Editor's Note:

Bearish candidates were a dime a dozen on Friday. The challenge is finding a stock that did not look too oversold and still offered a decent risk-reward. The market is definitely short-term oversold. I think the best play right now is to wait for a bounce this week, possibly on Friday's jobs numbers but hopefully sooner and then open new put positions as the bounce starts to roll over.


NEW DIRECTIONAL PUT PLAYS

Franklen Resources Inc. - BEN - close: 99.03 change: -1.30 stop: 106.80

Why We Like It:
BEN is an asset manager with a family of equity, fixed income and other mutual funds. The stock has topped out and it has already seen a lower high. Now shares are beginning to break support. Friday saw a close under round-number support at $100. The next level of support appears to be the 200-dma near $90.00. I am suggesting bearish positions now with a target to exit at $91.50. We're starting this play with a very wide stop loss since shares were so volatile on Thursday. Given our wide stop I have to label it more aggressive and suggest smaller positions. More aggressive traders could aim for the $80 region.

Suggested Options:
I am suggesting the February or March $95 puts. Februarys expire in three weeks.

BUY PUT FEB 95.00 BEN1020N95 open interest=237  current ask $1.50
-or-
BUY PUT MAR 95.00 BEN1020O95 open interest=712  current ask $3.00

Annotated Chart:

Entry  on   January 30 at $ 99.03 
Change since picked:       + 0.00
Earnings Date            01/28/10 (confirmed)
Average Daily Volume =        1.2 million  
Listed on   January 30, 2010         


Mckesson Corp. - MCK - close: 58.82 change: -1.49 stop: 62.51

Why We Like It:
Shares of MCK broke several layers of support last week. Investors decided to sell the earnings news. The 100-dma is now acting as resistance near $61.00. MCK has further resistance at the 50-dma near $62.00. The next level of support looks like the 200-dma down near $53.00. I am suggesting bearish positions now. Our first target to take profits will be $54.00.

Suggested Options:
I am suggesting the February or March $55 puts. Februarys expire in three weeks.

BUY PUT FEB 55.00 MCK1020N55 open interest=1693 current ask $0.30
-or-
BUY PUT MAR 55.00 MCK1020O55 open interest=239  current ask $0.85

Annotated Chart:

Entry  on   January 30 at $ 58.82 
Change since picked:       + 0.00
Earnings Date            01/26/10 (confirmed)
Average Daily Volume =        2.8 million  
Listed on   January 30, 2010