Editor's Note:

Our DCI play showed some relative strength ahead of earnings. Meanwhile the rest of the market was drifting lower after new multi-year highs yesterday. Our NKE buy-calls-on-the-dip trade has been opened.

-James

Current Portfolio:


CALL Play Updates

Ashland Inc. - ASH - close: 58.96 change: -0.21

Stop Loss: 54.95
Target(s): 63.00
Current Option Gain/Loss: + 3.5%, and -13.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: The market's mild decline produced a similar move in ASH. I would still consider new positions here or on a dip near $58.00. We'll use a stop loss at $54.95 but more conservative traders could probably get away with a tighter stop loss. Our first target is the $63.00 level.

The Point & Figure chart for ASH is bullish with a $83 target.

- Suggested Positions -

Long the March $60 calls (ASH1119C60) Entry @ $1.40

- or -

Long the April $60 calls (ASH1116D60) Entry @ $2.55

Entry on February 14th at $58.30
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 12th, 2010


Caterpillar Inc. - CAT - close: 103.00 change: -0.26

Stop Loss: 97.90
Target(s): 104.75, 107.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/15 update: CAT is still hanging tough and not seeing a lot of profit taking. Currently our plan is to buy calls on a dip at $101.00 with a stop loss at $97.90.

Trigger @ 101.00

Buy the March $105 calls (CAT1119C105) current ask $2.92

02/12 Adjusted our trigger, targets, stop loss and strike price.

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


Clean Harbors, Inc. - CLH - close: 92.83 change: -0.16

Stop Loss: 87.95
Target(s): 94.95, 99.00
Current Option Gain/Loss: +13.8%
Time Frame: 12 days
New Positions: see below

Comments:
02/15 update: CLH garnered some bullish analyst comments and a new $100 price target. This news was enough to life shares briefly over the $94.00 level but the high was only $94.36. I don't see any changes from my prior comments. I would not be surprised to see another dip into the $92-90 zone, which we could use as a new bullish entry point. More conservative traders might want to consider a stop loss closer to the $90.00 level.

Investors should note that the most recent data lists short interest at 11.3% of the very small 23.1 million-share float. That is a good recipe for a short squeeze higher. Please note that we'll plan on exiting ahead of the earnings on Feb. 23rd (still an unconfirmed date).

- Suggested Positions -

Long the March $95.00 call (CLH1119C95) Entry @ $1.80

Entry on February 11th at $92.25
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 181 thousand
Listed on February 10th, 2010


Coach Inc. - COH - close: 57.37 change: -0.60

Stop Loss: 54.40
Target(s): 58.25, 62.00
Current Option Gain/Loss: +42.8%, and + 82.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/15 update: COH's rally is losing steam under the $58.00 level. Shares look poised to retreat back toward the $56-55 zone. There is no change from my prior comments. Conservative traders may want to take profits now. Our first exit target is $58.25. Our final exit target is $62.00. No new positions at this time. 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

02/12: Adjusted 1st target to $58.25
02/12: New stop loss @ 54.40
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: 74.33 change: -0.33

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

Comments:
02/15 update: COST is slipping toward short-term support near $74.00 and the stock should have additional support near $73.00. I would be tempted to buy calls on a dip or bounce near $73.00 with a relatively tight stop. However, for now our official trigger to launch positions remains at $75.50. If triggered our target is $79.75. 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 $1.71

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


Eastman Chemical Co. - EMN - close: 91.66 change: -2.02

Stop Loss: 90.75
Target(s): 99.75, 104.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/15 update: Ouch! EMN was a big underperformers on Tuesday with a -2.1% drop. Yet shares remain inside the sideways consolidation. I am suggesting we buy calls at $94.60. If triggered our targets are $99.75 and $104.00. Expect the $100.00 level to initially act as overhead resistance. The Point & Figure chart for EMN is bullish with a $133 target.

Trigger @ 94.60

- Suggested Positions -

Buy the March $95 calls (EMN1119C95) current ask $2.20

Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 946 thousand
Listed on February 14th, 2010


Fastenal Co. - FAST - close: 62.85 change: -0.24

Stop Loss: 59.40
Target(s): 64.75, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/15 update: We are waiting for FAST to pull back and while it looks like shares are ready to roll over it's not making any progress. We have a trigger to buy calls on the dip at $61.65, with a stop loss at $59.40. 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 @ 61.55

- Suggested Positions -

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

- or -

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

02/12 New trigger @ 61.55, new stop loss @ 59.40

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


Fluor Corp. - FLR - close: 73.31 change: -0.90

Stop Loss: 69.25
Target(s): 77.25, 79.75
Current Option Gain/Loss: Unopened
Time Frame: 7 trading days
New Positions: Yes, see trigger

Comments:
02/15 update: The rally appears to have stalled at round-number resistance near $75.00. FLR gave up -1.2% today. I am suggesting a trigger to buy calls at $72.00.

Please note that this is a short-term trade. We only have a few days. FLR is due to report earnings on Wednesday, Feb. 23rd before the opening bell. Therefore we will plan to exit on Tuesday, Feb. 22nd at the closing bell, if FLR hasn't hit our exit target before then.

The Point & Figure chart for FLR is bullish with an $84 target.

Trigger @ $72.00

- Suggested Positions -

Buy the March $75.00 calls (FLR1119C75) current ask $2.50

Entry on February xxth at $ xx.xx
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on February 12th, 2010


Joy Global Inc. - JOYG - close: 94.07 change: -1.67

Stop Loss: 87.40
Target(s): 97.25, 99.85
Current Option Gain/Loss: - 5.1%, and -13.2%
Time Frame: 3 weeks
New Positions: see below

Comments:
02/15 update: JOYG can be a volatile stock. Shares gave up -1.7% with a dip toward short-term support near $94. Yesterday I suggested readers could buy calls on a dip near $94 but if you're patient we might see a better entry point near $92 (or even $90).

I do consider this a more aggressive, higher-risk trade because our stop loss is a little wide. You could try a tighter (more conservative) stop loss but JOYG can see sudden bouts of volatility. Our upside targets are $97.25 and $99.85.

The Point & Figure chart for JOYG is bullish with a $113 target.

- Suggested Positions -

Long the March $95 calls (JOYG1119C95) Entry @ $3.85

- or -

Long the April $100 calls (JOYG1116D100) Entry @ $3.46

Entry on February 14th at $94.44
Earnings Date 03/02/11 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on February 12th, 2010


Nike Inc. - NKE - close: 85.55 change: -0.22

Stop Loss: 83.85
Target(s): 88.00, 89.90
Current Option Gain/Loss: +15.3%, and +13.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/15 update: Our buy-the-dip trade in NKE is now open. As expected shares did finally hit support near $85. The stock actually dipped to $84.62. Our trigger to buy calls was hit at $85.25 first thing this morning. If you missed the entry point I would still buy calls now at current levels. Our targets are $88.00 and $89.90.

- Suggested Positions - (Small Positions Only!)

Long the March $85 calls (NKE1119C85) Entry @ $2.09

- or -

Long the April $90 calls (NKE1116D90) Entry @ $0.94

chart:

Entry on February 15th at $85.25
Earnings Date 03/17/11 (unconfirmed)
Average Daily Volume = 2.2 million
Listed on February 9th, 2010


PACCAR Inc. - PCAR - close: 52.54 change: -0.10

Stop Loss: 49.45
Target(s): 53.45
Current Option Gain/Loss: +66.6%, and +57.1%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/15 update: Traders bought the dip at $52.00 this morning and PCAR spent the rest of the day consolidating sideways. Currently our final exit target is $53.45 but more aggressive traders could aim higher. I am not suggesting new positions at this time.

Prior Comments:
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 soon. 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

02/12 Adjusted our final exit target to $53.45

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


Quality Systems Inc. - QSII - close: 79.53 change: -0.70

Stop Loss: 77.95
Target(s): 84.90, 89.00
Current Option Gain/Loss: -41.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/15 update: The bounce attempt failed this morning and QSII appears headed for the bottom of its trading range near the $78.75 area. Readers may want to wait for a dip near $78.75 before considering new bullish positions.

The Point & Figure chart for QSII is bullish with a $119 target.

- Suggested Positions -

Long the March $85 calls (QSII1119C85) Entry @ $0.85

Entry on February 14th at $80.75
Earnings Date 05/31/11 (unconfirmed)
Average Daily Volume = 202 thousand
Listed on February 12th, 2010


The Toronoto-Dominion Bank - TD - close: 80.14 change: -0.05

Stop Loss: 75.90
Target(s): 84.00, 89.00
Current Option Gain/Loss: +29.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/15 update: The banking indices suffered widespread declines but profit taking in TD was pretty minor. Shares actually spiked toward $81.00 this morning and settled with a fractional loss. There is a good chance TD will retest the $79-78 zone and I would use that dip as an entry point. Our targets are $84 and $89. We will plan to exit ahead of the early March earnings report (unconfirmed date).

FYI: The Point & Figure chart for TD is bullish with a $98 target.

- Suggested Positions -

Long the March $80.00 call (TD1119C80) Entry @ $1.35

Entry on February 11th at $78.89
Earnings Date 03/03/11 (unconfirmed)
Average Daily Volume = 583 thousand
Listed on February 10th, 2010


Proshares Ultra(long) Russell 2000 - UWM - close: 46.82 change: -0.47

Stop Loss: 42.99
Target(s): 49.75, 54.00
Current Option Gain/Loss: -12.7%
Time Frame: 6 to 8 weeks
New Positions: see below

Small Positions - UWM Position -

Long the April $48 calls (UWM1116D48) Entry @ $2.75

02/14 UWM opened at $46.90. Option opened @ $2.75

iShares Russell 2000 - IWM - close: 82.02 change: -0.47

Stop Loss: 78.65
Target(s): 84.95, 87.25
Current Option Gain/Loss: -10.9%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/15 update: Small caps were not exempt from the profit taking today. Readers can use this dip in the UWM and IWM as an entry point or cross your fingers and hope we get another dip tomorrow. If you're watching the IWM then look for a dip into the $81-80 zone. If you're watching the UWM then watch for a dip into the $46-45 zone.

Small Positions - IWM Position -

Long the April $84 calls (IWM1116D84) Entry @ $1.92

02/14 IWM opened @ 82.11. Option opened @ 1.92

UWM Entry on February 14th at $46.90
IWM Entry on February 14th at $82.11
Listed on February 12th, 2010


CBOE Market Volatility Index - VIX - close: 16.37 change: +0.42

Stop Loss: N/A
Target(s): 24.00, 28.00
Current Option Gain/Loss: -56.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/15 update: The VIX posted a gain, thanks to the market's decline, but the VIX remains near multi-year lows. I don't see any changes from my prior comments.

Over the weekend I suggested (again) that more conservative traders consider an early exit. Or you could keep this trade as some sort of hedge against a sudden market decline but bear in mind that this option expires on March 16th. I am not suggesting new positions at this time.

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 this 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.

- 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

Google Inc. - GOOG - close: 624.15 change: - 4.00

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:
02/15 update: GOOG erased yesterday's gain. There is no change from my prior comments. Our strangle will likely expire worthless. 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: $0.10 (-99.3%)

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: 82.02

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

Comments:
02/15 update: Unless the Russell 2000 index suddenly sees a big drop lower real soon, nothing is going to save this put play.

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

Donaldson Company, Inc. - DCI - close: 61.78 change: +0.59

Stop Loss: 59.75
Target(s): 62.50, 64.75
Current Option Gain/Loss: +38.8%
Time Frame: just a few days
New Positions: see below

Comments:
02/15 update: The trading gods have smiled on us. Shares of DCI continued to rally higher in spite of the market's malaise on Tuesday. Shares almost hit our first target but the rally ran out of steam at $62.40.

It was our plan to exit positions today at the closing bell to avoid holding over earnings.

(Small Positions) - Suggested Positions -

2011 March $60 calls (DCI1119C60) Entry @ $1.80, exit @ $2.50 (+38.8%)

02/15 Planned Exit. Option @ $2.50 (+38.8%)
02/14 New stop loss @ 59.75, Prepare to Exit on Tuesday's close.
02/12 New stop loss @ 58.45
02/10 Time frame for this trade has changed!
02/10 Bullish Trigger hit @ 60.35
02/05 Switched from puts to calls. Trigger @ 60.35

chart:

Entry on February 10th at $60.35
Earnings Date 02/23/11 (unconfirmed)
Average Daily Volume = 208 thousand
Listed on January 31st, 2011