Editor's Note:

Support appears to be holding for the major averages. This should encourage the bulls to buy the dip again. It's time to take advantage of the pull back.

REMINDER: I am away from the office this week for a seminar. Play updates will be brief and we might see fewer new positions added to the newsletter.

-James

Current Portfolio:


CALL Play Updates

Peabody Energy Corp. - BTU - close: 63.14 change: -0.33

Stop Loss: 61.75
Target(s): 69.75, 74.00
Current Option Gain/Loss: -70.0%, and -31.9%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/24 update: BTU traded in a $2.00 range essentially fluctuating on either side of its 50-dma. I still see this pull back as a chance to buy calls on the dip but more conservative traders may want to wait for a new close over the $65.00 level. Our first exit target is $69.75.

The Point & Figure chart for BTU is bullish with an $80 target.

- Suggested Positions -

Long the March $70 calls (BTU1119C70) Entry @ $1.07

- or -

Long the June $70 calls (BTU1118F70) Entry @ $3.60

Entry on February 17th at $66.30
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on February 16th, 2010


Caterpillar Inc. - CAT - close: 100.57 change: +0.55

Stop Loss: 97.90
Target(s): 104.75, 107.50
Current Option Gain/Loss: -14.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/24 update: CAT did not see a lot of change on Thursday. Shares were hovering near the $100 level and the bottom of its bullish channel. I see this dip near $100 as an entry point to buy calls.

- Suggested Positions -

Long the March $105 calls (CAT1119C105) Entry @ $1.35

02/23 Triggered @ $101.00. Option @ $1.35
02/22 Still waiting for a dip to $101.00
02/12 Adjusted our trigger, targets, stop loss and strike price.

Entry on February 23 at $101.00
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 5th, 2010


Fastenal Co. - FAST - close: 60.96 change: -1.22

Stop Loss: 59.90
Target(s): 67.25
Current Option Gain/Loss: -82.3%, and -42.2%
2nd Position Option Gain/Loss: + 0.0%, and + 0.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/24 update: The early afternoon decline in FAST gave us a bit of a scare when shares traded under their 50-dma. Fortunately, traders bought the dip near round-number support at $60.00. The last couple of days I have been suggesting readers buy calls on a dip in the $61-60 zone. Today's action is no different. I would use it as a bullish entry point. We're going to double down in the newsletter and add to positions here. We will keep the stop loss at $59.90 (changed on 2/22).

Readers may want to keep in mind that the most recent data listed short interest at 11.4% of the 132 million-share float.

- Suggested Positions -

Long the March $65 calls (FAST1119C65) Entry @ $0.85

- or -

Long the May $65 calls (FAST1121E65) Entry @ $2.25

-2nd Entry as of 2/24 (will fill in prices for 2/25's open)-

Long the March $65 calls (FAST1119C65) current ask @ $0.15

- or -

Long the APRIL $65 calls (FAST1121D65) current ask @ $1.00

02/24 Buy the dip. New Entry (2nd position).
02/23 New entry point @ 60.96. March $65 call @ 0.25, May $65 call @ $1.45
02/22 Entry @ 62.99, NEW STOP @ $59.90
02/19 Adjusted entry point. Buy calls now. Very small positions
02/12 New trigger @ 61.55, new stop loss @ 59.40

Entry on February 22nd at $62.99
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 8th, 2010


Nike Inc. - NKE - close: 86.52 change: +0.33

Stop Loss: 83.85
Target(s): 88.00, 91.50
Current Option Gain/Loss: + 39.2%, and + 53.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/24 update: Traders bought the dip in NKE near $85.50 and its 50-dma. This intraday bounce looks like an entry point to buy calls. More conservative traders might be tempted to raise their stops closer to the $85 level.

I am suggesting we take advantage of this entry point and add to positions (see below).

Our final exit target is $91.50.

- Suggested Positions - (Small Positions Only!)

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

- or -

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

2nd position, buy the bounce from $85.50

Long the March $85 calls (NKE1119C85) current ask @ $2.98

- or -

Long the April $90 calls (NKE1116D90) current ask @ $1.50

02/24 New entry point, buy the bounce from $85.50, Add 2nd position
02/19 Adjusted final target to $91.50
02/18 1st Target Hit @ 88.00. March $85 call @ 3.75 (+79.4%)
02/18 1st Target Hit @ 88.00. April $90 call @ 1.80 (+91.4%)

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


Occidental Petrol. - OXY - close: 101.76 change: -1.20

Stop Loss: 96.75
Target(s): 106.75, 109.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
02/24 update: Oil stocks pulled back on a dip in crude oil prices. Shares of OXY gave up -1.1% and definitely look headed for a retest of the $100.00 level. We will adjust our trigger to open bullish positions from $101.00 to $100.25. We'll adjust our stop loss to $96.75. If we are triggered at $101.00 our targets are $106.75 and $109.75.

Investors will want to take note that this is not without risk. OXY does a lot of oil and gas exploration across the U.S. and internationally. The company does do business in Bahrain and Yemen, which have been two hotspots for protests and violence in the last couple of weeks. You can see from the chart that headlines from these two countries really did not have an affect on OXY on the stock. Today's move lower appears to be a reaction to the market-wide event.

Trigger @ $100.25 <-- New Trigger

- Suggested Positions -

Buy the March $105 calls (OXY1119C105) current ask $1.70

- or -

Buy the April $105 calls (OXY1116D105) current ask $3.20

Entry on February xxth at $ xx.xx
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 4.9 million
Listed on February 22nd, 2010


The Toronoto-Dominion Bank - TD - close: 80.52 change: +1.07

Stop Loss: 76.90
Target(s): 84.00, 89.00
Current Option Gain/Loss: + 51.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/24 update: The major banking indices closed in the red again but gains were mild. Meanwhile TD was outperforming on Thursday. Shares gapped open higher and hit $81.80 intraday before trimming its gains. I'm not convinced the correction is over yet so readers may want to wait for a dip near $78.00 before initiating new positions. 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

02/16 New stop loss @ 76.90

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: 44.80 change: +0.51

Stop Loss: 42.99
Target(s): 49.75, 54.00
Current Option Gain/Loss: -41.8%, and + 0.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Small Positions - UWM Position -

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

-2nd position (entry 2/25)-

Long the April $47 calls (UWM1116D46) Entry @ $2.25

02/24 Add another position, April $47 calls
02/14 UWM opened at $46.90. Option opened @ $2.75

iShares Russell 2000 - IWM - close: 80.32 change: +0.51

Stop Loss: 78.65
Target(s): 84.95, 87.25
Current Option Gain/Loss: -43.7%, and + 0.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/24 update: Traders bought the dip near the 50-dma on both the UWM and IWM for the second day in a row. This is a new bullish entry point for us to open positions. The newsletter is adding new strikes and positions to take advantage of the pull back.

Small Positions - IWM Position -

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

-2nd position (entry 2/25)-

Long the April $82 calls (IWM1116D82) current ask @ $1.94

02/24 Add another position (April $82 calls)
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: 21.32 change: -0.81

Stop Loss: N/A
Target(s): 22.50, 28.00
Current Option Gain/Loss: +15.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/24 update: The VIX spiked toward its 200-dma and failed on Thursday. If the stock market bounces from current levels (near support) the VIX could collapse pretty quickly. Readers are encouraged to take profits now if you have not done so already. I am not suggesting new positions at this time. Our final (and very speculative) exit target is 28.00.

- Suggested Positions -

Long the 2011 March $22.50 calls (VIX1116C22.5) Entry @ $1.60

02/23 1st Target Hit @ 22.50, Option @ 2.35 (+46.8%)

Entry on January 26th at $17.00
Earnings Date --/--/--
Average Daily Volume =
Listed on January 25th, 2010


PUT Play Updates

Freeport-McMoran - FCX - close: 51.86 change: +0.85

Stop Loss: 56.55
Target(s): 50.25, 46.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/24 update: FCX is starting to see a little oversold bounce. Right now I'm waiting and watching for a failed rally in the $53-54 zone. Nimble traders could prepare now. I'm not quite ready to pull the trigger on this trade yet. Look for the 30-dma and 100-dma to be additional overhead resistance.

Trigger @ ??.??

- Suggested Positions -


Entry on February xxth at $ xx.xx
Earnings Date 04/21/11 (unconfirmed)
Average Daily Volume = 14.4 million
Listed on February 19th, 2010