Editor's Note:

There was little follow through on Wednesday following the prior session's bullish move higher. Overall it was a quiet session. We are seeing some of our bearish candidates accelerate lower.

-James

Current Portfolio:


CALL Play Updates

Coach Inc. - COH - close: 53.86 change: -0.14

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:
02/02 update: COH continues to consolidate sideways. It will be interesting to see how COH and other retailers react when they announce their January same-store sales figures soon. Many expect the results to be pretty bad given the terrible weather across the country the past couple of weeks.

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: 95.02 change: +0.25

Stop Loss: 87.75
Target(s): 94.75, 99.00
Current Option Gain/Loss: +108.0%, and +75.0%
Time Frame: a few days
New Positions: See below

Comments:
02/02 update: CMP rallied past $95 and posted its seventh gain in the last eight days. Shares are arguably short-term overbought. 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

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: 101.68 change: +0.48

Stop Loss: 95.75
Target(s): 99.90, 103.50
Current Option Gain/Loss: +124.1%, and +242.8%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/02 update: Hmm... be careful here. FDS posted another gain but it might be a short-term top. Shares rallied to $102.95 intraday but was fading lower into the close. Currently our final exit target is $103.50 but I would seriously consider an early exit right here. I am not suggesting new positions at this time.

Small Positions

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

- or -

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

02/02 Consider locking in gains now (Options @ +124% and +242%)
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


Perrigo Co. - PRGO - close: 72.76 change: -1.24

Stop Loss: 69.90
Target(s): 79.00
Current Option Gain/Loss: -24.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/02 update: PRGO opened a little lower this morning and eventually lost -1.6% on the session. I would still consider new bullish positions here or on a dip near $71. The plan was to use small positions to limit our risk. Our target is $79.00.
The Point & Figure chart for PRGO is bullish with an $85 target.

- Small Positions to Limit our Risk -

Long the March $75 calls (PRGO1119C75) Entry @ $2.18

Entry on February 2nd at $73.61
Earnings Date 02/01/11 (confirmed)
Average Daily Volume = 915 thousand
Listed on February 1st, 2010


CBOE Market Volatility Index - VIX - close: 17.30 change: -0.33

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -25.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/02 update: There was no follow through higher on yesterday's bullish breakout for the markets. The trend is up for stocks but I haven't completely given up on a big move in the VIX. Even so I will repeat my comments from Tuesday. 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: 61.61 change: -1.74

Stop Loss: 65.05
Target(s): 60.25, 58.00
Current Option Gain/Loss: +110.0%
Time Frame: 6 trading days
New Positions: see below

Comments:
02/02 update: The failed rally in AAP has turned into profit taking. Shares accelerated lower with a -2.7% loss. I am adjusting our stop loss down to $65.05. I'm not suggesting new positions at current levels but a failed rally near $64 could work as a possible entry point.

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

02/02 New stop loss @ 65.05

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: 65.74 change: -0.12

Stop Loss: 70.10
Target(s): 63.50, 60.25
Current Option Gain/Loss: - 1.4%, and +20.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/02 update: BWA continues to slip and shares have now broken down through the $67 level. BWA might see a little bounce at $65 but the path of least resistance seems to be lower now. Wait for a failed rally in the $67-68 zone before launching new positions. I am adjusting our stop loss down to $70.10. 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

02/02 New stop loss @ 70.10

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: 65.78 change: +0.72

Stop Loss: 67.65
Target(s): 60.10, 58.00
Current Option Gain/Loss: -73.6%, and -45.0%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
02/02 update: CTXS posted another gain and outperformed the NASDAQ. Shares are nearing technical resistance at the 100 and 50-dma. I would wait for this bounce to reverse before initiating new put positions. 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: 58.74 change: -0.51

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:
02/02 update: DCI slipped lower on Wednesday but shares remain stuck inside its $57.50-60.00 trading range. 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: 76.55 change: +0.58

Stop Loss: 80.25
Target(s): 70.50, 65.50
Current Option Gain/Loss: -32.0%, and -14.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/02 update: DECK might struggle if the retailers report disappointing January same-store sales numbers. Granted, January is normally the least important month of the year but the recent weather has kept consumers indoors, which could produce a serious disappointment. Readers might want to buy puts again as soon as this bounce reverses lower.

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: 612.00 change: + 0.96

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:
02/02 update: The bounce in GOOG has stalled. I don't see any changes from my prior comments. No new strangle positions at this time.

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

STRANGLE #2 (February) initial cost $15.10, currently: $1.90 (-87.4%)

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: 79.45 change: -0.30

Stop Loss: 80.25
Target(s): 75.00
Current Option Gain/Loss: -95.7%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
02/02 update: The IWM briefly traded over $80.00 (the high was $80.13) but the rally failed. The lack of follow through on yesterday's bullish move higher is interesting. I'm still cautious on this trade and would not open 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: 97.88 change: +0.92

Stop Loss: 100.05
Target(s): 95.15, 91.00
Current Option Gain/Loss: -40.3%
Time Frame: 3 weeks
New Positions: see below

Comments:
02/02 update: The bounce in PNRA continues. As expected shares hit some resistance near $98. If the market continues to climb we can expect shares to challenge resistance near $100. While the intermediate trend for PNRA is down more conservative traders may want to go ahead and exit early 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