NEW DIRECTIONAL PUT PLAYS

PetSmart, Inc. - PETM - close: 63.58 change: -0.40

Stop Loss: 65.25
Target(s): 56.00
Current Option Gain/Loss: Unopened
Time Frame: Exit Prior to earnings in late February
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of PETM look weak. The stock broke down sharply on January 28th thanks to an analyst downgrade. The analyst voiced concerns that PETM could face rising competition from Internet giant Amazon.com (AMZN). PETM dipped to $62.63 on the 28th Since then shares have seen an oversold bounce that has now reversed at new resistance near $66.00.

More aggressive traders will want to seriously consider an early entry point right now. I am concerned that the late January low could be support. Therefore I am suggesting a trigger to buy puts at $62.40. If triggered we'll use a stop loss at $65.25. Our target is $56.00. Do not be surprised to see a temporary bounce from the $60.00 level.

Trigger @ 62.40

- Suggested Positions -

buy the Mar $60 PUT (PETM1316o60) current ask $1.25

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 1.5 million
Listed on February 04, 2012