NEW DIRECTIONAL PUT PLAYS

Cliffs Natural Resources - CLF - close: 64.02 change: -0.85

Stop Loss: 66.25
Target(s): 57.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Metal and steel stocks have been underperforming. This relative weakness could definitely accelerate if the major indices break down. Shares of CLF broke down under support near $65.00 this past week. Now the stock is resting on one trend line of higher lows.

After Thursday's inside day and Friday's decline, I am suggesting small bearish put positions now with a stop loss at $66.25. More conservative traders may want to wait for CLF to trade under Wednesday's low at $62.91 before opening positions.

The $60.00 level could offer some support but we are aiming for $57.50. FYI: The Point & Figure chart for CLF is bearish with a $52 target.

- Suggested (Small) Positions -

buy the Mar $65 put (CLF1217o65) current ask $2.31

- or -

buy the Apr $60 put (CLF1221p60) current ask $1.81

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on March 03, 2012


Polaris Industries Inc. - PII - close: 66.32 change: -2.62

Stop Loss: 68.05
Target(s): 60.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
PII is reversing at resistance again. The stock was showing relative strength on Thursday with a big rally on strong volume. Unfortunately, Thursday's rally stalled at resistance near $70.00. Making matters worse was Friday's sell-off with a -3.8% decline on above average volume. The larger, longer-term trend for PII is up but shares could correct lower toward $60.00 or its 200-dma.

I am suggesting we open small bearish put positions if PII trades at $65.45. We will use a stop loss at $68.05 if triggered. Our exit target is $60.25.

Trigger to buy puts @ 65.45 (stop loss 68.05)

- Suggested Positions -

buy the Mar $65 PUT (PII1217o65) current ask $1.15

- or -

buy the Apr $65 PUT (PII1221P65) current ask $2.85

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 580 thousand
Listed on March 03, 2012