NEW DIRECTIONAL PUT PLAYS

Deckers Outdoor - DECK - close: 45.18 change: -0.98

Stop Loss: 46.30
Target(s): 40.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DECK's bullish breakout from mid August has reversed. Shares have been trying to hold support near $45 and its 50-dma. Yet it looks like DECK is about to breakdown again.

This is an aggressive trade. There are a lot of investors already bearish on the stock. The most recent data listed short interest at 29% of the small 30.5 million share float. That raises the risk of a short squeeze.

Today's low was $44.85. I am suggesting a trigger to buy puts at $44.75. Our target is $40.25. We'll use a stop above today's high.

Trigger @ 44.75

- Suggested Positions -

buy the Oct $42.50 PUT (DECK1220v42.5) current ask $1.85

Annotated Chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 4.5 million
Listed on September 11, 2012


Lorillard Inc. - LO - close: 121.00 change: -2.56

Stop Loss: 121.25
Target(s): 110.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
LO is a cigarette company. The fact that shares now have a 5% yield is not helping. Investors are in a selling mood with LO down four weeks in a row. Shares have broken through technical support at their 200-dma. Now LO is testing major support near 120 and its 300-dma.

Today's low was $119.84. The June 2012 low was $118.72. I am suggesting a trigger to buy puts at $118.50. We will target a drop to $110.50. We'll start with a stop loss at $121.25. I would keep our position size small to start.

Trigger @ 118.50 (small positions)

- Suggested Positions -

buy the Oct $115 PUT (LO1220v115) current ask $1.58

Annotated Chart:

Entry on September xx at $ xx.xx
Average Daily Volume = 963 thousand
Listed on September 11, 2012