Editor's Note:

The VIX volatility index has been slipping lower the last couple of days but volatility for individual stocks is rising. I warned readers a few days ago that trading was going to get more dangerous and that we'd likely see a lot more volatility in individual names.

Today LZ showed some volatility with an unexpected rally higher. Shares hit our stop loss.

-James

Current Portfolio:


CALL Play Updates

FactSet Research Systems - FDS - close: 97.43 change: +0.45

Stop Loss: 94.75
Target(s): 99.90, 103.50
Current Option Gain/Loss: + 6.8%, and - 7.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
01/25 update: Today provided a good entry point on FDS. Shares gapped open lower ($96.64), bounced near support around $96 and closed higher. I would still consider new positions here. Our plan was to keep positions small to limit our risk. Our first target to take profits is at $99.90. I'm adding a secondary target at $103.50.
The Point & Figure chart for FDS is bullish with a $105 target.

Small Positions

Long the 2011 February $95 call (FDS1119B95) Entry @ $2.90

- or -

Long the 2011 February $100 call (FDS1119B100) Entry @ $0.70

Entry on January 25th at $96.64
Earnings Date 03/16/11 (unconfirmed)
Average Daily Volume = 181 thousand
Listed on January 24th, 2010


FedEx Corp. - FDX - close: 93.99 change: -0.38

Stop Loss: 91.75
Target(s): 99.90, 104.75
Current Option Gain/Loss: -41.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/25 update: Tuesday was another quiet day for FDX. Shares are still trading above their trendline of higher lows. Shares should have support in the $93-92 zone. A breakdown under $92 could be bad news. The lack of follow through on yesterday's bounce makes me reluctant to launch new positions.

- 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: 61.40 change: -1.29

Stop Loss: 59.90
Target(s): 64.75, 67.50
Current Option Gain/Loss: -43.3%, and -30.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/25 update: Uh-oh! It was not a good day for RIMM. Shares erased yesterday's gains. The lack of follow through on Monday's bounce is worrisome. The next level of support is the 50-dma near $60.40 and then at the $60.00 level. I am not suggesting new positions at this time and honestly after today's action I would be tempted to exit early. 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: 73.35 change: -0.92

Stop Loss: 75.25
Target(s): 70.25, 68.00
Current Option Gain/Loss: - 7.6%
Time Frame: exit ahead of earnings
New Positions: see below

Comments:
01/25 update: There was no follow through on yesterday's bounce, which is a good sign for our put positions. More conservative traders might want to consider inching their stops down toward the $74.75 area. I would still consider very small bullish positions here. 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: 74.13 change: +1.75

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:
01/25 update: DECK is seeing a little oversold bounce with today's +2.4% gain. Currently our plan is to open bearish put positions on a bounce to $77.00. I'm keeping an eye on the 50-dma (77.30) as overhead resistance. Nimble traders may want to consider positions early on a bounce near $76.00 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: 619.91 change: + 8.83

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:
01/25 update: GOOG delivered a bounce from its dip near $610 doay. Shares look poised to bounce back toward resistance near $640 again. Part of me wonders how much of this might be end of the month window dressing.

We're not interested in the day to day churn in GOOG. What we want to see is this stock pick a direction and run with it. Right now GOOG news to either breakout past $640 or breakdown under $600. 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: $3.25 (-78.4%)

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: 77.88 change: +0.12

Stop Loss: 80.80
Target(s): 75.00
Current Option Gain/Loss: -13.9%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
01/25 update: The IWM found support near $77 again. The small caps look ready to bounce. Watch 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: 79.07 change: +1.04

Stop Loss: 80.25
Target(s): 76.25
Current Option Gain/Loss: -21.4%
Time Frame: 3 DAYS
New Positions: see below.

Comments:
01/25 update: Hmm... it might be time to consider an early exit. We already have plans to exit on Wednesday at the closing bell but readers might want to exit tomorrow morning. Today's big bounce in LMT was unexpected. Shares could rally right back toward resistance at $80 and just hover there until the earnings report on Thursday. No new positions at this time. Remember, our plan is to exit at the close on Wednesday. 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


Monsanto Co. - MON - close: 72.18 change: +1.06

Stop Loss: 75.51
Target(s): 69.00, 66.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
01/25 update: So far so good. We were expecting MON to bounce. The plan is to buy puts at $73.00. More conservative traders could wait and watch for a rebound closer to $74 or $75. If triggered at $73.00 we'll target a drop to $69.00 and $66.00.

Trigger to buy PUTS @ $73.00

- Suggested Positions -

Buy the 2011 February $70 PUT (FDS1119N70) -only four weeks left

- or -

Buy the 2011 March $70 PUT (FDS1119O70)

Entry on January xxth at $ xx.xx
Earnings Date 03/31/11 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on January 24th, 2010


Panera Bread Co. - PNRA - close: 97.62 change: +0.66

Stop Loss: 103.05
Target(s): 95.50, 91.00
Current Option Gain/Loss: -10.5%
Time Frame: 3 weeks
New Positions: Yes

Comments:
01/25 update: PNRA delivered a little oversold bounce after yesterday's drop. I wouldn't be surprised to see a rebound closer to $100. I would use a rally into the $99-100 range 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 BEARISH PLAYS

Lubrizol Corp. - LZ - close: 107.46 change: +4.38

Stop Loss: 107.25
Target(s): 98.00, 91.00
Current Option Gain/Loss: -48.8%
Time Frame: 2 weeks
New Positions: see below

Comments:
01/25 update: Ouch! What happened to LZ today? I couldn't find any news to explain the +4.2% rally and breakout past resistance at its 50 and 100-dma. Shares hit our stop loss at $107.25 closing this trade. LZ also broke the multi-week trendline of lower highs.

- Suggested Positions -

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

01/25 Stopped out. Option exit near $1.10 (-48.8%)

chart:

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