NEW DIRECTIONAL CALL PLAYS

Diamondback Energy, Inc. - FANG - close: 70.12 change: +2.52

Stop Loss: 67.75
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings in May
New Positions: Yes, see below

Company Description

Why We Like It:
FANG is in the basic materials sector. They are an oil and gas company, based in Texas. The stock has been showing relative strength during the market's recent declines.

Last week FANG provided a Q1 2014 production guidance update. They expect Q1 production to rise +30% from the prior quarter. FANG also raised their full-year 2014 production guidance by +10%.

The stock looks poised to break out past resistance near $70.00. If that happens FANG could see some short covering. The most recent data listed short interest at 37% of the small 32.5 million share float. That's plenty of fuel for a short squeeze.

We are suggesting a trigger to buy calls at $71.25. We are not setting an exit target yet but plan to exit prior to earnings in mid May.

FYI: The Point & Figure chart for FANG is bullish with an $85 target.

Trigger @ 71.25

- Suggested Positions -

buy the May $75 call (FANG1417E75) current ask $1.80

Annotated Chart:

Entry on April -- at $---.--
Average Daily Volume = 948 thousand
Listed on April 14, 2014


NEW DIRECTIONAL PUT PLAYS

Lumber Liquidators - LL - close: 84.70 change: -0.98

Stop Loss: 88.35
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on April 30th
New Positions: Yes, see below

Company Description

Why We Like It:
LL is in the services sector. The company operates a specialty retailer of hardwood flooring. This stock was a big winner in 2012 and 2013. Unfortunately the long-term up trend appears to be in trouble. Shares have been trending lower since its post-earnings rally in February failed near the $110 level. It now appears that traders are selling every rally.

LL had been trying to hold support in the $85-86 region but just broke through it on Friday and confirmed the relative weakness today. Monday's low was $83.91. We're suggesting a trigger to buy puts at $83.80. Readers may want to use small positions because there are already a lot of bears in this name. The most recent data listed short interest at 27% of the small 24.4 million share float. That could make any bounce a volatile one.

Plan on exiting prior to LL's earnings report on April 30th. We are not setting an exit target just yet. FYI: The Point & Figure chart for LL is bearish with a $72 target.

Trigger @ $83.80

- Suggested Positions -

Buy the May $80 PUT (LL1417Q80) current ask $3.40

Annotated Chart:

Weekly Chart:

Entry on April -- at $---.--
Average Daily Volume = 761 thousand
Listed on April 14, 2014