NEW DIRECTIONAL CALL PLAYS

L Brands, Inc. - LTD - close: 50.49 change: +0.20

Stop Loss: 49.40
Target(s): 54.50
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings in mid-May
New Positions: Yes, see below

Company Description

Why We Like It:
Formerly known as "Limited Brands", L Brands operates a number of specialty stores including Bath & Body Works and Victoria's Secret. The stock surged a couple of weeks ago and broke out to new record highs following better than expected same-store sales growth. Since then LTD has corrected and almost filled the gap. Now shares are on the rise again.

We want to be ready to catch the next move higher. Thursday's high was $50.83. I am suggesting a trigger to buy calls at $50.85. If triggered our target is $54.50 but we do not want to hold over the mid-May earnings report. This trade may only last a couple of weeks. FYI: The Point & Figure chart for LTD is bullish with a $68 target.

Trigger @ 50.85

- Suggested Positions -

buy the Jun $50 call (LTD1322F50) current ask $2.10

Annotated Chart:

Entry on April -- at $---.--
Average Daily Volume = 2.7 million
Listed on April 27 2013


NEW DIRECTIONAL PUT PLAYS

Stamps.com Inc. - STMP - close: 33.14 change: +0.52

Stop Loss: 34.05
Target(s): 30.00
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
STMP is an Internet company that provides online postage. The company reported earnings a couple of days ago and blew away the estimates. Wall Street was expecting 39 cents a share. STMP delivered 57 cents. Revenues soared +13.8% to $32.1 million, better than the $30.4 million estimate. Management then raised their 2013 revenue and earnings guidance.

Naturally the stock rallied on such strong results and positive guidance. Yet investors may not have expected a rally from $25.65 to $32.60 on Thursday. The stock is up +41% in just the last four days and the rally is slowing down near its old highs and likely resistance near $34.00.

We agree that the earnings news and guidance is bullish. However, STMP has simply gone too far too fast. Odds are good the stock will see a pullback. I do consider this a higher-risk trade so keep position size small. We are suggesting a trigger to buy puts at $32.50. If triggered our target is $30.00. I'm listing our initial stop loss at $34.05 but readers could use a stop loss just above today's high (33.62) instead.

Trigger @ 32.50 *Small Positions*

- Suggested Positions -

buy the May $35 PUT (STMP1318Q35) current ask $2.55

Annotated Chart:

Weekly Chart:

Entry on April -- at $---.--
Average Daily Volume = 235 thousand
Listed on April 27 2013


VMware, Inc. - VMW - close: 71.46 change: -0.61

Stop Loss: 72.85
Target(s): 62.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
VMW is in the cloud computing industry. The company reported earnings a few days ago and beat estimates by four cents. Yet VMW lowered its Q2 guidance. Shares gapped down the next day on the news and since then VMW has garnered a couple of analyst downgrades.

Traders have been selling the rallies and VMW's bearish trend of lower highs has pushed the stock to major support at $70.00. A breakdown here would look very bearish. I am suggesting a trigger to buy puts at $69.75. If triggered our target is $62.50. More aggressive traders could aim lower. The Point & Figure chart for VMW is bearish with a $42 target.

Trigger @ 69.75

- Suggested Positions -

buy the Jun $67.50 PUT (VMW1322R67.5) current ask $2.15

Annotated Chart:

Entry on April -- at $---.--
Average Daily Volume = 2.5 million
Listed on April 27 2013