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Call Updates

iShares China 25 - FXI - cls: 143.08 chg: +2.65 stop: 149.45

The FXI managed another bounce today. Traders also jumped in during the midday swoon and bought the dip near $140, which would be a bullish sign. Looking at the chart more closely you can see that the FXI has a subtle trend of higher lows dating back to the January 2008 low. Yesterday's dip was a bounce near that trendline. Aggressive traders may want to seriously buying calls here near $140 with a stop loss under Tuesday's low. We're going to be patient and wait for a dip near $136-135 and then re-evaluate our bullish entry point. We were officially waiting for a breakout over $160 with our suggested trigger at $161.01. If we are triggered our target is the $178.00-180.00 zone although we'll have to keep a wary eye on potential resistance at the 100-dma.

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 7.8 million

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Potash - POT - close: 161.03 change: +4.27 stop: 147.75

POT delivered a nice bounce on Wednesday. Actually most of the agriculture/fertilizer stocks rebounded nicely today. POT continues to look like the strongest in the bunch. The recent consolidation is starting to look like a short-term bull flag pattern. Readers may want to consider new call plays above $162 but we would suggest a tighter stop loss if you do open new positions. POT has already surpassed our early target in the $158-160 zone so readers should have already booked some profits. 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.

Picked on February 12 at $147.50 *triggered
Change since picked: +13.53
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 5.9 million

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Shaw Group - SGR - close: 63.89 change: +1.13 stop: 59.85

SGR produced a 1.8% rebound but the trading signals remain mixed. We suggest readers stay cautious here. We are not suggesting new positions at this time. We have two targets. Our first target is the $69.50-70.00 zone. Our second, more aggressive target is the $74.00-75.00 zone. The Point & Figure chart is very bullish with an $81 target.

Picked on February 24 at $ 64.53
Change since picked: - 0.64
Earnings Date 04/08/08 (unconfirmed)
Average Daily Volume = 1.8 million

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Smith Intl - SII - close: 64.13 change: +2.11 stop: 59.90

The oil inventory report this morning came in less than expected and sent crude oil futures to new highs. The oil service stocks out performed the market with a 3.2% gain in the OSX index. Shares of SII outpaced its peers with a 3.4% bounce. This actually looks like a new entry point to buy calls in SII and readers could use a stop under Tuesday's low. The stock has already hit our first target in the $64 zone. Our second target is the $68.00-70.00 zone. The P&F chart for SII is very bullish with an $80 target (it was a $77 target last week).

Picked on February 17 at $ 60.52
Change since picked: + 3.61
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 3.5 million

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Wynn Resorts - WYNN - close: 99.19 change: +1.91 stop: 94.75

Shares of WYNN continued its oversold bounce as expected but the stock is struggling a big with round-number resistance near $100. Overhead resistance at the 10-dma has dropped from $103.00 to $102.33. WYNN needs to hit our target in the $102.00-102.50 zone pretty quick. Remember, this is a technical bounce play only. Overall market and economic conditions do not bode well for WYNN's stock price. More aggressive traders could aim for $105. If given the opportunity we will consider switching to puts on a failed rally under $105.00 or a breakdown under $95.00. This call play should be very short-term. If it doesn't happen in the next day or two we'll probably abandon ship.

Picked on March 04 at $ 97.28
Change since picked: + 1.91
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 2.2 million

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Yahoo! Inc. - YHOO - close: 28.67 change: +0.61 stop: n/a

YHOO rose more than 2% today. The reason why would be harder question to answer. The big news from YHOO today was the company's announcement that it was delaying or extending the deadline for nominating board members. This postpones any proxy fight from MSFT. There was also news that YHOO was in talks with TWX about a potential rival bid to counter MSFT's hostile take over. Plus, there were additional comments among experts that they believe MSFT will raise its offer for the company. It's certainly possible that YHOO delayed the board member deadline and is talking to TWX to coax a higher bid out of MSFT but that would actually be logical. In reality YHOO's management, who strongly dislikes MSFT and would do anything in their power to not be acquired by MSFT, is just desperately seeking an alternative. Whatever drove the price higher we are not going to complain. Unfortunately, we need to see a higher bid from MSFT before March expiration. This remains a very risky, aggressive bet. Our suggested calls were the March $30 or March $32.50 strikes.

Picked on February 17 at $ 29.66
Change since picked: - 0.99
Earnings Date 04/17/08 (unconfirmed)
Average Daily Volume = 54 million
 

Put Updates

Ambac Fincl. - ABK - cls: 8.70 change: -2.02 stop: n/a

Shares of ABK were halted midday for pending news. When the news hit the announcement was not what the street was expecting. In spite of all the headlines and hype over the last several days there is no deal - at least not yet. It would appear at this time that ABK, the consortium of banks and regulators, and the ratings agencies could not come to an agreement on how ABK should be structured going forward or how much new capital the company needs to secure its dubious triple-A rating. ABK's announcement was the company's plan to raise $1.5 billion in cash by selling stock and equity "units". The new question is what price are they selling the stock at in an attempt to raise another $1 billion. The other $500 million will be additional debt. Investors hate having their investment diluted and shares of ABK plunged about 19%. We would not be opening new plays at this time but the path of least resistance definitely looks like it's lower. This remains a very speculative play. We will definitely hold over the April earnings if we get the chance. 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.

Picked on January 27 at $ 11.54
Change since picked: - 2.84
Earnings Date 04/24/08 (unconfirmed)
Average Daily Volume = 10.9 million

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MBIA Inc. - MBI - close: 12.18 change: -0.80 stop: n/a

Lack of a bailout plan for ABK also hit shares of MBI, which sank more than 6% on the session. Volume was pretty heavy on today's decline. 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. We will definitely hold over the April earnings if we get the chance.

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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NII Holdings - NIHD - close: 40.14 change: +0.18 stop: 41.26

NIHD came awfully close to stopping us out today. The stock spiked higher this morning and hit $41.24 before reversing lower. This could be the sort of failed rally we mentioned as a potential entry point. If you prefer more momentum then wait for a new decline under $39.00 to open put plays. Our target is the $35.50-35.00 zone. More aggressive traders could aim for the trendline of lower lows. The Point & Figure chart is bearish with a $19 target. FYI: The latest data lists short interest at 3.8% of the 171.7 million-share float, which is only about 1.5 days worth of short interest.

Picked on March 04 at $ 38.95 *triggered
Change since picked: + 1.19
Earnings Date 02/27/08 (confirmed)
Average Daily Volume = 3.3 million

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Precision Castparts - PCP - cls: 105.68 chg: -0.29 stop: 111.51

PCP continues to under perform the market. Overall we don't see any changes from our prior comments. Another failed rally under $110 could be used as a new entry point for puts. Our target is the $101.00-100.00 zone. The most challenging part of this trade is our stop loss placement. After Friday's 4.4% decline knowing where to put the stop is tough. The $112 area looks like a good spot but just to give PCP a little room to move we're suggesting a stop at $112.65.

Picked on March 03 at $109.49 *triggered
Change since picked: - 3.78
Earnings Date 05/08/08 (unconfirmed)
Average Daily Volume = 1.9 million

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Everest Re Group - RE - close: 94.80 chg: -0.43 stop: 100.35

Investors remain cautious on financials and the insurance stocks. RE didn't see much of a bounce today. Broken support near $96.00 should be new resistance but if it does trade over $96.00 look for a failed rally near $98.00 as a new entry point for puts. We have two short-term targets. Our first, conservative target is $93.50. Our second, more aggressive target is the $91.00-90.00 zone. We're suggesting a stop loss at $102.01 but more conservative traders might be able to get away with a stop around $100.51. FYI: The P&F chart is bearish with a $74 target.

Picked on February 28 at $ 97.93
Change since picked: - 3.13
Earnings Date 04/23/08 (unconfirmed)
Average Daily Volume = 487 thousand

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Sears Holding - SHLD - close: 96.56 change: +0.62 stop: 100.51

SHLD continues to churn sideways between $95 and $100. We are going to stick to our plan. We are suggesting a trigger to buy puts at $94.00. If we are triggered at $94.00 our target is the $85.50-85.00 zone near its January lows. Looking at the weekly chart and its bearish channel more aggressive traders may want to aim for $80 but we would expect a bounce near $85.00. FYI: A breakdown under $94 would produce a new triple-bottom breakdown sell signal on the Point & Figure chart. There are a lot of investors who believe SHLD is going lower. The most recent data puts short interest at more than 19% of the 65 million-share float. That is almost 7 days worth of short interest. Naturally that raises our risk of a short squeeze.

Picked on February xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 02/28/08 (confirmed)
Average Daily Volume = 2.8 million
 

Strangle Updates

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Dropped Calls

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Dropped Puts

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Dropped Strangles

CROCS Inc. - CROX - close: 20.46 chg: -1.83 stop: n/a

Target exceeded! The selling pressure in CROX is picking up speed. The stock lost more than 8% today and is nearing potential round-number support at the $20 level. We had recently changed our exit target on the options from $4.25 to $3.75. Looks like we should have held to our guns. Today's drop in CROX sent the March $25 put to an intraday high of $4.90. The options we had suggested were the March $40 calls (CQJ-CH) and the March $25 puts (CZL-OE). Our estimated cost was $2.50. We were previously suggesting an exit if either option hit $4.25. We have since adjusted our target to $3.75.

Picked on February 17 at $ 33.43
Change since picked: -12.97
Earnings Date 02/19/08 (confirmed)
Average Daily Volume = 5.2 million
 

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