cost of imported goods doubled over the same timeframe because it now takes twice as many rubles to buy the same product. Raising interest rates to 17% is also going to be an extreme drag on business conditions inside Russia. With your money worth 50% less and interest rates 300% higher than a few months ago the Russian economy is going to implode.

This is going to be a significant hit to European countries with large imports into Russia. German is their biggest trading partner and this will be a devastating blow to the German economy. Europe's economic slide will accelerate with the flow of goods into Russia declining to a trickle.

Visualize the European map with Russia as a large economic sinkhole that is expanding around the edges into Europe. With Europe's economic woes increasing there is a much better chance that this will eventually drag the U.S. down as well.

The Russian RTS market plunged -13.17% and the biggest decline since 2008.


It was just announced that Putin was named "Man of the Year" for the 15th consecutive year with 68% of the votes. The closest runner up got 4%. The poll was conducted by the Public Opinion Foundation across 43 regions of Russia. If Russia continues its collapse he will probably get a lot less of the vote next year. However, you have to wonder how much government pressure was applied to the foundation to influence the vote. Truth is scarce in Russia.

The only bright spot in this equation is that the Fed is not going to raise rates for a long time because that would make the dollar that much stronger and further complicate the foreign exchange pressure on earnings and further slow the European countries.

Lastly, Russian banks have about $100 billion in debt that they can no longer roll over as a result of the economic sanctions on Russia. Those banks are prohibited from doing business with U.S. or EU banks so they will have to turn to the Russian government for a bailout. That $100 billion in debt has actually doubled since the ruble is only worth half as much. This Russian currency crisis may be a bottomless pit with no solution and could result in another debt default and/or social unrest. Having a loaf of bread or gallon of milk double in price over just a few months is not going to be unnoticed by the Russian consumer.

Oil prices fell to $53.60 overnight before rallying to $57.15 intraday. The rebound in oil prices powered the market higher but the gains did not last. Crude fell back to $55 just before the close and took the market with it. I published a monthly chart of crude last week showing the 200-month average as prior support. An astute reader emailed me saying crude prices declined -7.42% below the 200-month average in 2009 before rebounding and prices today are -7.4% below the same average today and that appears to be where prices are trying to consolidate. Whether that penetration level will repeat as a bounce point is of course unknown.


It was a light day for economics in the U.S. with new residential construction the only material report. Housing starts for November declined -1.6% to 1.028 million with 677,000 single-family and 351,000 multi-family starts. Housing permits, a forecast of future construction activity, declined -5.2% from 1.092 million to 1.035 million. Total completions declined -6.4% from 922,000 to 863,000.

There may have been some weather impact in the November numbers after that early winter storm came through in the middle of the month.

The big event for Wednesday is the FOMC meeting and the change in the post meeting announcement. Quite a few people expect them to remove the "considerable period" language and replace it with something that is data dependent. Bill Gross said there is no way they will change it because they are not going to raise rates for a considerable period. Jim Grant of Grant's Interest Rate Observer said they will remove it and change their bias to point towards future rate hikes.

I would be really surprised if they went that far. The Fed is very incremental. They do things in micro-steps and only after they have talked about it in their public comments to make sure the market is not surprised. While they have floated the trial balloon on removing the language there is no reason for them to hurry. With commodities in free fall and Russia's implosion likely to knock Europe into a deeper recession in 2015 they have to be careful what they do. They may be the U.S. central bank but they are also the banker for the world. What they do impacts markets around the world and the majority of those markets are in decline today.


The yield on the U.S. ten-year treasury declined to 2.07% on the currency turmoil. This compares to 1.77% on the London Gilt, 0.398% on the German Bund and 0.365% on the Japanese 10-year.


Bill Gross left PIMCO just in time. The $3.3 billion emerging markets fund held $803 million in Russian bonds at the end of September or roughly 21% of its assets. Those bonds have collapsed and become nearly worthless. The fund has declined -8% over the last month.

Bank of England Governor Mark Carney said the evaporating currency markets have the ability to cause widespread havoc especially in emerging markets. Equity markets in Dubai and Saudi Arabia each fell more than -7% and Indonesian policy makers were forced to support the rupiah after it hit a 16 year low.

Of the $15 billion in outstanding currency options on the ruble only one contract worth $5 million with expiration in 12 months is still profitable. The rest are well out of the money at the current exchange rate. New York based FXCM Inc, the third largest currency broker has stopped offering the ruble and Alpari UK has stopped allowing clients to open new positions.

In stock news GE warned that profits were going to be squeezed as a result of lower oil prices because of lower capital spending by oil companies. GE forecast earnings of $1.70-$1.80 compared to consensus estimates for $1.79. The company said it would grow between 2-5% in 2015 and that was also low. For any other company this would have caused an immediate decline in the stock price. GE shares did decline but they only lost a dime.


Federal Express (FDX) said it was buying logistics firm Genco, a specialist in handling product returns. No terms were given but rumors claim it was a $1.1 billion purchase. Genco had $1.6 billion in revenue in 2013. Genco handles more than 600 million returned items per year. With ecommerce growing there will be far more returns in the future.


Boeing (BA) announced a 25% increase in its dividend and boosted its authorized share repurchase program to a whopping $12 billion. Boeing had $4.8 billion remaining on its prior buyback program after spending $6 billion in 2014. The dividend rose from 73 cents to 91 cents. Q3 cash flow was lower than analysts expected but they promised at the time that Q4 would be very strong as deliveries accelerated. These moves appear to be confirming that promise.


Microsoft (MSFT) was cut to neutral by Bank of America (BAC) with a price target of $47. Shares closed at $45 after a -3.2% decline. The analyst said the stock performance since Satya Nadella took over as CEO had made the stock overvalued. Shares had risen +25% since the management change.


Google (GOOGL) shares fell -18 to close under $500 after JP Morgan cut price targets from $670 to $600 and lowered earnings estimates for Q4, 2015 and 2016. The analyst said search was moving more towards mobile and away from desktop. Also Bing was stealing market share and the company had a major contract renewal coming up from Apple that could go to Bing or Yahoo.


Tesla (TSLA) shares are falling as a result of the falling gasoline prices. The theory being that cheaper gas negates the need for an electric car. Unfortunately people are missing the point. Tesla is a luxury car that just happens to be electric. People who pay $100,000 for a car are not really concerned about the price of gasoline.


After the bell Darden Restaurants (DRI) posted earnings of 28 cents compared to estimates for 27 cents. Revenue rose +5% to $1.56 billion compared to estimates for $1.55 billion. Stronger demand in the Olive Garden stores drove the gains. Shares rose $1 in afterhours trading.


Amazon (AMZN) lost $10 after announcing that it had extended the deadline for Prime customers to shop and still get gifts before Christmas. Prime customers can order online before 11:59 PM ET on December 22nd while regular customers have to order by that same time on December 19th. If you live in a dozen major cities you can order as late as 10:AM on Christmas Eve and receive your item the same day for $5.99 shipping. This is a bonanza for procrastinators. Shares fell because of the weak market and a push by Google to shop on Google Shopping instead of Amazon. Google is going to launch a "buy" button on its search pages to compete with Amazon. This would be similar to Amazon's "one-click ordering" button.


Markets

It was an ugly day in the neighborhood to twist one of Mr. Rogers sayings. The Dow declined -102 at the open, rallied to +247 intraday and then crashed back to close at the lows of the day with a -112 point loss. The 350 point range ended at the lows and that is not a good sign for tomorrow.

The S&P broke below prior support at 1,985 at the open but spiked to 2,017 intraday on a major short squeeze as crude prices bounced nearly $4 off their lows. When the crude rebound failed and the chatter surrounding Russia increased it was lights out for the S&P and sellers hit it hard at the close.

There is no good news on the S&P decline. The 100-day average is now well behind us at 1,987 and the 200-day is comfortably below at 1,947. With 1,950 as sentiment support that 200-day average may have a chance of slowing the decline. Otherwise we are targeting a retest of 1,900.

The 50-week average at 1,928 would be our best chance of stopping a plunge to 1,900.

However, the S&P futures are up +7 at 8:30 ET. While that is positive the futures have been up strong the last two nights and the market sank anyway.

I have nothing positive to say about the S&P other than it is oversold and now -5% off its highs. In all the prior declines over the last two years with the exception of October, that 5% level was bought and a rebound followed. With tax selling in full bloom and extreme uncertainty coming out of Russia and Europe I would not count on a rebound this time around. This time may be different.



The Dow chart is similar to the S&P with a very large intraday spike that was sold hard to close on the lows of the day. The Dow is now almost -900 points off of its 17,958 closing high on December 5th. That is a -5% drop and other than round number support at 17,000 it could be a long drop to 16,360 or even lower to 16,000. We were just there in October so it is definitely possible. There were far fewer concerns in the market in October than we have today.

Home Depot was a big loser in the Dow after Nomura downgraded the stock on margin pressure and market share gained by Lowe's. Visa, Goldman Sachs, Nike and American Express were down on exposure to Russia. It was not a good day for the international stocks.



The Nasdaq fell -57 points on declines in Google and Apple. Google was downgraded to lose -18 points and Apple fell to a two month low on the halt on sales in Russia. Amazon lost $10 on the Google competition move.

Investors are simply taking profits across the board and these "excuses" just accelerate the trend.


The Nasdaq slid to a stop at the low of the day at 4,548 and just barely over weak support at 4,545. A breakdown here could blow past weak support at 4,485 and begin to target the October lows. Resistance is 4,650, which was prior support.


The Russell 2000 gave back less than a point thanks to a rebound in energy stocks. The 195 energy stocks in the Russell were positive most of the day and that kept the Russell in positive territory until just before the close. The Russell chart is unsupported with 1,115 the next level to watch. Small caps have held up better than large caps because they have less exposure to Europe and Russia.


I would love to tell you to buy the dip but the velocity of the market change on Tuesday afternoon really suggests there is more selling ahead. However, there could have been a lot of option expiration pressures in that downdraft and maybe those pressures have been erased. While that is a pleasant thought it is probably wishful thinking.

We need to follow the trend or wait on the sidelines. With the market already very oversold I see no future in trying to short stocks from here. Our best bet is to wait for a trend change. In this case we should be looking for as bottom that last more than a couple hours. There will be plenty of time to buy the market if a tradable rebound appears.

Annual End of Year Renewal Special

It is that time of year again when we offer the best prices of the year on a package of our top newsletters. If you have been a subscriber for several years you know this is the best price and best deal of the year.

Please follow the link below to see for yourself the EOY subscription special for 2015. You will not be disappointed!

Enter passively, exit aggressively!

Jim Brown

Send Jim an email

 


New Option Plays

Lowered Forecasts

by James Brown

Click here to email James Brown


NEW DIRECTIONAL PUT PLAYS

Citrix Systems - CTXS - close: 59.66 change: -0.62

Stop Loss: 61.15
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.9 million
Entry on December -- at $---.--
Listed on December 16, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The company press release describes CTXS as "a leader in mobile workspaces, providing virtualization, mobility management, networking and cloud services to enable new ways to work better. Citrix solutions power business mobility through secure, personal workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. This year Citrix is celebrating 25 years of innovation, making IT simpler and people more productive. With annual revenue in 2013 of $2.9 billion, Citrix solutions are in use at more than 330,000 organizations and by over 100 million users globally."

It sounds like they are in the right industry. Cloud services, cloud networking, mobile apps and desktops. Those are all hot areas for business investment. Unfortunately the company might be encountering tough competition.

The company's Q2 earnings report back in July beat Wall Street's estimates on both the top and bottom line but management guided lower for Q3. When CTXS reported their Q3 results on October 22nd (after the close) their bottom line profit beat estimates by two cents. Yet their revenue number missed Wall Street's estimate. Once again management issued a bearish outlook. They guided earnings and revenues below Wall Street estimates. You can see how shares gapped down on October 23rd.

The stock bounced from these late October lows likely thanks to the market's super sharp rally. The stock market's big cap indices broke out to new highs but not so for CTXS. Shares failed at resistance and have been struggling for weeks.

Since their October report the stock has been downgraded and initiated with an underweight rating by two firms. The stock also got a big vote of no confidence when the latest 13F filings came out and it was revealed that some big fund managers have closed their positions in CTXS.

The stock's performance has created a bearish sell signal on the point & figure chart with a $49.00 target. This week CTXS has broken key support at the $60.00 level. Tonight I am suggesting a trigger to buy puts at $59.45.

I'm listing the March puts but we will plan exit prior to CTXS's earnings in late January (February puts are not available yet).

Trigger @ $59.45

- Suggested Positions -

Buy the MAR $57.50 PUT (CTXS150320P57.50) current ask $2.60

Option Format: symbol-year-month-day-call-strike

Daily Chart:

Weekly Chart:



In Play Updates and Reviews

Another Rocky Day For Equities

by James Brown

Click here to email James Brown

Editor's Note:

The rally in stocks reversed midday and the S&P 500 closed near its low for the session. That doesn't bode well for tomorrow.

Today's market weakness was strong enough to see DIN, HD, and SBUX all hit our stop loss. We've decided to remove FFIV as a candidate.

Our bearish trades in ARW and GBX were both triggered.


Current Portfolio:


CALL Play Updates


Currently we do not have any active call trades





PUT Play Updates

Arrow Electronics - ARW - close: 54.64 change: -0.59

Stop Loss: 57.75
Target(s): To Be Determined
Current Option Gain/Loss: + 0.0%
Average Daily Volume = 585 thousand
Entry on December 16 at $54.75
Listed on December 13, 2014
Time Frame: Exit PRIOR to January option expiration
New Positions: see below

Comments:
12/16/14: Our ARW trade is now open. Shares continued to sink and broke down below technical support at the 50-dma. ARW hit our suggested entry point at $54.75. I would still consider new bearish positions at current levels.

Earlier Comments: December 13, 2014:
ARW is in the services sector. The company sells electronic components at the wholesale level. The company describes itself as "a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 100,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 460 locations in 58 countries."

Most of this year ARW has been reporting results that beat Wall Street's bottom line estimates but they kept missing the revenue number. That changed with their Q3 results when ARW reported on October 29th. ARW managed to beat estimates on both the top and bottom line with revenues up +11% from a year ago. Management offered relatively bullish guidance. Yet the stock did not react. That appears to be the mystery.

ARW's share price performance immediately slowed down following its Q3 report. You can see on the daily chart below that ARW plunged with the market's correction in September and October. Yet while the S&P 500 lost about -10% during that pullback shares of ARW lost more than -25%. When the market started to bounce ARW followed but its rally stalled after its Q3 report. The S&P 500 and the NASDAQ continued to rally and broke out to new highs for the year. ARW was unable to follow suit. Now the stock appears to be reversing after a failed rally at round-number resistance near the $60 mark.

With the new lower high there is a good chance the weakness in ARW continues. The stock never reversed its massive sell signal on its P&F chart. Tonight we are suggesting a trigger to open bearish positions at $54.75. More aggressive traders may want to jump in earlier (like a drop under $56.00) but we would like to see ARW trade below its simple 50-dma (currently $55.22).

- Suggested Positions -

Long Jan $55 PUT (ARW150117P55) entry $2.00

12/16/14 triggered @ 54.75
Option Format: symbol-year-month-day-call-strike


The Greenbrier Companies - GBX - close: 43.06 change: -0.68

Stop Loss: 47.05
Target(s): To Be Determined
Current Option Gain/Loss: -25.6%
Average Daily Volume = 940 thousand
Entry on December 16 at $43.25
Listed on December 15, 2014
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/16/14: Today's market decline also triggered our new bearish trade in GBX. The stock's initial rally, like the market's, failed this morning and GBX sank to new multi-month lows. Our suggested entry point was hit at $43.25 and I would still consider new put positions at current levels.

Earlier Comments: December 15, 2014:
Railroad-related stocks have seen a dramatic shift thanks to the sell-off in crude oil.

GBX is in the services sector. The company manufacturers railroad freight cars and ocean-going barges. They also refurbish freight railroad cars. New rules by the White House on railroad tanker cars that carry crude oil should mean strong business for GBX as companies are forced to either buy new cars or refurbish old ones to meet the new requirements.

The last couple of earnings reports from GBX have been bullish. They have strong revenue growth. Management raised their 2015 earnings guidance with their last report back in October. GBX has a huge backlog. Yet none of this seems to matter at the moment. The market is transfixed on the death spiral in crude oil prices.

How does crude oil impact the railroad stocks? The shale oil revolution in the U.S. has been a major boon for the railroads. A lot of the shale oil drilling has taken place in regions with limited or no pipelines available to move the oil to be refined. That has boosted huge demand to transport oil by rail. Forbes noted that back in 2008 there were only 9,500 car loads of oil shipped by train. Yet by 2013 that has blossomed to 407,761 carloads. The first six months of 2014 saw 229,800 carloads of oil shipped by train.

Unfortunate, OPEC, mainly the Saudis, have declared war on all other oil producers, including the U.S. shale oil industry. When OPEC met on Thanksgiving they decided to not cut production knowing full well it would drive the price of oil lower. The very next day shares of GBX plunged.

Analysts have estimated that the average price to produce U.S. shale oil is in the $70-80 per barrel range. Today WTI crude oil is at $55.69 a barrel. E&P companies are not going to produce oil at a loss. That's going to cut back demand to transport oil by rail. However, it's not just oil transports the rail companies are missing out on. If the U.S. energy sector cuts back on shale oil drilling it will also reduce the need to move tons of fracking sand and metal pipes to drill all of those wells. If that wasn't bad enough the depressed oil prices mean cheaper gas and that makes trucking companies more of a competitor to normal transportation of goods.

GBX is not a railroad. They are a derivative trade on the rails and seem to be a lot more volatile. Right now the momentum is lower. GBX has spent the last few days trying to hold support at $45.00 and it has failed. The $40.00 mark might be round-number support but the next support level looks like it's closer to $37.00. The point & figure chart is forecasting at $24.00 target.

Tonight we are suggesting a trigger to open bearish positions at $43.25. We'll try and limit our risk with a stop loss at $47.05, which is just above today's high. That's a relatively wide stop loss. I do consider this a more aggressive, higher-risk trade due to the volatility. The most recent data listed short interest at 27% of the small 23.3 million share float and that raises the risk of a short squeeze (more volatility). Consider using small positions to limit your risk.

Keep in mind that this could be a short-term three or four week trade. GBX will most likely report its Q4 earnings in the early to mid January and we'll plan on exiting prior to the report.

*small positions* - Suggested Positions -

Long JAN $40 PUT (GBX150117P40) entry $2.15

12/16/14 triggered @ 43.25
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

DineEquity, Inc. - DIN - close: 99.72 change: -0.10

Stop Loss: 97.35
Target(s): To Be Determined
Current Option Gain/Loss: +100.0%
Current Option Gain/Loss if you sold the Dec $100 call: +500.0%
Average Daily Volume = 154 thousand
Entry on November 05 at $91.55
Listed on November 04, 2014
Time Frame: Exit PRIOR to December 20th option expiration
New Positions: see below

Comments:
12/16/14: DIN finally succumbed to the market's sell-off. Shares broke their trend of higher lows and underperformed with a -2.85% decline as traders rushed to lock in profits.

Our stop loss was hit at $97.35, closing both the long call positions and the short-call position.

- Suggested Positions -

DEC $95 call (DIN141220c95) entry $1.20 exit $2.40 (+100.0%)

December 15, 2015, at the open, sold the Dec. $100 call
Short DEC $100 call (DIN141220c100) entry $1.10 exit $0.30
If you bought the $95 call and sold the $100 then the trade is +500.0%

12/16/14 stopped out at $97.35
12/15/14 sold the Dec $100 call at the open
12/13/14 Sell the Dec. $100 call on Monday, Dec. 15th
12/10/14 new stop @ 97.35
12/06/14 only two weeks left on our December options
11/29/14 new stop @ 96.85
11/26/14 new stop @ 94.85, traders may want to take profits here!
11/22/14 new stop @ 93.85
11/19/14 new stop @ 92.75
11/13/14 new stop @ 92.25
11/12/14 new stop @ 91.45
11/08/14 new stop @ 89.65
11/05/14 triggered @ 91.55
Option Format: symbol-year-month-day-call-strike

chart:


F5 Networks - FFIV - close: $128.27 change: -1.99

Stop Loss: 129.65
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 965 thousand
Entry on December -- at $---.--
Listed on December 11, 2014
Time Frame: Exit PRIOR to earnings on January 21st, 2015
New Positions: see below

Comments:
12/16/14: The stock market is not cooperating and shares of FFIV are following the market lower. Today's decline (-1.5%) looks like a breakdown of the short-term trend of higher lows.

Our FFIV trade has not been triggered yet. Tonight we are removing FFIV as an active candidate.

Trade did not open.

12/16/14 removed from the newsletter, suggested entry was $133.80

chart:


The Home Depot - HD - close: 97.06 change: -2.99

Stop Loss: 97.25
Target(s): To Be Determined
Current Option Gain/Loss: -24.8%
Average Daily Volume = 6.4 million
Entry on December 08 at $100.25
Listed on December 06, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/16/14: HD had been holding pretty well but its relative strength vanished today. Whatever dam that was keeping the sellers in check finally broke. Shares lost -2.9% and closed near their lows of the session. Our stop was hit at $97.25.

- Suggested Positions -

FEB $105 CALL (HD150220C105) entry $1.21 exit $0.91 (-24.8%)

12/16/14 stopped out @ 97.25
12/08/14 triggered @ 100.25
Option Format: symbol-year-month-day-call-strike

chart:


Starbucks Corp. - SBUX - close: 79.13 change: -1.76

Stop Loss: 79.90
Target(s): To Be Determined
Current Option Gain/Loss: -49.3%
Average Daily Volume = 4.0 million
Entry on December 10 at $83.55
Listed on December 09, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/16/14: Last week's relative strength in SBUX has expired. The stock is down sharply two days in a row. Yesterday saw it break support near $82.00. Today SBUX has broken what should have been support at $80.00. Our stop was hit at $79.90.

The longer-term story for SBUX remains bullish. I'd keep this stock on your watch list. We'll play it again.

- Suggested Positions -

Feb $85 CALL (SBUX150220C85) entry $2.29 exit $1.16 (-49.3%)

12/16/14 stopped out at $79.90
12/10/14 triggered @ 83.55
Option Format: symbol-year-month-day-call-strike

chart: