NEW DIRECTIONAL CALL PLAYS

Caterpillar Inc. - CAT - close: 101.11 change: -1.06

Stop Loss: 99.75
Target(s): 109.00
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on April 24th
New Positions: Yes, see below

Company Description

Why We Like It:
CAT is in the industrial goods sector. The company makes construction and mining equipment in addition to engines, turbines, and diesel-electric locomotives. CAT did see a couple of headlines today suggesting the company might face more intense scrutiny by the I.R.S. over its tax strategies. This story came out last week and failed to stop the rally in CAT. Today's drop is more likely just a reaction to the widespread market weakness.

Bigger picture CAT is still outperforming and traders were buying the dip midday. Shares are likely to bounce from here assuming the market sell-off does not accelerate. We want to be ready for CAT's next bounce. That's why we're suggesting a trigger to buy calls at $102.35. We'll start with a stop loss at $99.75. Our exit target is $109.00. However, we do not have much time for CAT to perform. The company is scheduled to report earnings on April 24th and we do not want to hold over the announcement.

Trigger @ $102.35

- Suggested Positions -

Buy the MAY $105 call (CAT1417E105) current ask $1.22

Annotated Chart:

Entry on April -- at $---.--
Average Daily Volume = 5.9 million
Listed on April 07, 2014


NEW DIRECTIONAL PUT PLAYS

Charter Communications - CHTR - close: 118.94 change: -3.78

Stop Loss: 122.25
Target(s): 110.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on April 28th
New Positions: Yes, see below

Company Description

Why We Like It:
CHTR is in the services sector. The company is in the cable-tv business. The stock has been underperforming for a while. Shares peaked at resistance near $140. The last several weeks have seen CHTR consolidating in the $120-130 zone. Now shares are finally breaking down below key support at $120 and its 300-dma. The next level of support should be $110.

Today's intraday low was $118.39. I'm suggesting a trigger to open bearish positions at $118.25. If triggered our target is $110.50. The Point & Figure chart for CHTR is bearish with a $110 target.

Trigger @ 118.25

- Suggested Positions -

Buy the May $115 PUT (CHTR1417Q115) current ask $3.50

Annotated Chart:

Weekly Chart:

Entry on April -- at $---.--
Average Daily Volume = 995 thousand
Listed on April 07, 2014