NEW DIRECTIONAL PUT PLAYS

Fortune Brands Inc. - FO - close: 59.51 change: -0.60

Stop Loss: 62.05
Target(s): 55.15
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
FO is a conglomerate of several different brands and products. Until recently the stock had been ignoring the market's rally and its weakness because FO had been stuck in a three-month trading range in the $60-63 zone. This week has changed that. FO has broken support at $60.00 and at its 100-dma. If there is any follow through lower then the next level of support is the $55.00 area.

I am suggesting bearish positions now. Our target is $55.15. More aggressive traders may want to aim for the simple 200-dma instead. I am starting this trade with a stop at $62.05 but more conservative traders may want to place their stops closer to $61 instead. Let's keep our position size small.

- Open Small Bearish Positions -

Buy the April $60 put (FO1116P60) current ask $2.15

- or -

Buy the June $55 put (FO1118R55) current ask $1.60

Annotated Chart:

Entry on March 17th at $ xx.xx
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on March 16th, 2010


Union Pacific Corp. - UNP - close: 91.47 change: +1.55

Stop Loss: 95.05
Target(s): 85.25, or 200-dma
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
I remain long-term bullish on the railroad stocks but short-term UNP is poised to breakdown. The stock has produced a bearish double top with the peaks in January and February. Now the stock has broken down under its 100-dma. I suspect UNP could drop toward its simple 200-dma near $85.00. Let's open small bearish positions now and target the $82.25 mark. More conservative traders may want to use a tighter stop loss to limit their risk.

- Small Bearish Positions -

Buy the April $90 PUTS (UNP1116P90) current ask $2.48

Annotated Chart:

Entry on March 17th at $ xx.xx
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on March 16th, 2010