NEW DIRECTIONAL PUT PLAYS

Green Mountain Coffee Roasters - GMCR - close: 62.85 change: -1.40

Stop Loss: 65.01
Target(s): 56.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
GMCR exploded higher two weeks ago on its earnings report. I'm sure most of it was short covering because there is so much short interest in this stock. GMCR still has a high degree of short interest at 19.5% of the 128.6 million-share float. It looks like the rally has run out of fuel. Now there is a good chance that GMCR will fill the gap.

I am suggesting a trigger to buy puts $61.75 with a stop loss at 65.01. Our exit target is $56.00. GMCR can be a volatile stock so we want to keep our position size small. Plus, the $60.00 level could still act as potential support.

Buy Puts Trigger @ $61.75 (small positions)

- Suggested Positions -

buy the Mar $60 PUT (GMCR1217O60)

Annotated Chart:

Entry on February xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 11, 2012


WellPoint Inc. - WLP - close: 64.17 change: -0.48

Stop Loss: 65.15
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The big gap down in shares of WLP in late January was due to the company missing the earnings estimates. The stock has spent the last three weeks consolidating sideways above support near $64 but with a bearish trend of lower highs. This coiling should produce a break down lower soon.

The late January low was $63.48. I am suggesting a trigger to open bearish positions at $63.25. If triggered our target is $58.50 but more conservative traders may want to exit near $60.00 which could act as round-number support.

Buy Puts Trigger @ 63.25

- Suggested Positions -

buy the Mar $62.50 PUT (WLP1217O62.5) current ask $1.34

Annotated Chart:

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on February 11, 2012