NEW DIRECTIONAL PUT PLAYS

Edwards Lifesciences - EW - close: 68.81 change: -1.99

Stop Loss: 72.25
Target(s): 63.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The sell-off in EW is picking up speed. Shares just broke down under the $70.00 level. There might be some short-term support near $68.00 but the next level of major support looks like the $65.00 and $62.00 levels. The Point & Figure chart has turned bearish with a $61.00 target.

I am suggesting small bearish positions at the open tomorrow with a stop loss at $72.25. Our target is $63.00. More conservative traders may want to wait for a failed rally near $70.00 before considering new positions.

- Suggested (Small) Positions -

buy the Apr $65 PUT (EW1221p65) current ask $1.80

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on March 06, 2012


WellPoint, Inc. - WLP - close: 64.34 change: -0.85

Stop Loss: 65.25
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:
WLP is consolidating above support in the $63.50 area. The trend of lower highs would suggest the stock will see a breakdown. If that happens the next level of support is $60.00 or the summer 2011 lows near $57.00.

I am suggesting a trigger to open small bearish positions at $63.40 with a stop loss at $65.25. Our target is $60.25.

NOTE: WLP is due to begin trading ex-dividend tomorrow. Expect a gap down at the open by 29 cents to account for the dividend.

Trigger @ 63.40 (small positions)

- Suggested Positions -

buy the Apr $62.50 PUT (WLP1221p62.5)

Annotated Chart:

Entry on March xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.5 million
Listed on March 06, 2012