NEW DIRECTIONAL CALL PLAYS

Cimarex Energy Co. - XEC - close: 64.00 change: +0.77

Stop Loss: 61.90
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on Feb. 19th
New Positions: Yes, see below

Company Description

Why We Like It:
The energy sector has been outperforming the S&P 500. Shares of XEC have participated in that rally. You could argue shares of XEC are overbought given the big bounce off its late December lows. Yet shares are now poised to breakout from a six-month trading range between $56 and $64.

I am suggesting a trigger to buy March calls at $64.55. More conservative traders may want to wait for a rally past $65.00 instead. If triggered our target is $69.50. However, we will plan to exit prior to the Feb. 19th earnings report.

Trigger @ 64.55

- Suggested Positions -

buy the Mar $65 call (XEC1316c65) current ask $2.35

Annotated Chart:

Weekly Chart:

Entry on January -- at $---.--
Average Daily Volume = 708 thousand
Listed on January 26, 2012


NEW DIRECTIONAL PUT PLAYS

Monster Beverage Corp. - MNST - close: 46.71 change: -0.56

Stop Loss: 50.15
Target(s): 41.00
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to the late February earnings report
New Positions: Yes, see below

Company Description

Why We Like It:
The last half of 2012 was a rough one for shares of MNST and 2013 is not seeing any change in trend. The stock exploded the few years prior to its peak in mid 2012. Since then the company seems to be suffering a number of maladies. First and foremost it seems that sales are slowing in certain markets. More recently there has been rising litigation risk. Just last week MNST plunged to a new relative low following the release of a report from the Substance Abuse and Mental Health Services Administration. This report is suggesting that emergency room visits related to energy drink consumption has more than doubled from 10,068 in 2007 to 20,783 in 2011. Elsewhere there are allegations that (excessive) energy drink consumption can be attributed to death in young adults. One politician in the Chicago area has proposed a ban on the sale of energy drinks.

Naturally MNST denies any health risk associated with its energy drink products, claiming they only contain enough caffeine similar to a cup of coffee. Legally, any deaths related to energy drink consumption have not yet been proven. It is the risk of increased litigation that has created a black cloud over shares of MNST. We think the current down trend continues.

Before we continue, please note that MNST has been a very volatile stock in the past. This should be considered an aggressive, higher-risk trade. I am suggesting we buy put positions now, at the open on Monday. Our target is the $41.00 level since the $40.00 level was support in October and November 2012.

- Suggested Positions - *Small Positions*

buy the Mar $45 PUT (MNST1316o45) current ask $2.85

Annotated Chart:

Weekly Chart:

Entry on January -- at $---.--
Average Daily Volume = 2.0 million
Listed on January 26, 2012