Editor's Note:

The FOMC decision was a nonevent and stocks continue to drift higher as we head toward month end. Are we witnessing some month-end window dressing? The bounce today lifted MON to our entry point to buy puts. PNRA almost hit our first target. I have updated our stop and targets on PNRA. Our LMT play is closed as we planned to exit ahead of earnings.

-James

Current Portfolio:


CALL Play Updates

FactSet Research Systems - FDS - close: 98.49 change: +1.06

Stop Loss: 94.75
Target(s): 99.90, 103.50
Current Option Gain/Loss: +27.5%, and +50.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
01/26 update: The rally continues for FDS and shares hit a new high at $99.23 this morning. Our options saw nice improvements thanks to today's rally. I don't see any changes from my prior comments. 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: 94.31 change: +0.32

Stop Loss: 91.75
Target(s): 99.90, 104.75
Current Option Gain/Loss: -41.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/26 update: I have to be honest here. FDX has been a terrible stock for option owners. We would have been better off selling options these past six weeks. Eventually this stock is going to move and shares are nearing the trendline of higher lows. So a rally or a breakdown should be imminent. I would be 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: 62.00 change: +0.60

Stop Loss: 59.90
Target(s): 64.75, 67.50
Current Option Gain/Loss: -31.9%, and -23.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/26 update: RIMM has now bounced twice near $60.75 in the last two days. Unfortunately RIMM still has a short-term trend of lower highs. I remain cautious and would not open new positions here. If the 40 and 50-dma fail then it will be a quick drop to the $60.00 level. 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


CBOE Market Volatility Index - VIX - close: 16.64 change: -0.95

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -18.7%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
01/26 update: Our VIX play is not off to a great start but I see today's gap down at the open this morning as merely a better entry point to open positions. The VIX opened at 17.00 and then slipped to a -5% decline for the day. Our option opened at $1.60. I would still consider call positions here. Or you could wait for a dip closer to the 16.00-15.50 zone.

Officially we're listing this play without a stop loss but more conservative traders may want to consider a stop loss under the recent lows near $15.30. We have two targets to take profits at 24.00 and at 28.00.

- Suggested Positions -

Long the 2011 March $22.50 calls (VIX1116C22.5) Entry @ $1.60

Entry on January 26th at $17.00
Earnings Date --/--/--
Average Daily Volume =
Listed on January 25th, 2010


PUT Play Updates

Cognizant Technology Solutions - CTSH - close: 73.22 change: -0.13

Stop Loss: 75.25
Target(s): 70.25, 68.00
Current Option Gain/Loss: -11.5%
Time Frame: exit ahead of earnings
New Positions: see below

Comments:
01/26 update: CTSH did not participate in the market's rebound. Shares spent the session churning sideways. I have to correct myself. We've been playing calls for so long that yesterday when I said very small "bullish" positions I meant to say "bearish" positions. We can look for failed rallies in the $74-75 zone as an entry point for very small bearish positions. 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: 75.74 change: +1.61

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:
01/26 update: The oversold bounce in DECK continues. Aggressive traders may want to buy puts now with the bounce to $76.00 today. I am suggesting we initiate bearish positions on a bounce to $77.00.

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: 616.50 change: - 3.41

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:
01/26 update: The bounce in GOOG stalled near the $620 level. There is no change from my prior comments.

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: $2.95 (-80.4%)

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: 79.12 change: +1.24

Stop Loss: 80.80
Target(s): 75.00
Current Option Gain/Loss: -44.2%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
01/26 update: The stock market just refuses to correct. Small caps rallied this morning and the IWM managed to breakout above some its short-term moving averages (like the 10, 20 and 30-dma). This is short-term bullish. I still expect to see resistance near $80.00 but readers may want to wait for the IWM to fail near $80 before initiating new bearish positions.

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


Monsanto Co. - MON - close: 73.54 change: +1.34

Stop Loss: 75.51
Target(s): 69.00, 66.00
Current Option Gain/Loss: -17.0%, and - 8.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/26 update: The bounce in MON continues. Shares opened at $72.28 and then spent the first half of the day hovering near $73.00 before inching higher. Our trigger to buy puts was hit at $73.00. MON should have resistance in the $74.00-75.00 zone. More conservative traders may want to wait for MON to fail first before initiating positions. Our stop loss is at $75.51. Our targets are $69.00 and $66.00.

- Suggested Positions -

Long the 2011 February $70 PUT (FDS1119N70) Entry @ $1.00

- or -

Long the 2011 March $70 PUT (FDS1119O70) Entry @ $1.85

chart:

Entry on January 26th at $73.00
Earnings Date 03/31/11 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on January 24th, 2010


Panera Bread Co. - PNRA - close: 96.10 change: -1.52

Stop Loss: 100.55
Target(s): 95.50, 91.00
Current Option Gain/Loss: + 5.2%
Time Frame: 3 weeks
New Positions: Yes

Comments:
01/26 update: PNRA is still underperforming the market. Shares dipped to $95.63 intraday before bouncing from the rising 100-dma. Our first target has been $95.50. More conservative traders will want to consider taking profits right here and now! I am moving our first target from $95.50 to $95.15. I'm also moving our stop loss down to $100.55. No new positions at this time.

- Suggested Positions - (small positions)

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

01/26 New stop loss @ 100.55, target adjusted from 95.50 to 95.15

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

Lockheed Martin Corp. - LMT - close: 78.39 change: -0.68

Stop Loss: 80.25
Target(s): 76.25
Current Option Gain/Loss: -14.2%
Time Frame: 3 DAYS
New Positions: see below.

Comments:
01/26 update: Our time on this short-term LMT play is up. The plan was to exit positions today at the closing bell to avoid holding over earnings. Unfortunately LMT didn't see the pull back I was expecting.

- Suggested Positions -

Long the 2011 February $75.00 PUT (LMT1119N75) Entry @ $0.70, exit 0.60 (-14.2%)

01/26 Planned exit. Option @ 0.60 (-14.2%)

chart:

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