Editor's Note:

The rally continues with financials powering the move higher on Monday. Our COH call play has been triggered. Our BWA put play was stopped out thanks to an upgrade this morning. I am dropping KSS as a put with the trade unopened.

-James

Current Portfolio:


CALL Play Updates

Caterpillar Inc. - CAT - close: 100.47 change: +0.88

Stop Loss: 93.90
Target(s): 99.90, 104.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/07 update: Caterpillar continues to climb and managed to breakout and close over round-number resistance at the $100.00 mark. There is no change from my prior comments. We want to wait for a dip and buy calls at $96.50. Our targets are $99.90 and $104.00.


The Point & Figure chart for CAT is bullish with a $112 target.

Trigger @ 96.50

Buy the March $100 calls (CAT1119C100) current ask $2.92

Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 5th, 2010


Compass Minerals - CMP - close: 94.19 change: +0.32

Stop Loss: 91.90
Target(s): 94.75, 99.00
Current Option Gain/Loss: + 56.0%, and +45.0%
Time Frame: a few days
New Positions: See below

Comments:
02/07 update: CMP spent Monday consolidating sideways under the $94 level. Tomorrow is our last day. Given our time frame we'll raise the stop loss to $91.90. We will plan to exit on Tuesday, Feb. 8th at the closing bell to avoid holding over CMP's earnings report. I am not suggesting new bullish positions at this time.

- Suggested Positions -

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

- or -

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

02/07 New stop loss @ 91.90
02/05 Two days left. Plan to exit on Feb. 8th at the close
02/03 New stop loss @ 89.90
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


Coach Inc. - COH - close: 55.89 change: +1.30

Stop Loss: 52.49
Target(s): 58.50, 62.00
Current Option Gain/Loss: + 7.1%, and +23.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/07 update: COH has finally broken out above resistance near $55.00 and its 50-dma. Shares hit our trigger to buy calls at $55.35. The play is now open with a stop loss at $52.49. I would still consider new positions here or on a dip back toward $55.00. Keep in mind that the $60.00 level could end up being round-number, psychological resistance.

- Suggested Positions -

Long the 2011 March $55.00 calls (COH1119C55) Entry @ $2.10

- or -

Long the 2011 March $57.50 calls (COH1119C57.5) Entry @ $0.85

chart:

Entry on February 7th at $55.35
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on January 31st, 2011


Donaldson Company, Inc. - DCI - close: 59.56 change: +0.13

Stop Loss: 57.40
Target(s): 62.50, 64.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/07 update: DCI is still bouncing around its trading range but shares did test resistance near $60.00 today. Currently the plan is to wait for a breakout past resistance near $60.00.

I am suggesting a trigger to buy calls at $60.35. If triggered we'll use a stop at $57.40. Our targets are $62.50 and $64.75. We will plan to exit ahead of the late February earnings report.

Trigger @ 60.35 (Small Positions)

- Suggested Positions -

Buy the 2011 March $60 calls (DCI1119C60) Current ask $1.75

02/05 Switched from puts to calls. Trigger @ 60.35

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


FactSet Research Systems - FDS - close: 102.83 change: +0.92

Stop Loss: 97.40
Target(s): 99.90, 103.50
Current Option Gain/Loss: +124.1%, and +274.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/07 update: FDS rallied toward last week's highs near $103 and stalled. There is no change from my prior comments. The trend is up but FDS looks a little overbought. Our final exit target is $103.50. More aggressive traders may want to aim for the $105 area or higher. I am adjusting our stop loss to $97.40.

Small Positions

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

- or -

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

02/07 New stop loss @ 97.40
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


PACCAR Inc. - PCAR - close: 50.60 change: +0.10

Stop Loss: 49.45
Target(s): 53.85
Current Option Gain/Loss: +13.3%, and + 0.0%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/07 update: Our aggressive buy the dip near support play in PCAR is off to an okay start. Shares opened at $50.60 and closed with a +0.7% gain, which outperformed the S&P 500. I would still consider buying calls on a dip near $50.00. Our exit target is $53.85. This should be a short-term trade. Aggressive traders could use February calls. I'm listing both February and March. Just remember that Februarys expire in two weeks.

Note: A lot of the option strikes are odd. PCAR must have had some sort of dividend.

Open Small Positions Now

Long the February $49.70 call (PCAR1119B49.7) Entry @ $1.50

- or -

Long the March $55 call (PCAR 1119C55) Entry @ $0.35

Entry on February 7th at $50.60
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on February 5th, 2010


CBOE Market Volatility Index - VIX - close: 16.49 change: +0.35

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -46.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/07 update: After five declines in a row the VIX finally bounced after testing the previous week's low. There is no change from my prior comments. I would consider new bullish positions on a dip anywhere near the 15.50 area. Just because the VIX bounced near the 15.00-15.50 level in the past doesn't mean it can go crashing through it but that would be a good area to speculate on a rebound. I will point out that between 2005 and 2006 the VIX was pretty much dead, limping along the 10.00 area for two years.

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


Wynn Resorts - WYNN - close: 118.01 change: -0.05

Stop Loss: 117.40
Target(s): 129.00, 135.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see TRIGGER

Comments:
02/07 update: WYNN is still churning inside the $114-121 zone. There is no change from my prior comments. I am suggesting a trigger to launch bullish positions at $122.00. If triggered our targets are $129.00 and $134.50.

Trigger @ $122.00

- Suggested Positions -

Buy the March $130 calls (WYNN1119C130)

Entry on February xxth at $ xx.xx
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 3rd, 2010


PUT Play Updates

Advance Auto Parts Inc. - AAP - close: 64.50 change: +0.52

Stop Loss: 65.05
Target(s): 60.25, 58.00
Current Option Gain/Loss: - 40.0%
Time Frame: 6 trading days
New Positions: see below

Comments:
02/07 update: We've got two days left for this trade but it may not survive that long. Shares continue to bounce and AAP hit $65.03 intraday before failing under technical resistance at its 50-dma. Our stop loss is at $65.05. More conservative traders may want to exit early. Right now our plan is to exit on Wednesday, Feb. 9th, at the closing bell to avoid holding over earnings.

- 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


Citrix Systems - CTXS - close: 66.33 change: -0.07

Stop Loss: 68.05
Target(s): 60.10, 58.00
Current Option Gain/Loss: -84.2%, and -55.0%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
02/07 update: CTXS is still trying to inch higher but didn't make much progress today. I do not see any changes from my weekend comments. The stock is still trading under what looks like significant resistance near the $67.50 area. I did seriously consider an early exit for this trade and more cautious traders may want to exit now. I am not suggesting new positions at this time. Please note that I'm adjusting our stop loss to $68.05. Our initial plan was to start with small (half-sized) positions to limit our risk.

- (small positions) -

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

- or -

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

02/05 Adjusted stop loss to $68.05

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


Google Inc. - GOOG - close: 614.30 change: + 3.32

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:
02/07 update: GOOG's +0.5% bounce was in-line with the NASDAQ's rally today. There is no change from my weekend comments.

The lack of any real movement in GOOG has crushed our strangle trade. The options are just evaporating toward the zero line. We've got two weeks left before February options expire? What are the odds that GOOG is going to move more than +/- 7% in the next two weeks?

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: $0.80 (-94.7%)

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: 80.66 change: +0.79

Stop Loss: --.--
Target(s): 75.00
Current Option Gain/Loss: -100.0%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
02/07 update: The small caps outperformed the major averages today with the Russell 2000 index adding +1%. This pushed the IWM up through resistance near $80.00, which we knew was a risk. I will repeat my prior comments that more nimble traders may want to buy calls on this move higher.

I am not suggesting new bearish plays at this time.

Small Position only

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

02/03 Remove the stop loss
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


CLOSED BULLISH PLAYS

Perrigo Co. - PRGO - close: 71.42 change: -0.25

Stop Loss: 69.90
Target(s): 79.00
Current Option Gain/Loss: -51.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/07 update: Big picture the trend for PRGO is up but short-term the stock is struggling. Shares remain inside the $70-74 range but if the stock can't rally with the market hitting new highs then when will PRGO rally?

I am suggesting an early exit now to cut our losses. I would keep PRGO on your watch list since a dip or a bounce near $68.00, which should be much stronger support, would be an attractive entry point. The initial plan was to use small positions to limit our risk.

- Small Positions to Limit our Risk -

March $75 calls (PRGO1119C75) Entry @ $2.18, Exit @ $1.05 (-51.8%)

02/07 Exit Early. Option @ $1.05 (-51.8%)

chart:

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


CLOSED BEARISH PLAYS

BorgWarner Inc. - BWA - close: 70.47 change: +3.44

Stop Loss: 70.10
Target(s): 63.50, 60.25
Current Option Gain/Loss: -50.7%, and -33.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/07 update: Our BWA has been stopped out. Before the opening bell this morning JP Morgan upgraded BWA to an overweight and shares surged past several layers of resistance. The stock hit our stop loss at $70.10.

Use small positions to limit our risk.

- (small positions) -

Feb. $65 PUTs (BWA1119N65) Entry @ $1.42, Exit @ 0.70 (-50.7%)

- or -

Mar. $65 PUTs (BWA1119O65) Entry @ $2.25, Exit @ 1.50 (-33.3%)

02/07 Stopped out @ 70.10. Options @ -50.7% and -33.3%
02/02 New stop loss @ 70.10

chart:

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


Kohl's Corp. - KSS - close: 51.77 change: +0.59

Stop Loss: 52.25
Target(s): 47.00, 45.50
Current Option Gain/Loss: Unopened
Time Frame: 3 weeks
New Positions: Yes, see trigger

Comments:
02/07 update: I am giving up on KSS as a bearish play, at least for now. The stock is still underperforming the major averages and still has a trend of lower highs but in this environment bearish plays will likely underperform.

Our trade never opened (trigger at 49.75).

Entry on February xxth at $ xx.xx
Earnings Date 02/24/11 (confirmed)
Average Daily Volume = 4.9 million
Listed on February 2nd, 2010