Editor's Note:

Traders were getting over their geopolitical fears and bought the dip heading into the weekend. Small caps were strong performers as well as bank stocks. I have updated new stops on NKE, TD, UWM, and IWM. I've reactivated our FCX put play with a trigger at $54.00.

-James

Current Portfolio:


CALL Play Updates

Peabody Energy Corp. - BTU - close: 65.30 change: +2.16

Stop Loss: 61.75
Target(s): 69.75, 74.00
Current Option Gain/Loss: -51.4%, and -13.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/26 update: BTU is bouncing on cue. Shares added +3.4% on Friday. The close over $65.00 is encouraging. More conservative traders might want to inch up their stop loss. Depending on your risk tolerance you can buy calls on this bounce or wait for a dip near $64. 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

Chart:

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


BorgWarner - BWA - close: 76.95 change: +1.59

Stop Loss: 73.75
Target(s): 79.75, 84.50
Current Option Gain/Loss: +18.1%, and - 4.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/26 update: BWA gapped open higher on Friday morning near $76 but then pulled back toward the $75.50 level to almost fill the gap before rebounding again. I would still consider new positions here or you could wait for another dip near $76-75. Our targets are $79.75 and $84.50. Our plan was to use small positions to limit our risk.

SMALL bullish positions

- Suggested Positions -

Long the March $80 calls (BWA1119C80) Entry @ $1.10

- or -

Long the April $80 calls (BWA1116D80) Entry @ $2.47

Chart:

Entry on February 25th at $76.06
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on February 24th, 2010


Caterpillar Inc. - CAT - close: 102.00 change: +1.43

Stop Loss: 97.90
Target(s): 104.75, 107.50
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/26 update: The bounce in CAT continues. Shares added +1.4% but stalled at their 10-dma overhead. I would still consider new bullish positions here or on a dip near $100 again.

- 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.

Chart:

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: 61.51 change: +0.66

Stop Loss: 59.90
Target(s): 67.25
Current Option Gain/Loss: -76.4%, and -42.2%
2nd Position Option Gain/Loss: + 0.0%, and - 4.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/26 update: So far so good. FAST is bouncing from a test of support near $60 and its 50-dma. I would still consider new positions now at current levels.

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) Entry @ $0.20

- or -

Long the APRIL $65 calls (FAST1121D65) Entry @ $0.99

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

Chart:

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


F5 Networks Inc. - FFIV - close: 120.18 change: +3.12

Stop Loss: 109.90
Target(s): 129.00
Current Option Gain/Loss: -11.1%, and -17.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/26 update: Shares of FFIV were upgraded before the opening bell on Friday. This prompted the stock to gap open higher at $121.00, which did NOT help our entry point. Shares spent the day consolidating sideways near $120. I would prefer to open new positions on a dip in the $117.50-115.00 zone. The plan was to use small positions to limit our risk. Our target is $129.00.

SMALL bullish positions

- Suggested Positions -

Long the March $120 calls (FFIV1119C120) Entry @ $5.40

- or -

Long the April $125 calls (FFIV1116D125) Entry @ $6.80

02/25 FFIV gapped open higher on an upgrade.

Chart:

Entry on February 25th at $121.00
Earnings Date 04/20/11 (unconfirmed)
Average Daily Volume = 3.7 million
Listed on February 24th, 2010


3M Co. - MMM - close: 90.25 change: +0.22

Stop Loss: 88.75
Target(s): 94.50, 99.00
Current Option Gain/Loss: + 0.0%, and - 6.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/26 update: The bounce in MMM was pretty minor on Friday. That is a little bit worrisome but overall this dip near $90 still looks like a bullish entry point. I would still consider new positions now although readers may want to keep their position size smaller to limit their risk.

- Suggested Positions -

Long the March $90 calls (MMM1119C90) Entry @ $1.75

- or -

Long the April $95 calls (MMM1116D95) Entry @ $0.78

Chart:

Entry on February 25th at $89.75
Earnings Date 04/27/11 (unconfirmed)
Average Daily Volume = 3.5 million
Listed on February 24th, 2010


Nike Inc. - NKE - close: 87.98 change: +1.46

Stop Loss: 84.80
Target(s): 88.00, 91.50
Current Option Gain/Loss: + 79.4%, and + 97.8%
2nd Position Gain/Loss: + 17.1%, and - 0.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/26 update: NKE continues to bounce after testing its 50-dma on Thursday. If you don't feel like chasing it here you could wait for a dip near the $87.00 area. I am raising our stop loss to $84.80.

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) Entry @ $3.20

- or -

Long the April $90 calls (NKE1116D90) Entry @ $1.86

02/25 New stop loss @ 84.80
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%)

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


Occidental Petrol. - OXY - close: 103.10 change: +1.34

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:
02/26 update: Oil stocks rallied again as violence continues in Libya and protests flare up again in Tunisia and Egypt. Yet the action in OXY still looks like indecision as the stock produced an inside day on Friday. I am suggesting we wait for a dip near $100 but it may not happen. Nimble traders may want to consider buying calls on a breakout at $104.00. The newsletter will keep our trigger at $100.25 for now.

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 effect on OXY on the stock. Today's move lower appears to be a reaction to the market-wide event.

Trigger @ $100.25

- Suggested Positions -

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

- or -

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

Chart:

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: 82.65 change: +2.13

Stop Loss: 76.90
Target(s): 84.00, 89.00
Current Option Gain/Loss: +151.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/26 update: TD was showing relative strength on Friday. The stock opened higher and then rallied to a new all-time high to close with a +2.6% gain. At this point we may want to consider buying calls on dips near $81.00. I am raising our stop loss to $77.90.

Our targets are $84 and $89. We will plan to exit ahead of the March 11th earnings report (unconfirmed date).

- Suggested Positions -

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

02/26 New stop loss @ 77.90
02/16 New stop loss @ 76.90

Chart:

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


Proshares Ultra(long) Russell 2000 - UWM - close: 46.86 change: +2.06

Stop Loss: 43.49
Target(s): 49.75, 54.00
Current Option Gain/Loss: -21.8%, and + 8.0%
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 @ $2.50

02/26 New stop loss @ 43.49
02/25 April $47 call opened at $2.50
02/24 Add another position, April $47 calls
02/14 UWM opened at $46.90. Option opened @ $2.75

Chart:

iShares Russell 2000 - IWM - close: 82.18 change: +1.86

Stop Loss: 79.20
Target(s): 84.95, 87.25
Current Option Gain/Loss: -16.1%, and +12.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/26 update: The small caps were some of the best performers on Friday with the Russell 2000 index outperforming the S&P 500. Traders are buying the dip and bounce near the rising 50-dma. If you missed buying the dip then you might want to wait for the next one. I am also raising our stop loss on both the UWM and IWM.

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 @ $2.35

02/26 New stop loss @ 79.20
02/25 April $82 call opened at $2.35
02/24 Add another position (April $82 calls)
02/14 IWM opened @ 82.11. Option opened @ 1.92

Chart:

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: 19.22 change: -2.10

Stop Loss: N/A
Target(s): 22.50, 28.00
Current Option Gain/Loss: -37.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/26 update: Just as expected, the VIX is plunging as investors buy the dip in stocks. More conservative trades may want to exit completely right here. 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%)

Chart:

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


PUT Play Updates

Freeport-McMoran - FCX - close: 52.45 change: +0.59

Stop Loss: 55.15
Target(s): 50.25, 47.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see trigger

Comments:
02/26 update: The oversold bounce in FCX has made it back toward prior support and what should be resistance near $53. Aggressive traders may want to buy puts right here. I am suggesting we use a trigger to buy puts at $54.00 and we'll use a stop loss at $55.15. If triggered our first target is $50.25. Our second target is $47.00.

Trigger @ 54.00

- Suggested Positions -

Buy the March $52.50 PUTS (FCX1119O52.5) current ask $2.03

- or -

Buy the April $50.00 PUTS (FCX1116P50) current ask $2.13

02/26 Update our trigger to buy puts at $54.00, stop 55.15

Chart:

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