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Call Updates

Atwood Oceanics - ATW - cls: 93.11 change: +0.84 stop: 87.45

The OSX oil service index managed a decent bounce near its rising 10-dma, which is normally a positive sign. Meanwhile ATW, which did dip under short-term support near $90.00 intraday, managed to bounce back. We remain bullish on ATW and would use the rebound as a new entry point to buy calls. If you're skeptical of the market's late day bounce then consider a tighter stop loss near $89.00 or Friday's low near $89.25. Our target is the $99.00-100.00 zone. FYI: ATW has a moderate amount of short interest, about 7.4% of the 27.6 million-share float. That is about 4 days worth of short interest.

Suggested Options:
We would suggest the March or April calls.

Picked on February 17 at $ 90.37
Change since picked: + 2.74
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume = 654 thousand

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CF Industries - CF - close: 125.86 change: +2.90 stop: 113.45*new*

Shares of CF hit some rough profit taking on Thursday but the stock found support near $120 on Friday. Shares bounced near $120 twice on Friday and were already on the way up before the last hour market rally occurred. This looks like a new bullish entry point but if you are launching positions now then consider a tighter stop under its 10-dma (near 118.00). We are adjusting our stop loss to $113.45. Our target is the $138.00-140.00 zone. The Point & Figure chart is bullish with a $141 target. FYI: The most recent data puts short interest at 6.8% of the 53.4 million-share float.

Suggested Options:
We would suggest the March or April calls.

Picked on February 19 at $121.03 *triggered/gap higher
Change since picked: + 4.83
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 2.8 million

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Monsanto - MON - cls: 116.67 change: +0.24 stop: 111.90 *new*

It looks like MON is offering bulls another entry point. Shares pulled back toward $114.24 and hovered there most of the day before rebounding into the close. If you don't trust the late day bounce then wait for a breakout over $120.00 (or better yet $120.50) before buying calls. We have two targets. Our first target is the $127.00 level. Our second target is the $137.00-140.00 range. As we discussed earlier a move over $118 triggered a new P&F chart buy signal, which now forecasts a $157 price target. The fertilizer and agriculture stocks have been very volatile so readers should consider them aggressive, higher-risk plays. Please note that we are adjusting our stop loss to $111.90.

Suggested Options:
We would suggest the March or April calls.

Picked on February 12 at $118.09 *gap higher entry
Change since picked: - 1.42
Earnings Date 04/03/08 (unconfirmed)
Average Daily Volume = 7.1 million

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Mosaic - MOS - close: 108.96 change: -2.79 stop: 99.45

Friday's pull back in MOS and its mini, intraday, double-bottom near $106.50 looks like a new bullish entry point. However, if you want to launch new call positions here we would suggest a tighter stop, maybe in the $104-105 zone. The problem with that is MOS and its peers have been very volatile equities the last several weeks and you could easily get stopped out on an intraday dip. We are leaving our stop at $99.45 for now. MOS has already hit our initial target near $110. Our second target is the $118.00-120.00 zone. Again, these are very volatile stocks with a lot of intraday spikes. We would consider this a more aggressive, higher-risk play.

Suggested Options:
We would suggest the March or April calls.

Picked on February 12 at $101.83 *gap higher entry
Change since picked: + 7.13
Earnings Date 04/09/08 (unconfirmed)
Average Daily Volume = 5.8 million

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Nucor - NUE - close: 65.85 change: +1.70 stop: 59.95

Shares of NUE continue to look strong. The stock was already on the rebound Friday afternoon before the market's spike higher. The stock is arguably overbought after five weeks of gains in a row. However, in this case all we can do is play the trend. The stock has broken through multiple levels of resistance in the last several days. Our target is the $68.00-70.00 zone since the $70.00 level is likely to be significant resistance. The P&F chart is bullish with a $76 target.

Suggested Options:
We are not suggesting new positions at this time. However, after NUE hits our target we'll probably start looking for a new entry point.

Picked on February 17 at $ 62.01
Change since picked: + 3.84
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 5.0 million

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Petroleo Brasileiro - PBR - cls: 118.55 chg: +0.35 stop: 111.90*new*

Bulls bought the dip in PBR near its rising 10-dma again and the stock maintained its pattern of higher lows. Friday's bounce looks like a new bullish entry point to buy calls although readers could certainly wait for another rally past prior resistance near $120 again. We are adjusting our stop loss to $111.90. Currently, our target is the $128.00-130.00 range. The move over $116 has produced a new Point & Figure chart buy signal. Actually it is a quadruple-top bullish breakout buy signal with a $150 target (it was a $138 target two weeks ago). FYI: Another risk is PBR's earnings report. We can't find an earnings date and they normally report in mid February. That is a risk because we do not like to hold over an earnings report.

Suggested Options:
We would suggest the March or April calls.

Picked on February 12 at $116.00 *triggered
Change since picked: + 2.55
Earnings Date 02/12/08 (unconfirmed)
Average Daily Volume = 7.6 million

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Potash - POT - close: 157.00 change: +0.13 stop: 144.75

Shares of POT continue to march higher. This past week was definitely bullish with a breakout to new all-time highs. The stock has already hit our first target in the $158-160 zone. Right now if you're looking for a new entry point we would look for a bounce in the $150-152 zone or a new high over $160. POT should have some short-term support near $150 and its 10-dma. More conservative traders might want to think about adjusting their stop toward $150. Our second, more aggressive target is the $168.00-170.00 zone. More aggressive traders may want to aim significantly higher. The Point & Figure chart is forecasting a $222 target. Again, this is a very volatile stock. Readers should consider it an aggressive, higher-risk trade.

Suggested Options:
We would suggest the March or April calls.

Picked on February 12 at $147.50 *triggered
Change since picked: + 9.50
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Smith Intl - SII - close: 62.33 change: +0.87 stop: 58.45

Business is good for many of the oil service plays but unfortunately the group can be influenced by the day-to-day fluctuations in crude oil prices. The sector definitely saw some volatility this week. Traders bought the dip in SII near round-number support at $60.00 before the late day market spike higher. We remain bullish on SII but the stock does have some hurdles ahead of it. First and foremost is potential resistance near $65.00 and its 50 and 100-dma. Plus, we see a lack of volume behind the rally. Normally, to be truly bullish, we want to see rising volume on the rally. Friday's bounce could be used as a new entry point to buy calls but consider raising your stop closer to the $60.00 level. Our first target is the $64.25-65.00 range. Our second target is the $68.00-70.00 zone. We would expect SII to pull back initially when it hits $65.00. The P&F chart for SII is very bullish with an $80 target (it was a $77 target last week).

Suggested Options:
We would suggest the March or April calls.

Picked on February 17 at $ 60.52
Change since picked: + 1.81
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.5 million

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Yahoo! Inc. - YHOO - close: 28.42 change: -0.00 stop: n/a

Gosh! It only took three weeks for the lawsuits to start flying. Two pension funds have filed suit against YHOO for its rejection of the MSFT bid. The current consensus on the street, if there is a consensus, is that YHOO will eventually accept MSFT's bid. The real question is will they accept the $31/share bid or will they negotiate MSFT higher, say in the $33-34-35 zone. Some have speculated that MSFT is pursuing a proxy fight with YHOO's board because it is cheaper than raising their bid for the company. Our directional call play is a very speculative gamble that MSFT will raise its bid and that this news will come out in the next four weeks. There is plenty of risk and MSFT could decide to walk away or YHOO could do something stupid and poison any deal that kills the share price.

Suggested Options:
We were suggesting the March $30.00 or March $32.50 calls. They are cheaper today than they were a week ago. This is probably a "better" entry point given the speculative nature of the play.

Picked on February 17 at $ 29.66
Change since picked: - 1.24
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 54 million
 

Put Updates

Ambac Fincl. - ABK - cls: 10.71 change: +1.48 stop: n/a

ABK was the big story on Friday. It was a late story that came out in the last hour of trading but it was still THE story that moved the market. A CNBC commentator reported that ABK and a group of banks were close to a bailout plan for the troubled bond insurer. This news sent shares of ABK to a 16% gain and the market spiking higher. The story suggests that a deal could be reached as early as Monday or Tuesday this week. CNBC plans on airing a live interview with ABK management on Monday morning before the opening bell. It is unclear if this plan involves splitting up the company or not but it sounds like a group of banks is planning to add $2 or $3 billion to stabilize ABK and save it from losing its triple-A credit rating. While we have been bearish on the bond insurers I'm surprised this hasn't happened sooner. If you're a bunch of banks at risk of write downs in the tens of billions should ABK lose its credit rating would you "invest" a few billion to save the company and save yourself from these massive write downs? Odds are you would even though it is a conflict of interest and probably only prolongs the market's financial duress since we still won't know what these CDOs are worth or what's inside them and how much is at risk. Will the market pop on news of a real plan? Yes, it will. Will we suddenly revert to a bull market? I can't say but stocks could rebound for several days on the move. There is still no guarantee that a deal will get done or if it will meet approval with the credit rating agencies. However, we are not suggesting new positions at this time. Previously we had been suggesting the May out-of-the money puts and a speculative out-of-the money March ($20) call as a hedge should a bailout plan come to pass.

Suggested Options:
We are not suggesting new positions at this time.

Picked on January 27 at $ 11.54
Change since picked: - 0.83
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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W.W.Grainger - GWW - close: 74.77 chg: +0.07 stop: 78.26

GWW was hitting new relative lows near $72.75 before reversing higher on Friday afternoon. Friday's candlestick is technically a bullish reversal pattern. Traders need to be on the defensive here. More conservative traders might want to tighten their stop toward $77.00 or even $76.00. We are not suggesting new puts at this time. Our target is the $70.75-70.00 zone.

Suggested Options:
We are not suggesting new puts at this time.

Picked on February 10 at $ 76.65
Change since picked: - 1.88
Earnings Date 04/16/08 (unconfirmed)
Average Daily Volume = 1.0 million

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iShares DJ Financial - IYF - cls: 87.92 chg: +1.14 stop: 91.85

The IYF financials ETF was trading near its low for the day and its low for the week on Friday afternoon before the ABK news came out. The news sent shorts scrambling to cover. If a bailout plan does get announced on Monday then we would expect the IYF to breakout over resistance near $90.00 and probably its 50-dma near $90.70. We're going to adjust our stop loss to $90.75. We are not suggesting new puts at this time. Our official target is the $81.00-80.00 zone.

Suggested Options:
We are not suggesting new puts at this time.

Picked on February 06 at $ 88.62
Change since picked: - 0.70
Earnings Date 00/00/00
Average Daily Volume = 1.1 million

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MBIA Inc. - MBI - close: 12.18 change: +0.28 stop: n/a

Shares of MBI were trading near new lows for the day, week and month just before the ABK bailout news hit the wires on Friday afternoon. MBI ended up 2% by the closing bell but the stock might shoot a lot higher if a feasible plan for ABK does get announced. It is worth noting that Moody's did downgrade a reinsurer for MBI, which puts more pressure on the company. Given the news on Friday for ABK we're not suggesting new put positions for MBI at this time. We had been suggesting the out-of-the-money May puts and a March $22.50 (or $20.00) call as a hedge in case a bailout plan for the bond insurers does get done.

Suggested Options:
We are not suggesting new positions.

Picked on January 27 at $ 14.20
Change since picked: - 2.02
Earnings Date 01/31/08 (confirmed)
Average Daily Volume = 15.2 million

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Mohawk Ind. - MHK - cls: 74.68 chg: +1.58 stop: 78.05

There is no real reason for MHK to be spiking higher on Friday afternoon other than shorts covering into the weekend afraid the ABK news will spark a market stampede. MHK is nearing resistance at $75.00 again. If the market does rally we would expect MHK to trade up into the $76-78 range. Wait and watch for a failed rally before considering new put plays. There is potential support at $70.00 but we're aiming for the $66.50-65.00 zone near its January 2008 bottom.

Suggested Options:
Wait and watch for a new failed rally before considering new put positions.

Picked on February 14 at $ 73.70
Change since picked: + 0.98
Earnings Date 02/13/08 (confirmed)
Average Daily Volume = 907 thousand

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Sears Holding - SHLD - cls: 96.54 chg: +0.54 stop: 100.55

We were quickly running out of time but SHLD finally hit our suggested trigger to buy puts - and then it bounced! The market's late afternoon spike on Friday lifted SHLD from its lows of the month to a gain for the day. Our suggested trigger was $94.75. The play is now open. If you missed the entry point look for a failed rally anywhere in the $98-100 zone as a new entry point to buy puts. We only have three days and plan to exit on Wednesday afternoon at the closing bell to avoid holding over the Thursday morning earnings report. Currently our target is the $86.00-85.00 range but we could face a challenging week. It would not be out of the question to see SHLD trade sideways as investors wait on the earnings report.

Suggested Options:
If you can handle the three-day time span we would suggest the March puts.

Picked on February 22 at $ 94.75 *triggered
Change since picked: + 1.79
Earnings Date 02/28/08 (confirmed)
Average Daily Volume = 3.0 million

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Legacy Vulcan - VMC - cls: 68.26 chg: +0.14 stop: 70.86

VMC spent the week trading sideways. At this time we would watch for a failed rally under $70.00 or a new decline under $65.00 before considering new put positions. Our target is the $60.50-60.00 zone. The stop loss is a little bit wider than we would like but VMC can see some big $3-$4 swings intraday so readers should consider this an aggressive, higher-risk play.

Suggested Options:
If VMC provides us a new entry point we would suggest the March or April puts.

Picked on February 17 at $ 66.64
Change since picked: + 1.62
Earnings Date 04/30/08 (unconfirmed)
Average Daily Volume = 2.1 million
 

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

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CROCS Inc. - CROX - close: 25.43 chg: -0.69 stop: n/a

CROX slid again on Friday. The stock broke support near $25.00 on an intraday basis and hit new multi-month lows. Even the market's spike higher in the last 30 minutes failed to really move shares of CROX. We are not suggesting new strangles at this time. The options we had suggested were the March $40 calls (CQJ-CH) and the March $25 puts (CQJ-OE). Our estimated cost was $2.50 and we wanted to sell if either option hits $4.25 or higher.

Suggested Options:
We are not suggesting new strangle positions on CROX.

Picked on February 17 at $ 33.43
Change since picked: - 8.00
Earnings Date 02/19/08 (confirmed)
Average Daily Volume = 5.2 million

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Genentech - DNA - close: 71.60 change: -0.15 stop: n/a

Shares of DNA were halted for trading around 3:40 p.m. on Friday afternoon (just as the market was spiking higher on the ABK story). A few minutes after the closing bell it was announced that the FDA advisory panel had approved for DNA's Avastin drug as a treatment for breast cancer. Now remember, this is not a "cure" for breast cancer but it has been shown that Avastin prolongs the life of those suffering from advanced breast cancer. It is certainly a positive step for patients and shares of DNA soared after hours. DNA was trading in the $77.50-78.00 range in after hours markets. At $78.00 the March $75 calls could easily spike to $5.00 or more. More aggressive traders may want to raise their exit target from $5.00 to something in the $7.00 or $8.00 range. We are no longer suggesting new strangle positions on DNA. The options we had suggested were the March $75 calls (DWN-CO) and the March $70 puts (DWN-ON). Our estimated cost was $2.80. We want to sell if either option hits $5.00 or higher.

Suggested Options:
We are not suggesting new positions at this time.

Picked on February 20 at $ 72.37
Change since picked: - 0.77
Earnings Date 04/10/08 (unconfirmed)
Average Daily Volume = 3.5 million
 

Dropped Calls

Apple Inc. - AAPL - close: 119.46 change: -2.08 stop: see details

Our bullish triple-play on AAPL has been a big disappointment. The explosive rebound never materialized and shares slowly withered back toward support near $120. The final blow came on Friday. The stock dipped to a new low under the early February bottom after new concerns arose over AAPL's iPhone. It appears that analysts are concerned that iPhone sales are not meeting expectations. Plus, the high-number of iPhones that have been "unlocked" impact AAPL's profitability for this product line. Shares eventually hit our suggested stop loss at $116.99.

AAPL play #1 - directional calls

AAPL hit our suggested stop loss at $116.99 closing this directional play.

AAPL play #2 - Credit put spread

The drop to a new relative low is our cue to exit. That means we need to buy back the $120 put we sold. In the mean time it might pay off to keep the March $110 put we bought.

AAPL play #3 - Sell Naked Puts

AAPL hit our suggested stop to close this play so we needed to buy back the naked put we sold. We had suggested selling the March $150 put.

Picked on February 10 at $125.48 *stopped out 116.99
Change since picked: - 6.02
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 44.4 million
 

Dropped Puts

Myriad Genetics - MYGN - cls: 36.88 chg: +0.05 stop: 40.51

Target achieved. MYGN ended Friday up five cents but midday the stock broke down under the $36.00 level hitting $35.93. Our target had been the $36.00-35.00 range. The stock is now down three weeks in a row and down five out of the last six weeks. It is probably time for an oversold bounce soon. We can be watching for a failed rally near resistance at a potential entry point for new bearish plays.

Picked on February 07 at $ 39.75 *triggered
Change since picked: - 2.87
Earnings Date 02/05/08 (confirmed)
Average Daily Volume = 801 thousand

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Simon Properties - SPG - cls: 85.88 chg: +2.15 stop: 90.15

We are losing patience with the REIT put play in SPG. The stock can be very volatile, as are many stocks in the industry, and if you can catch a move it's great. Shares have been going nowhere for days and now it looks like SPG might be poised to move higher. We're closing the play now and will reconsider bearish positions on a failed rally near its 100 or 200-dma or a new low under $82.00.

Picked on February 07 at $ 84.39 *triggered
Change since picked: + 1.49
Earnings Date 02/01/08 (confirmed)
Average Daily Volume = 2.7 million
 

Dropped Strangles

None
 

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