Editor's Note:

Clearly the rally is not over yet with stocks surging again on Monday. The DJIA hit new two-year highs. Some of this move could be short covering on the unexpected strength. I am suggesting an early exit from our NTAP play.

-James

Current Portfolio:


CALL Play Updates

FedEx Corp. - FDX - close: 94.37 change: +1.03

Stop Loss: 91.75
Target(s): 99.90, 104.75
Current Option Gain/Loss: -34.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/24 update: The industrials bounced and the DJIA surged to new two-year highs, largely thanks to a big gain in IBM. That helped FDX bounce from its rising trendline of higher lows. Yet I remain cautious on FDX. You could launch bullish positions here but I'd only do it with a stop loss near $92.90.

- Suggested Positions (only small positions so far) -

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

01/22: January options have expired (-100%)
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


Research In Motion - RIMM - close: 62.69 change: +1.14

Stop Loss: 59.90
Target(s): 64.75, 67.50
Current Option Gain/Loss: -13.7%, and - 8.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/24 update: RIMM is bouncing from its Friday lows and its 20-dma. I would be tempted to buy calls right here but if you do I'd consider a stop loss close to Friday's low of $61.11 or at least a stop near the 50-dma near $60.35. 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



PUT Play Updates

Cognizant Technology Solutions - CTSH - close: 73.05 change: -0.56

Stop Loss: 75.25
Target(s): 70.25, 68.00
Current Option Gain/Loss: -23.0%
Time Frame: exit ahead of earnings
New Positions: see below

Comments:
01/24 update: Over the weekend we moved CTSH from our call section to our put section based on the stock's breakdown. Naturally Murphy's law sent tech stocks higher on Monday. Shares are testing short-term overhead resistance near the 10 and 20-dma. I'd still consider new put positions but keep your position size small. Our stop loss is at $75.25. Our first target is $70.25. Our secondary target is $68.00. We still want to avoid holding over earnings. That only gives us a few trading days (earnings are Feb. 7th).

- Suggested Positions (very small positions only!) -

Long the 2011 February $70.00 PUT (CTSH1119N70) Entry @ $1.30

01/24 CTSH opened at $73.13. Put option opened at $1.30 01/22 Moved from call candidate to put play.

Entry on January 24th at $73.13
Earnings Date 02/07/11 (confirmed)
Average Daily Volume = 1.8 million
Listed as a PUT on January 22nd, 2010


Decker's Outdoor Corp. - DECK - close: 72.38 change: -0.52

Stop Loss: 80.25
Target(s): 70.50, 65.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see Trigger

Comments:
01/24 update: We may have to give up on DECK. It looks like we may have missed the entry point. Shares are continue to fall lower without us. I don't see any changes from my prior comments. Right now our plan is to launch small bearish put positions on a bounce at the $77.00 mark. We may need to adjust our entry point toward the $76.00 level instead.

If we are triggered at $77.00 I'm suggesting a stop loss at $80.25. Bear in mind that DECK can be somewhat volatile and readers may want to keep their position size small. Our targets are $70.50 and $65.50.
The Point & Figure chart for DECK is bearish with a $65 target.

Trigger @ $77.00

- Suggested Positions -

Buy the 2011 February $75.00 PUTS (DECK1119N75) current ask $4.00

- or -

Buy the 2011 March $75.00 PUTS (DECK1119O75) current ask $6.00

Entry on January xxth at $ xx.xx
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on January 20th, 2010


Google Inc. - GOOG - close: 611.08 change: - 0.75

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

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

Comments:
01/24 update: The action last week produced a huge failed rally/bearish reversal pattern on GOOG. While I am not surprised by the bounce near $600 and the 50-dma today I think it's temporary. I'm not suggesting new strangle positions at this time.

EXIT PLAN:
We will keep the February strangle position for a few more days and re-evaluate our exit strategy.

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

STRANGLE #2 (February) initial cost $15.10, currently: $5.05 (-66.5%)

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

- AND -

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

01/22: Exit the January strangle at the open.

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: 77.76 change: +0.57

Stop Loss: 80.80
Target(s): 75.00
Current Option Gain/Loss: - 7.8%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
01/24 update: The small cap Russell 2000 index produced a small oversold bounce on Monday that underperformed the NASDAQ and the Dow Jones Industrials. Look for a failed rally near $79.00 as a potential entry point to buy puts.

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


Lockheed Martin Corp. - LMT - close: 78.03 change: -1.19

Stop Loss: 80.25
Target(s): 76.25
Current Option Gain/Loss: + 7.1%
Time Frame: 3 DAYS
New Positions: see below.

Comments:
01/24 update: Our new short-term trade on LMT is off to a good start. Remember, this is a three-day trade. We want to exit on Wednesday at the closing bell to avoid holding over earnings on Thursday morning.

LMT opened at $78.88 and fell to a -1.5% decline. Our target to exit is $76.50.

- Suggested Positions -

Long the 2011 February $75.00 PUT (LMT1119N75) Entry @ $0.70

Entry on January 24th at $78.88
Earnings Date 01/27/11 (confirmed)
Average Daily Volume = 907 thousand
Listed on January 22nd, 2010


Lubrizol Corp. - LZ - close: 103.08 change: +0.30

Stop Loss: 107.25
Target(s): 98.00, 91.00
Current Option Gain/Loss: - 9.3%
Time Frame: 2 weeks
New Positions: see below

Comments:
01/24 update: Monday turned out to be a quiet day for LZ. Shares opened at $103.00 and settled with a very minor gain. I don't see any changes from my weekend comments.

I'm suggesting put positions now. We'll plan on taking profits at $98.00 and at $91.00. Earnings are early February. We do not want to hold over the announcement. I do see potential support at $100.00 and the 200-dma at 97.75. Don't be surprised to see a little oversold bounce at either level.

- Suggested Positions -

Long the 2011 February $100 PUT (LZ1119N100) Entry @ $2.15

Entry on January 24th at $103.00
Earnings Date 02/02/11 (confirmed)
Average Daily Volume = 514 thousand
Listed on January 22nd, 2010


Panera Bread Co. - PNRA - close: 96.96 change: -2.61

Stop Loss: 103.05
Target(s): 95.50, 91.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 weeks
New Positions: Yes

01/24 update: PNRA continued to drop as we expected but shares gapped open lower this morning so our entry point could have been better. PNRA opened at $97.96 and slipped to $96.23 before trimming its losses. If you're nimble enough look for a bounce into the $99-100 zone as a new entry point to buy puts. Our first target is the $95.50 mark. Expect an oversold bounce near $95.00. We do not want to hold over the February earnings report. Traders should be aware that PNRA has higher-than average short interest (about 8% of the float) and a move over $103 could spark some short covering!

- Suggested Positions - (small positions)

Long the 2011 February $95 PUTS (PNRA1119N95) Entry @ $2.85

Entry on January 24th at $97.96
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume = 364 thousand
Listed on January 22nd, 2010


CLOSED BULLISH PLAYS

NetApp, Inc. - NTAP - close: 55.55 change: -0.22

Stop Loss: 54.90
Target(s): 62.25, 64.50
Current Option Gain/Loss: -69.2%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
01/24 update: It's time to hit the eject button on NTAP. Tech stocks were in rally mode on Monday and yet NTAP failed to participate. Shares dipped to $54.96 before paring its losses. I am suggesting an early exit now.

- Suggested Positions (small positions only) -

Long the 2011 February $60 calls (NTAP1119B60) Entry @ $2.50, exit 0.77

01/24: Exit Early. Option @ $0.77 (-69.2%)

chart:

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