Editor's Note:

Inflation remains a popular topic on Wall Street. Grain commodities were on the rise. Stocks trended lower after hitting new two-year highs yesterday. There is little change on our play list. However, our time frame on the WYNN has changed drastically. The company now expects to report earnings tomorrow night. We need to exit tomorrow at the close.

-James

Current Portfolio:


CALL Play Updates

Caterpillar Inc. - CAT - close: 99.79 change: -0.82

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:
02/09 update: CAT underperformed the DJIA today with a -0.8% decline. Shares remain very short-term overbought and we'd like to see the dip continue. Right now I am aiming to 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


Coach Inc. - COH - close: 57.41 change: +0.20

Stop Loss: 53.49
Target(s): 58.50, 62.00
Current Option Gain/Loss: +57.1%, and +111.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/09 update: COH eked out another gain after hitting $57.80 intraday this morning. There is no change from my prior comments. Our first exit target is $58.50. I would still consider new positions 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

02/08: New stop loss @ 53.49

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


Costco Wholesale Corp. - COST - close: 74.67 change: +0.08

Stop Loss: 72.95
Target(s): 79.75
Current Option Gain/Loss: Unopened
Time Frame: 3+ weeks
New Positions: Yes, see Trigger

Comments:
02/09 update: COST spent the day churning sideways between $74 and $75. There is no change from my prior comments. I would be tempted to buy calls right now but COST has significant resistance near $75.00 dating back to early 2008. The old high was $75.23. I am suggesting we use a trigger to buy calls on a breakout at $75.50. If triggered our target is $79.75. However, we will plan to exit ahead of COST's early March earnings report. That gives us three or four weeks.

The Point & Figure chart for COST is bullish with an $88 target.

Trigger @ 75.50

- Suggested Positions -

Buy the March $75 calls (COST1119C75) current ask $1.39

Entry on February xxth at $ xx.xx
Earnings Date 03/02/11 (confirmed)
Average Daily Volume = 5.8 million
Listed on February 7th, 2010


Donaldson Company, Inc. - DCI - close: 59.73 change: -0.20

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:
02/09 update: DCI is still building steam under resistance at $60.00. There is no change from my previous comment. 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


Fastenal Co. - FAST - close: 62.68 change: +0.14

Stop Loss: 58.70
Target(s): 64.75, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/09 update: FAST extended its gains to five days in a row (and up seven out of the last eight sessions). The stock looks a little overbought here. We want to see a pull back.

I am suggesting we wait for a dip and use a trigger at $61.00 to open bullish call positions. If triggered we'll use a stop loss at $58.70. Our targets are $64.75 and $67.25. FYI: The Point & Figure chart for FAST is bullish with a $73 target. Readers may want to keep in mind that the most recent data listed short interest at 11.4% of the 132 million-share float.

Trigger @ 61.00

- Suggested Positions -

Buy the March $60 calls (FAST1119C60) current ask $3.30

- or -

Buy the March $65 calls (FAST1119C65) current ask $0.75

Entry on February xxth at $ xx.xx
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 8th, 2010


PACCAR Inc. - PCAR - close: 50.84 change: -0.65

Stop Loss: 49.45
Target(s): 53.85
Current Option Gain/Loss: - 6.6%, and -28.5%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/09 update: PCAR underperformed on Wednesday with a -1.2% decline. Readers could buy calls on this dip or wait for a pull back closer to the $50.00 mark. 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: 15.87 change: +0.06

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -53.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/09 update: Wednesday was a quiet day for the VIX with the index bouncing along the 16.00 level. I have been suggesting that we could open new positions near the 15.50 area. Now we have a new low as a reference point and traders could place their stop loss under 14.86. Officially we don't have a stop loss on this aggressive, speculative trade. I would start with very small positions.

Earlier Comments:
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: 121.53 change: +1.35

Stop Loss: 115.80
Target(s): 129.00, 135.00
Current Option Gain/Loss: - 7.2%
Time Frame: -- time is up --
New Positions: see below

Comments:
02/09 update: Warning! The time frame on our WYNN trade just changed today. Previous data listed WYNN's earnings report around Feb. 24th. Suddenly the company is expected to report earnings tomorrow (Feb. 10th) after the market's closing bell. Aggressive traders might want to risk holding over the report. We do not want to hold over the announcement. Thus, we need to plan on exiting this position tomorrow (Thursday) at the close.

- Suggested Positions -

Long the March $130 calls (WYNN1119C130) Entry @ 2.75

02/09 Time frame changed. WYNN updated their earnings release date. Prepare to exit tomorrow on Feb. 10th at the closing bell
02/08 New stop loss @ 115.80, triggered at $122.00

Entry on February 8th at $122.00
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 3rd, 2010


PUT Play Updates

Citrix Systems - CTXS - close: 65.17 change: -0.50

Stop Loss: 68.05
Target(s): 60.10, 58.00
Current Option Gain/Loss: -89.4%, and -50.0%
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
02/09 update: CTXS is still slowly fading lower after Monday's failed rally but I remain very cautious here. No new positions at this time. 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: 616.50 change: - 1.88

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:
02/09 update: This sideways drift in GOOG has killed our strangle play. At this point our strangle trade is dead in the water and has very little hope before expiration.

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: $0.45 (-97.0%)

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: 80.87 change: -0.36

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

Comments:
02/09 update: There is no change from my prior comments on this IWM put play. Our put has evaporated with the breakout higher. The trend in the IWM is back to being bullish. I'm more interested in launching call positions at this time.

Our put play has been dead for a couple of days now so we'll ride it out through expiration and see what happens.

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