NEW DIRECTIONAL CALL PLAYS

QUALCOMM Inc. - QCOM - cloes: 40.48 change: -6.72 stop: 39.40

Why We Like It:
QCOM reported earnings last night that beat estimates. Yet management issued an earnings warning for the second quarter and 2010 fiscal year. Investors just hammered it lower today with a 14% plunge toward $40.00. The $40.00 level has been significant support in the past. I think the sell-off is overdone, at least on a short-term basis, and QCOM could easily bounce before rolling over again.

This is an aggressive trade since we're fighting the trend, the market, but it's also a trade that allows for clearly defined risk. The $40.00 level is the line in the sand. I'm suggesting a stop loss at $39.40. You may want to put your stop closer to $40.00. We'll take profits at $42.00 and again at $43.75. This should be a short-term trade.

Suggested Options:
I'm suggesting very small call positions in the February $43.00 calls.

BUY CALL FEB 43.00 open interest=13,669  current ask $0.40
CBOE format: AAO1020B43

Annotated Chart:

Entry  on   January 28 at $ 40.48 (very small positions)
Change since picked:       + 0.00
Earnings Date            01/28/10 (confirmed)
Average Daily Volume =         18 million  
Listed on   January 28, 2010         


Volatility Index - VIX - close: 23.73 change: +0.59 stop: 19.90

Why We Like It:
Now that the S&P 500 has broken support near 1,085 it could portend the next leg down for this correction. Traders are eyeing the 1040-1035 zone as a 10% correction for the market. There could be a flood of buying pressure for puts as investors try and protect themselves, which could lift the VIX.

By its very nature the VIX can be volatile. I'm listing a wide stop loss. We want to give it room to maneuver. Our first target to take profits is at $29.50. Our second target is $34.00.

Suggested Options:
Traders may want to consider the February calls. I'm suggesting the March $30 calls.

BUY CALL MAR 30.00 open interest=13,708 current ask $1.60
CBOE format: VIX1017C30

Annotated Chart:

Entry  on   January 28 at $ 23.73 
Change since picked:       + 0.00
Earnings Date            --/--/--
Average Daily Volume =          x million  
Listed on   January 28, 2010         


NEW DIRECTIONAL PUT PLAYS

Apple Inc. - AAPL - close: 199.29 change: -8.59 stop: 216.00

Why We Like It:
AAPL looks top heavy and has run out of catalysts to drive it higher. Earnings are over. The iPad has been unveiled. I think shares are ready to correct. Look at the weekly chart. AAPL has rallied from $80 to $215. It's due for a pull back. The only thing I can think of to drive the stock higher now is a stock split. We're going to give this trade lots of room with a wide stop since shares have been so volatile lately. Our first target to take profits is at $182.50. Our second target is $165.00 although we might exit at the 200-dma. This is an aggressive trade and I'm suggesting small positions.

Suggested Options:
I am suggesting the March $180 puts.

BUY PUT MAR 180 open interest=2330 current ask $3.65
CBOE format: APV1020O180

Annotated Chart:

Entry  on   January 28 at $199.29 (small positions)
Change since picked:       + 0.00
Earnings Date            01/25/10 (confirmed)
Average Daily Volume =         26 million  
Listed on   January 28, 2010