Editor's Note:

The stock market crushed the shorts today with a breakout to new highs. Our CMP play hit our first exit target. While CTSH and MON hit our stops.

-James

Current Portfolio:


CALL Play Updates

Coach Inc. - COH - close: 54.00 change: -0.09

Stop Loss: 52.49
Target(s): 58.50, 62.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/01 update: I was surprised by the relative weakness in COH today. Shares rallied toward resistance near $55 but failed to breakthrough. COH underperformed the RLX retail index. There is no change from my prior comments. A breakout past $55 could be an entry point to buy calls. The Jan. 18th high was $55.27.

I am suggesting a trigger to buy calls at $55.35. If triggered we'll target a move to $58.50 and $62.00 but keep in mind that the $60.00 level could end up being round-number, psychological resistance.

Trigger @ $55.35

- Suggested Positions -

Buy the 2011 March $55.00 calls (COH1119C55)

- or -

Buy the 2011 March $57.50 calls (COH1119C57.5)

Entry on February xxth at $ xx.xx
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on January 31st, 2011


Compass Minerals - CMP - close: 94.77 change: +2.90

Stop Loss: 87.75
Target(s): 94.75, 99.00
Current Option Gain/Loss: +100.0%, and +65.0%
Time Frame: a few days
New Positions: See below

Comments:
02/01 update: Target achieved. The market's big rally on Tuesday was enough to push CMP to new highs. Shares hit $94.84 this afternoon. Our first exit target was hit at $94.75. I am raising our stop loss to $89.85 and raising. Our final exit target is $99.00. If you're looking for a new entry point I'd wait for a dip near $92.00-92.50ish.

Don't forget that earnings are about a week away. We want to exit in front of earnings.

- Suggested Positions -

Long the 2011 February $95.00 calls (CMP1119B95) Entry @ $1.25

- or -

Long the 2011 March $95 calls (CMP1119C95) Entry @ $2.00

02/01 Target Hit @ 94.75. Feb. call @ $2.50 (+100%)
Mar. call @ $3.30 (+65%)
02/01 New stop loss @ 89.85

chart:

Entry on January 28th at $91.00
Earnings Date 02/08/11 (confirmed)
Average Daily Volume = 210 thousand
Listed on January 27th, 2010


FactSet Research Systems - FDS - close: 101.20 change: +0.40

Stop Loss: 95.75
Target(s): 99.90, 103.50
Current Option Gain/Loss: +51.7%, and +185.7%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/01 update: FDS continues to climb and hit $101.99 intraday. Volume was a little light today. Right now our exit target is $103.50. More aggressive traders may want to aim higher. I am not suggesting new positions at this time.

FYI: I can't explain the ridiculously wide spreads on some of FDS' options today.

Small Positions

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

- or -

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

01/29 Consider an Early Exit now!
01/27 New stop loss @ 95.75
01/27 1st Target Hit @ 99.90. Feb. $95 call @ $4.25 (+46.5%)
01/27 1st Target Hit @ 99.90. Feb. $100 call @ $1.45 (+107%)

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


CBOE Market Volatility Index - VIX - close: 17.63 change: -1.90

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

Comments:
02/01 update: The market's bullish breakout past resistance today looks pretty convincing. This move could be the death knell for this trade on the VIX. More conservative traders will want to consider an early exit now to preserve capital. I am not suggesting new positions at this time.

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

Advance Auto Parts Inc. - AAP - close: 63.35 change: -0.59

Stop Loss: 66.15
Target(s): 60.25, 58.00
Current Option Gain/Loss: +20.0%
Time Frame: 6 trading days
New Positions: see below

Comments:
02/01 update: Our AAP put play is off to a good start. Shares completely ignored the market's rally today. I don't see any changes from my prior comments. While AAP still looks like a put candidate we might have better luck trading calls given this market environment.

We want to exit ahead of the earnings announcement in a few days. The Point & Figure chart for AAP is bearish with a $52 target.

- Suggested Small Positions -

Long the 2011 Feb. $60.00 puts (AAP11N60) Entry @ $0.50

Entry on February 1st at $64.22
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on January 31st, 2011


BorgWarner Inc. - BWA - close: 67.28 change: -0.12

Stop Loss: 71.25
Target(s): 63.50, 60.25
Current Option Gain/Loss: -11.9%, and - 4.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/01 update: I am shocked that BWA underperformed on Tuesday. Yes, the pattern is bearish but the market's rally was so widespread I was expecting BWA to participate. We can still open put positions here at current levels but the market's trend is clearly up and we might have better luck on bullish candidates instead. Our targets are $63.50 and $60.25. FYI: The Point & Figure chart for BWA has turned bearish.

Use small positions to limit our risk.

- (small positions) -

Long the Feb. $65 PUTs (BWA1119N65) Entry @ $1.42

- or -

Long the Mar. $65 PUTs (BWA1119O65) Entry @ $2.25

Entry on January 31st at $67.77
Earnings Date 02/10/11 (confirmed)
Average Daily Volume = 2.0 million
Listed on January 29th, 2010


Citrix Systems - CTXS - close: 65.06 change: +1.88

Stop Loss: 67.65
Target(s): 60.10, 58.00
Current Option Gain/Loss: -63.1%, and -32.5%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
02/01 update: CTXS bounced back toward resistance in the $65-66 area. This looks like a new entry point to buy puts but honestly given the market's breakout higher today I would be reluctant to buy puts. We're probably better off finding new bullish candidates instead. Previously I suggested that readers buy half their position at the start and if we see another failed rally near $66 then we can buy our second half. Our targets are $60.10 and $58.00.

- (small positions) -

Long the Feb. $60 PUTs (CTXS1119N60) Entry @ $0.95

- or -

Long the Mar. $60 PUTs (CTXS1119O60) Entry @ $2.00

Entry on January 31st at $63.43
Earnings Date 01/26/11
Average Daily Volume = 3.2 million
Listed on January 29th, 2010


Donaldson Company, Inc. - DCI - close: 59.25 change: +0.65

Stop Loss: 60.35
Target(s): 52.75, 50.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/01 update: DCI added +1.1% with a bounce back toward short-term resistance near $59.50. If this stock can breakout past $60.00 we will want to consider buying call options instead. For now the plan is to buy puts with a trigger to initiate positions at $57.45. If triggered we'll aim for a drop to $52.75 and $50.50. I would keep your position size small to limit our risk.

Trigger @ 57.45 (Small Positions)

- Suggested Positions -

Buy the 2011 March $55 puts (DCI1119O55)

Entry on February xxth at $ xx.xx
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 208 thousand
Listed on January 31st, 2011


Decker's Outdoor Corp. - DECK - close: 75.97 change: +2.58

Stop Loss: 80.25
Target(s): 70.50, 65.50
Current Option Gain/Loss: -20.7%, and - 8.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/01 update: Uh-oh! The bounce today erased our gains. Shares of DECK are nearing resistance in the $77-78 zone. The bigger picture is still bearish but given the market's action today readers may want to scale back on their positions and/or lower their stop losses. I am not suggesting new positions at this time.

Our targets are $70.50 and $65.50. The Point & Figure chart for DECK is bearish with a $65 target.

- Suggested Positions -

Long the 2011 February $75.00 PUTS (DECK1119N75) Entry @ $2.65

- or -

Long the 2011 March $75.00 PUTS (DECK1119O75) Entry @ $4.80

01/27 DECK hit our trigger to buy puts at $77.00

Entry on January 27th at $77.00
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on January 20th, 2010


Google Inc. - GOOG - close: 611.04 change: +10.68

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:
02/01 update: GOOG bounced from the $600 level but shares face resistance near $620 and $640. I don't see any changes from my weekend comments.

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

STRANGLE #2 (February) initial cost $15.10, currently: $2.35 (-84.4%)

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

- AND -

2011 February $580 put (GOOG1119N580) 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: 79.75 change: +1.80

Stop Loss: 80.25
Target(s): 75.00
Current Option Gain/Loss: -93.3%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
02/01 update: Stocks saw a huge rally on Tuesday and the Russell 2000 index added +2.2%. Meanwhile the IWM rallied to resistance at the $80.00 mark. This is it. It's do or die time for our put play with a stop loss at $80.25. I am not suggesting new positions at this time. Nimble traders may want to buy calls if the IWM trades above $80.75.

Small Position only

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

01/29 New stop loss @ 80.25

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


Panera Bread Co. - PNRA - close: 96.96 change: +1.40

Stop Loss: 100.05
Target(s): 95.15, 91.00
Current Option Gain/Loss: -22.8%
Time Frame: 3 weeks
New Positions: see below

Comments:
02/01 update: PNRA tried to keep pace with the market's rebound and shares added +1.45. PNRA might see some resistance near $98 and should definitely see some resistance near $100.00. However, more conservative traders may want to exit right now. I am not suggesting new bearish positions at this time.

- Suggested Positions - (small positions)

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

01/29 New stop loss @ 100.05
01/28 1st Target Hit @ 95.15, option @ $3.20 (+12.2%)
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

Cognizant Technology Solutions - CTSH - close: 75.35 change: +2.40

Stop Loss: 75.25
Target(s): 70.25, 68.00
Current Option Gain/Loss: -53.8%
Time Frame: exit ahead of earnings
New Positions: see below

Comments:
02/01 update: The market's big rally through resistance was enough to lift CTSH past resistance. Shares hit our stop loss at $75.25. I would keep an eye on the $76.50 level, which was tough resistance in early January. A breakout there could be big news for CTSH.

- Suggested Positions (very small positions only!) -

2011 February $70.00 PUT (CTSH1119N70) Entry @ $1.30, Exit @ 0.60 (-53.8%)

02/01 Stopped out. option @ $0.60 (-53.8%)
01/24 CTSH opened at $73.13. Put option opened at $1.30
01/22 Moved from call candidate to put play.

chart:

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


Monsanto Co. - MON - close: 76.05 change: +2.67

Stop Loss: 75.51
Target(s): 69.00, 66.00
Current Option Gain/Loss: -55.0%, and -32.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/01 update: The rally carried shares of MON through resistance in the $75 area and hit our stop loss at $75.51. MON closed at new relative highs. This could be a bullish entry point to buy calls.

- Suggested Positions -

2011 February $70 PUT (FDS1119N70) Entry @ $1.00, exit @ $0.45 (-55%)

- or -

2011 March $70 PUT (FDS1119O70) Entry @ $1.85, exit @ $1.25 (-32.4%)

02/01 Stopped out. MON @ 75.51. Option at -55% and -32.4%
01/29 MON is offering a new entry point to buy puts.

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