NEW DIRECTIONAL CALL PLAYS

Lumber Liquidators - LL - close: 61.12 change: +0.58

Stop Loss: 58.40
Target(s): 66.00
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on Feb. 20th
New Positions: Yes, see below

Company Description

Why We Like It:
LL is a specialty retailer of hardwood flooring. Right now the market seems to think the rebound in housing is good news for LL's business. If LL disappoints with its earnings report the reaction could be severe. That's why we do not want to hold over the Feb. 20th earnings report. However, until then, the trend is up and LL is breaking out past resistance near $60.00. This is a new all-time high for the stock and shares could see a short squeeze. The most recent data listed short interest at 22% of the very small 23.9 million share float.

I am suggesting new bullish positions now. We'll try and limit our risk with a stop loss at $58.40. Our target is $66.00. FYI: The P&F chart is bullish with a $74 target.

- Suggested Positions -

buy the Mar $65 call (LL1316c65) current ask $1.50

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 568 thousand
Listed on February 11, 2012


Mohawk Industries - MHK - close: 104.84 change: +1.73

Stop Loss: 101.85
Target(s): 109.75
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on Feb. 21st
New Positions: Yes, see below

Company Description

Why We Like It:
MHK is another stock that appears to be benefiting from the rebound in the U.S. housing sector. MHK manufacturers flooring and floor coverings for both the residential and commercial markets. The stock has been showing strength and rallied to new six-year highs. At the moment MHK is testing resistance at the $105.00 mark.

I am suggesting we use a trigger to buy calls at $105.35. If triggered our target is $109.75. We do not want to hold over the Feb. 21st earnings report.

Trigger @ 105.35

- Suggested Positions -

buy the Mar $105 call (MHK1316c105) current ask $3.40

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 588 thousand
Listed on February 11, 2012