NEW DIRECTIONAL PUT PLAYS

F5 Networks - FFIV - close: 94.64 change: +0.74

Stop Loss: 96.75
Target(s): 86.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of FFIV already appeared to be in a correction before Monday's market meltdown. Monday's drop was exacerbated by an analyst downgrade to a "sell" with a $70 price target. Yesterday saw shares breakdown below support near $100 and technical support at its 50-dma and 200-dma. The bounce attempt today failed at its 100-dma.

Aggressive traders could buy puts now. I am suggesting we wait for a drop below today's low and then buy puts. We'll use a trigger at $93.50. It's possible the $90.00 level could act as round-number, psychological support but we are going to aim for the $86.50 level.

Trigger @ 93.50

- Suggested Positions -

buy the Mar $95 PUT (FFIV1316o95) current ask $1.68

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 1.4 million
Listed on February 26, 2012


iShares Dow Jones Transports - IYT - close: 103.59 change: +0.20

Stop Loss: 105.25
Target(s): 98.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The transportation sector helped lead the market higher starting late last year. The three-month rally pushed the Dow Jones Transportation Average and the iShares (IYT) to new all-time highs and extremely overbought conditions. Now the transports have reversed.

Nimble traders could buy puts on a bounce near $105.00. I am suggesting a trigger to buy puts at $102.75. If triggered our target is $98.00 although more conservative traders may want to exit near the $100 mark.

Trigger @ 102.75

- Suggested Positions -

buy the Apr $100 PUT (IYT1320p100) current ask $1.75

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 610 thousand
Listed on February 26, 2012