NEW DIRECTIONAL PUT PLAYS

Covidien - COV - close: 65.67 change: -0.75

Stop Loss: 67.05
Target(s): 62.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
COV makes healthcare products. The company reported earnings on April 26th. The Q1 EPS numbers were above Wall Street estimates but management guided lower. This warning sparked the big sell-off. Since then COV has managed to bounce back but the rebound is rolling over now that shares have filled the gap.

I am suggesting a trigger to buy puts at $65.55. If triggered our target is $62.00.

Trigger @ 65.55

- Suggested Positions -

buy the Jun $65 PUT (COV1322R65) current ask $1.10

Annotated Chart:

Entry on May -- at $---.--
Average Daily Volume = 3.5 million
Listed on May 16 2013


iShares Russell 2000 - IWM - close: 97.95 change: -0.25

Stop Loss: 98.75
Target(s): 95.05
Current Option Gain/Loss: Unopened
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The small cap Russell 2000 index has produced an impressive four-week rally. Yet momentum is slowing down and technical indicators are starting to suggest the rally is about to rollover.

The trend is still up so I would consider this a more aggressive, higher-risk trade. I am suggesting a trigger to buy puts at $97.45. If triggered our target is $95.05. Broken resistance at $95.00 should be new support. If we see the IWM bounce at $95.00 we might switch and buy calls on the rebound.

Trigger @ 97.45

- Suggested Positions -

buy the Jun $95 PUT (IWM1322R95) current ask $1.16

Annotated Chart:

Entry on May -- at $---.--
Average Daily Volume = 41.8 million
Listed on May 16 2013