NEW DIRECTIONAL CALL PLAYS

Lockheed Martin - LMT - close: 150.39 change: +2.21

Stop Loss: 147.00
Target(s): 165.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
LMT is in the industrial goods sector. The company is a major player in the aerospace and defense contractor industries. The company issued relatively up beat guidance when they reported earnings in January. That didn't stop shares from seeing a post-earnings sell-off. LMT has found support in the $145 area near its rising 50-dma. Today LMT was showing relative strength and outperformed with a +1.5% gain. The stock is testing short-term resistance near $152.00.

I am suggesting small bullish positions if LMT can trade at $152.25. If triggered our multi-week target is $165.00. That is a little bit aggressive since the $158-160 zone could be overhead resistance. Plus our stop loss is a little bit wide at $147.00. Use small positions to limit risk.

FYI: If you like stocks in this industry then check out shares of Boeing (BA). BA is testing potential support near $120.00 and a bounce near there could be a potential entry point to buy calls.

Trigger @ $152.25

- Suggested Positions -

Buy MAR $155 call (LMT1422C155) current ask $1.85

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 2.4 million
Listed on February 05, 2014


NEW DIRECTIONAL PUT PLAYS

Cardinal Health - CAH - close: 65.37 change: -0.19

Stop Loss: 66.25
Target(s): 60.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
CAH is in the services sector. The company provides pharmaceutical and drug services, distributed drugs and over the country healthcare and consumer products in addition to medical supplies.

The recent performance in CAH is very interesting. The company reported earnings on January 30th and beat Wall Street's estimates on both the top and bottom line. Management issued bullish guidance. The stock produced a one-day pop and then reversed. Does that mean all the good news has been priced in?

The failure in late January looks like a bearish double top pattern. The pullback has left shares flirting with support near $65.00. Today's low was $64.78. I am suggesting a trigger to buy puts at $64.65. If triggered our target is $60.25. I would keep a wary eye on the simple 100-dma (currently near $61.60), which could be temporary support.

FYI: The Point & Figure chart for CAH is bearish with a $60 target.

Trigger @ 64.65

- Suggested Positions -

Buy MAR $65 PUT (CAH1422o65) current ask $1.80

Annotated Chart:

Entry on February -- at $---.--
Average Daily Volume = 2.9 million
Listed on February 05, 2014