Editor's Note:

Wednesday's sell-off continued Thursday morning. While the major market indices managed an afternoon bounce to trim their losses it was a rough day for the bulls. We had five bullish candidates get stopped out today (AMZN, CMI, IPI, MICC, and WYNN).

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 93.61 change: -1.93

Stop Loss: 92.25
Target(s): 99.80
Current Option Gain/Loss: - 35.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/20 update: Yuck! It was another down day for CAT. Shares lost -2% and closed under what should have been support at the $95.00 level. While the market trimmed its losses, shares of CAT did not see the same afternoon bounce. This is a warning sign. More conservative traders will want to consider an early exit now! I am not suggesting new positions at this time.

Keep in mind that earnings are on the 27th of January and we don't want to hold over the event.

- Suggested Positions -

Long the 2011 February $100 calls (CAT1119B100) Entry @ $1.45

chart:

Entry on January 18th at $ 95.15
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 4.2 million
Listed on January 5th, 2010


Cognizant Technology Solutions - CTSH - close: 73.61 change: -0.94

Stop Loss: 73.90
Target(s): 79.90, 83.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
01/20 update: CTSH appears to be breaking down from its $76.50-73.50 trading range. I don't see any changes from my prior comments. Right now our plan is to buy calls on a breakout with a trigger at $76.65. However, we might want to consider buying calls on a dip or a bounce near the $70.00 level and CTSH's rising 50-dma.

Don't forget that this is an aggressive play and likely to be a short-term trade that only last a few days. We do not want to hold over the early February earnings report. If triggered at $76.65 our first target are $79.90. Keep your position very small to limit your risk.

- Suggested Positions (very small positions only!) -

Trigger to open positions @ 76.65

Buy the 2011 February $75.00 call (CTSH1119B75) current ask $3.00

- or -

Buy the 2011 February $80.00 call (CTSH1119B80) current ask $1.00

Entry on January xxth at $ xx.xx
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on January 18th, 2010


FedEx Corp. - FDX - close: 93.51 change: -0.83

Stop Loss: 91.75
Target(s): 99.90, 104.75
Current Option Gain/Loss: -100% and -34.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/20 update: FDX briefly traded under the $93.00 level and short-term support at its rising 40-dma. The close back under the $94.00 level is worrisome. If you're holding the April calls you might want to consider an early exit now. Currently our stop loss is at $91.75.

- Suggested Positions (only small positions so far) -

Buy the 2011 January $100 call (FDX1122A100) Entry @ $0.80

- or

Buy the 2011 April $100 call (FDX1116D100) Entry @ $2.96

01/13: New targets for the April calls (99.90 and 104.75)
01/12: New stop loss @ 91.75
01/08: New exit strategy for January calls. Try to exit at 40 cents or more.
12/17: FDX opens at $94.23 - our entry point.
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

Entry on December 17th at $94.23
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


International Business Machines - IBM - close: 155.80 change: +0.11

Stop Loss: 147.85
Target(s): 154.50, 159.90
Current Option Gain/Loss: +46.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/20 update: IBM is completely ignoring the widespread market weakness. Shares recovered from their morning dip to post a gain. The stock is short-term overbought so it would only be natural to expect some profit taking. I am not suggesting new bullish positions at this time. Our final target is $159.90.

- Suggested Positions -

Long the 2011 April $155 calls (IBM1116D155) Entry @ $2.25

01/19: Target Hit @ 154.50. April call @ $4.20 (+46.4%)
01/18: New stop loss @ 146.40. New targets at $154.50 and $159.90
01/18: As planned, exit the January calls (+87.4%)
01/13: Exit the January calls on Tuesday before the close (& earnings)
01/06: New stop loss @ 144.75
01/03: New targets @ $152.50, and $159.50

Entry on December 29th at $146.75
Earnings Date 01/18/11 (confirmed)
Average Daily Volume = 4.7 million
Listed on December 14th, 2010


NetApp, Inc. - NTAP - close: 56.22 change: -1.41

Stop Loss: 54.90
Target(s): 62.25, 64.50
Current Option Gain/Loss: -56.4%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
01/20 update: As we expected NTAP gapped open lower as investors reacted to the FFIV news but the drop in NTAP was not as bad as we feared. Shares opened at $55.69 (instead of near $54) and traders bought the dip near support at the $55 area. Under more healthy circumstances I would be tempted to buy calls right here on this bounce from $55. However, given the tone of trading today I would not want to initiate new positions at this time. Our stop loss is at $54.90.

- Suggested Positions (small positions only) -

Long the 2011 February $60 calls (NTAP1119B60) Entry @ $2.50

Entry on January 12th at $59.04
Earnings Date 02/16/11 (unconfirmed)
Average Daily Volume = 3.8 million
Listed on January 11th, 2010


Research In Motion - RIMM - close: 62.40 change: -0.88

Stop Loss: 59.90
Target(s): 64.75, 67.50
Current Option Gain/Loss: -10.1%, and - 5.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/20 update: RIMM held up reasonably well for a tech stock. I cautioned traders yesterday to look for a dip toward $62.00 and RIMM hit $61.88 midday. I'd rather wait for a dip closer to $60.00 before considering new bullish positions. No new trades at this time. Our final target remains $67.50.

- Suggested Positions -

Long the 2011 February $62.50 calls (RIMM1119B62.5) Entry @ $2.47

- or -

Long the 2011 March $65.00 calls (RIMM1119C65) Entry @ $2.35

01/13: New stop @ 59.90
01/13: 1st Target Hit @ 64.75. Feb. call @ $4.00 (+61.9%) Mar. call @ $3.75 (+59.5%)
01/12: New stop loss @ 58.45

Entry on January 6th at $61.00
Earnings Date 03/31/11 (unconfirmed)
Average Daily Volume = 9.9 million
Listed on January 5th, 2010


SPX Corp. - SPW - close: 73.86 change: -1.27

Stop Loss: 71.75
Target(s): 77.40, 79.90
Current Option Gain/Loss: - 7.4%
Time Frame: 4 to 6 weeks
New Positions: See below

Comments:
01/20 update: SPW slipped lower and ended the session with a -1.6% loss. Shares are hovering near the $74 level again. I'm not suggesting new positions at this time. However, if we see another dip or bounce near the $72.00 level we might want to jump in with some new call positions.

- Suggested Positions -

Long the 2011 February 75.00 calls (SPW1119B75) Entry @ $2.16

01/19: 1st Target Hit @ 77.40. Option @ $3.35 (+55%)
01/18: New stop loss @ 71.75

Entry on January 11th at $73.49
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 396 thousand
Listed on January 10th, 2010


PUT Play Updates

Google Inc. - GOOG - close: 626.77 change: -4.98

Stop Loss: n/a
Target(s): n/a
Current Option Gain/Loss: see below
Time Frame: 1 Day or 1 month
New Positions: No

THIS IS A STRANGLE TRADE (not a simple put play)

Comments:
01/20 update: After its morning decline GOOG spent the rest of the session churning sideways as investors waited for the company's earnings report out tonight. Wall Street is expecting a profit of $8.09 a share. The company reported earnings of $8.75 with revenues of $6.37 billion, also better than expected. Unfortunately, the stock is not seeing a very big afterhours reaction. The stock is only trading near $640 afterhours. We needed to see a much bigger move!

Our plan was to initiate a strangle position at the close today to capture any post-earnings move tomorrow morning. We had a very aggressive January trade, with January options that expire in one day. Plus, we had a February trade. I suggested options that were $50 out of the money to make this trade less expensive and still within a reasonable move for GOOG. We are NOT suggesting new positions at this time.

Since GOOG settled at $626.77 and the initial play description was working with GOOG at $631 I don't see any changes in our suggested strike prices.

EXIT PLAN: We want to exit our JANUARY OPTIONS on Friday morning at the open. We'll hold on to our February options for a few days and re-evaluate. If GOOG doesn't see a big enough gap on Friday morning our January option values are going to vanish into thin air!

STRANGLE TRADE: Buy an out of the money CALL and PUT

STRANGLE #1 (January options) initial cost $3.45

Buy the 2011 January $680 call (GOOG1122A680) Entry @ $1.65

- AND -

Buy the 2011 January $580 put (GOOG1122M580) Entry @ $1.80


STRANGLE #2 (February options) initial cost $15.10

Buy the 2011 February $680 call (GOOG1119B680) Entry @ $6.20

- AND -

Buy the 2011 February $580 put (GOOG1122N580) Entry @ $8.90

Entry on January 20th at $626.77
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on January 19th, 2010


iShares Russell 2000 Index - IWM - close: 77.71 change: -0.82

Stop Loss: 80.80
Target(s): 75.00
Current Option Gain/Loss: +12.1%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
01/20 update: Stocks did continue lower but the major indices produced an afternoon rebound to pare their losses. The IWM tagged its rising 40-dma and tested the early January lows near $77.50. I wouldn't be surprised to see a little oversold bounce tomorrow but look for short-term resistance near $79.00, which is where we can launch new positions. I want to reiterate this is an aggressive entry point since the market's trend is still up!

Small Position only

Long the 2011 February $77 puts (IWM1119N77) Entry @ $1.65

Entry on January 20th at $78.14
Earnings Date --/--/--
Average Daily Volume = 38 million
Listed on January 19th, 2010


CLOSED BULLISH PLAYS

Amazon.com Inc. - AMZN - close: 181.96 change: -4.91

Stop Loss: 183.40
Target(s): 192.50, 199.75
Current Option Gain/Loss: -95.7%, and -31.1%
Time Frame: 4 to 6 weeks
New Positions: See below

Comments:
01/20 update: It was another painful session for AMZN with shares down -2.6%. The stock is off nine points in the last two days. The NASDAQ was hardest hit this morning and while the major averages bounced off their midday lows, shares of AMZN did not see the same rebound. AMZN's low today was $181.00 and our stop loss was hit at $183.40.

- Suggested (SMALL) positions -

2011 January $190 calls (AMZN1122A190) Entry @ $2.35, exit $0.10 (-95.7%)

- or -

2011 February $200 calls (AMZN1119B200) Entry @ $3.85, exit $2.65 (-31.1%)

01/20: Stopped @ 183.40. Jan. call @ 0.10 (-96%), Feb. call @ 2.65 (-31%)
01/18: New stop loss at $183.40
01/15: New stop loss @ 181.80, New targets 192.50, 199.75

chart:

Entry on December 28th at $182.10
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 5.0 million
Listed on December 27th, 2010


Cummins Inc. - CMI - close: 108.02 change: -3.41

Stop Loss: 108.75
Target(s): 117.50
Current Option Gain/Loss: -100% and -31.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/20 update: Ouch! The profit taking in CMI accelerated lower on Thursday. Shares broke support near $109.00 and hit our stop loss at $108.75. This looks like a bearish reversal and nimble traders might want to consider bearish positions.

(small positions only to limit our risk)

- Suggested Positions -
2011 January $115 calls (CMI1122A115) Entry @ $1.12, exit $0.00 (-100%)

- or -

2011 March $115 calls (CMI1119C115) Entry @ $4.73, exit $3.25 (-31.2%)

01/20: Stopped out. Jan. call @ -100%, March call @ -31%
01/04: New entry point on afternoon bounce.
01/01: Adjusted targets to $114.50, 117.50
12/27: CMI opens at $110.18
12/25: Buy calls now at current levels (small positions)
12/21: New entry point @ $110.25, New stop @ 108.75, New option strikes.

chart:

Entry on December 27th at $110.18
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on December 11th, 2010


Intrepid Potash, Inc. - IPI - close: 34.59 change: -0.96

Stop Loss: 34.75
Target(s): 39.90, 42.00
Current Option Gain/Loss: -65.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/20 update: Agriculture stocks continued to drop on Thursday and IPI hit our stop loss at $34.75.

- Suggested Positions -

2011 February $40 calls (IPI1119B40) Entry @ $1.00, Exit $0.35 (-65%)

01/20: Stopped out. Feb. calls @ $0.35 (-65%)
01/19: Play triggered at $37.25

Chart:

Entry on January 19th at $ 37.25
Earnings Date 03/01/11 (unconfirmed)
Average Daily Volume = 717 thousand
Listed on January 12th, 2010


Millicom Intl. Cellular - MICC - close: 94.25 change: -0.75

Stop Loss: 93.75
Target(s): 99.90
Current Option Gain/Loss: -16.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/20 update: MICC succumbed to profit taking this morning. Shares actually gapped open lower under support near $94.00. The stock opened at $93.61. Our stop loss was $93.75 so the play was closed immediately.

FYI: It looks like MICC must have had a special dividend because several of the options have odd strike prices ending in .40.

- Suggested Positions -

2011 April $100.00 calls (MICC1116D100) Entry @ $3.30, Exit $2.75* (-16.6%)

01/20: Stopped out. April call @ 2.75 (-16.6%)*
01/19: As planned, exit the January calls. Exit @ 0.70 (-69%)
01/13: New stop loss @ 93.75
01/06: New stop loss @ 92.49
01/03: New stop loss @ 91.75, New target at $99.90

chart:

*Our exit price is an estimate. I have conflicting data suggesting the April calls would have closed at $3.90 or $3.00 and neither price seems probable.

Entry on December 23rd at $94.23
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 518 thousand
Listed on December 22nd, 2010


Wynn Resorts Ltd. - WYNN - close: 116.24 change: -1.94

Stop Loss: 116.95
Target(s): 124.75, 128.00
Current Option Gain/Loss: - 49.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/20 update: We've been stopped out of our aggressive trade on WYNN. The stock suffered a late morning slide that took it to the $114.00 level before trimming its losses to just -1.6%. Our stop loss was hit at $116.95. Yesterday I suggested conservative traders exit early.

Our plan was to keep our positions very small because this is an aggressive, higher-risk trade.

(Very Small Positions) - Suggested Positions -

2011 February $125.00 calls (WYNN1119B125) Entry @ $3.24, Exit $1.65 (-49%)

01/20: Stopped out. February call @ $1.65 (-49%)
01/19: Cautious traders may want to exit early now.
01/18: Play triggered on gap open higher at $120.50

chart:

Entry on January 18th at $120.50
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 15th, 2010