Editor's Note:

The first day of the new year was a busy one. Stocks produced a widespread gain. We had multiple trades get triggered (DOV, IYT, WFM, and TSCO).

VAR hit our exit target. BMC hit our stop loss.

-James

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 74.22 change: +0.87

Stop Loss: 71.75
Target(s): 77.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: BA started the new year off with a strong note but the rally failed near resistance at $75.00. BA's +1.1% gain trailed behind the major indices. More conservative traders may want to raise their stop closer to $73.00 instead. I am not suggesting new positions at this time but readers may want to raise their exit targets toward the $78-79.50 zone.

Earlier Comments:
There is potential resistance at $75.00 and more conservative traders may want to exit there. I am aiming for $77.00. FYI: The Point & Figure chart for BA is bullish with a $79 target.

- Suggested Positions -

Long 2012Jan $75 call (BA1221A75) entry $1.08

12/31/11 new stop loss @ 71.75
12/28/11 new stop loss @ 71.40
12/22/11 new stop loss @ 69.85
12/13/11 trade opened
12/12/11 adjusted stop loss to $69.25
12/12/11 trade did not open, try again.

Entry on December 13 at $71.67
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on December 10, 2011


Dover Corp. - DOV - close: 59.09 change: +1.04

Stop Loss: 56.75
Target(s): 64.50
Current Option Gain/Loss: -32.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: Our DOV trade has been triggered. The plan was to buy calls at $59.55 but DOV gapped open higher at $59.57 this morning. The stock did struggle with resistance near $60.00 and closed right on its simple 200-dma. I would not be surprised to see DOV dip back toward the $58.50-58.00 zone before moving higher. Wait for that dip before considering new positions or wait for a breakout over $60.00.

Earlier Comments:
More conservative traders may want to wait for DOV to rally past the $60.00 level instead since $60.00 might be considered round-number resistance. If we are triggered at $59.55 our target is $64.50. FYI: The Point & Figure chart for DOV is bullish with a $75 target.

- Suggested Positions -

Long Jan $60 call (DOV1221A60) entry $1.25

01/03/12 DOV gapped open higher at $59.57, above our trigger, opening this trade.

Entry on January 03 at $59.57
Earnings Date 01/27/12 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on December 27, 2011


Hi Tech Pharmacal Co. - HITK - close: 39.05 change: +0.16

Stop Loss: 36.70
Target(s): 44.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: HITK did not make much progress today with some more sideways trading. We are waiting for a breakout. The current plan is to buy calls (small positions) at $40.15 with a stop at $38.85. We want to keep our position size small to limit our risk.

Earlier Comments:
The most recent data listed short interest at more than 13% of the very small 10 million share float. Our target is $44.50. Readers might want to aim higher. The Point & Figure chart for HITK is bullish with a $58 target.

New Trigger, buy calls @ 40.15, stop loss @ 38.85 (small positions)

- Suggested Positions -

buy the 2012Jan $40 call (HITK1221A40)

12/27/11 new trigger @ 40.15, stop loss 38.85
12/22/11 not open yet. New Trigger @ 37.25, stop 36.70
12/21/11 trade not open yet. (SP500 opened lower) Try again. New stop loss @ 37.90

Entry on December xx at $ xx.xx
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 298 thousand
Listed on December 20, 2011


iShares Transportation - IYT - close: 90.34 change: +0.87

Stop Loss: 87.45
Target(s): 94.75 or 98.50
Current Option Gain/Loss: Jan$95c: -25.0% & Feb$95c: -17.2%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
01/03 update: It's not the best entry point but our trade on the IYT is open. We were waiting to buy calls at $90.75 but the market's enthusiasm this morning pushed the IYT to gap open higher at $91.20. The rally reversed at $91.81 but broken resistance near $90.00 and the simple 200-dma should be new support. Readers can still buy calls now or wait for a bounce near $90.00.

- Suggested Positions -

Long Jan $95 call (IYT1221A95) entry $0.20
target 94.75

- or -

Long Feb $95 call (IYT1218B95) entry $1.45
target 98.50

01/03/12 IYT gapped open higher at $91.20, above our trigger at $90.75

Entry on January 03 at $91.20
Earnings Date --/--/--
Average Daily Volume = 582 thousand
Listed on December 22, 2011


JPMorgan Chase & Co - JPM - close: 34.98 change: +1.73

Stop Loss: 32.35
Target(s): 37.50
Current Option Gain/Loss: Jan$33c: +111.4% & Feb$35c: +81.1%
Time Frame: exit prior to earnings
New Positions: see below

Comments:
01/03 update: Financial stocks were some of the best performers today. JPM was leading the pack with a +5.2% gain. The stock's rally stalled at resistance near $35.00 and its simple 150-dma. More conservative traders may want to seriously consider just taking profits right here with JPM at resistance.

Don't forget that we plan to exit ahead of the January 13th earnings report.

I am moving our stop loss up to $32.35.

- Suggested Positions -

Long 2012Jan $33 call (JPM1221A33) entry $1.05

- or -

Long February $35 call (JPM1218B35) entry $0.90

01/03/12 new stop loss @ 32.35, readers may want to take profits now
2012Jan $33 call +111.4%, Feb $35 call +81.1%
12/31/11 new stop loss @ 31.70
12/31/11 adjust our time frame. We want to exit prior to the January 13th earnings report.

Entry on December 22 at $32.75
Earnings Date 01/13/12 (confirmed)
Average Daily Volume = 45.3 million
Listed on December 20, 2011


TJX Companies - TJX - close: 63.71 change: -0.84

Stop Loss: 62.75
Target(s): 68.00
Current Option Gain/Loss: Jan$65c: -35.0% & Feb$65c: -20.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/03 update: After outperforming for much of the fourth quarter the discount retail names like TJX were underperformers on the first day of 2012. TJX has closed under the $64.00 level. More conservative traders may want to abandon ship immediately. Aggressive traders will want to keep their stop loss under technical support at the rising 50-dma. We are leaving our stop loss at $62.75 tonight. I am not suggesting new positions at this time.

Earlier Comments:
TJX doesn't move super fast so we'll need some patience. Our target is $68.00. FYI: The Point & Figure chart for TJX is bullish with a $78 target.

- Suggested Positions -

Long 2012Jan $65 call (TJX1221A65) Entry $1.00

- or -

Long Feb $65 call (TJX1218B65) Entry $1.75

12/31/11 new stop loss @ 62.75

Entry on December 22 at $64.10
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.7 million
Listed on December 21, 2011


Waters Corp. - WAT - close: 75.94 change: +1.89

Stop Loss: 71.75
Target(s): 79.50
Current Option Gain/Loss: + 4.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: WAT displayed some relative strength on Tuesday. The stock gapped higher above resistance and closed up +2.5%. We are raising our stop loss to $71.75. More conservative traders may want to adjust theirs even higher.

- Suggested Positions -

Long Jan $75 call (WAT1221A75) entry $2.25

01/03/12 new stop loss @ 71.75
12/28/11 Traders may want to exit early now.

Entry on December 22 at $74.55
Earnings Date 01/24/12 (unconfirmed)
Average Daily Volume = 787 thousand
Listed on December 20, 2011


Whole Foods Market, Inc. - WFM - close: 69.64 change: +0.06

Stop Loss: 67.75
Target(s): 74.00
Current Option Gain/Loss: -26.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: Warning! The action today in WFM is troubling. The stock gapped open higher at $70.55, which immediately opened our trade since we had a trigger at $70.25. The rally reversed at $71.00 and WFM closed back under $70.00, which should have been new support. I am not suggesting new positions at this time and more conservative traders may want to tighten their stop losses significantly.

- Suggested Positions -

Long 2012Jan $70 call (WFM1221A70) entry $1.90

01/03/12 WFM gapped open higher at $70.55, above our trigger (70.25)

Entry on January 03 at $70.55
Earnings Date 02/08/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on December 28, 2011


PUT Play Updates

Autodesk, Inc. - ADSK - close: 30.81 change: +0.48

Stop Loss: 31.25
Target(s): 25.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
01/03 update: The stock market's widespread gains produced a strong bounce in ADSK. The stock gapped higher at $31.22. The rally reversed at short-term technical resistance and ADSK pared its gains down to +1.5%. There is no change from my prior comments.

We are waiting for a breakdown. The late November low was $29.76. I am suggesting a trigger to buy puts at $29.65. Our exit target is $25.50. FYI: The Point & Figure chart for ADSK is bearish with a $23 target.

Trigger @ 29.65

- Suggested Positions -

buy the 2012Jan $30 PUT (ADSK1221M30)

- or -

buy the Feb $28 PUT (ADSK1218N28)

Entry on December xx at $ xx.xx
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.9 million
Listed on December 29, 2011


Fossil, Inc. - FOSL - close: 79.27 change: -0.09

Stop Loss: 83.05
Target(s): 73.50
Current Option Gain/Loss: +31.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: FOSL continues to underperform the market. The stock opened at $81.12 and spike toward short-term resistance near $82.50 before rolling over again and closing negative. I would still consider new bearish positions at this time.

Earlier Comments:
Our target is $73.50. More conservative traders may want to exit in the $75 area instead. FYI: The Point & Figure chart for FOSL is bearish with a $71 target.

- Suggested Positions -

Long 2012Jan $75 PUT (FOSL1221M75) entry $0.95

Entry on January 03 at $81.12
Earnings Date 02/15/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on December 31, 2011


Tractor Supply Company - TSCO - close: 69.46 change: -0.69

Stop Loss: 72.55
Target(s): 65.50
Current Option Gain/Loss: - 4.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: Our new trade on TSCO is open. The stock spiked higher this morning but the rally reversed at its simple 10-dma. Shares underperformed the market and hit our trigger to buy puts at $69.50. I would still consider new positions now.

Earlier Comments:
We will aim for a drop to $65.50 but more aggressive traders may want to aim for the $62-60 zone instead.

- Suggested Positions -

Long Jan $70 PUT (TSCO1221M70) entry $2.20

Entry on January 03 at $69.50
Earnings Date 01/26/12 (unconfirmed)
Average Daily Volume = 550 thousand
Listed on December 31, 2011


Watson Pharmaceuticals - WPI - close: 60.63 change: +0.29

Stop Loss: 62.55
Target(s): 56.00
Current Option Gain/Loss: Jan$60p: -42.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: WPI gapped higher this morning but the rally reversed near $61.50. WPI ended the session up +0.48%. I am not suggesting new positions at this time.

- Suggested Positions -

Long JAN $60 PUT (WPI1221M60) Entry $2.00

12/28/11 new stop loss @ 62.55
12/19/11 new stop loss @ 63.05
12/15/11 planned exit for Dec. $60 puts, bid $0.70 (-12.5%)
12/14/11 Prepare to exit Dec. $60 puts at the open tomorrow, current bid on these puts is $0.65

Entry on December 07 at $61.75
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 03, 2011


CLOSED BULLISH PLAYS

Varian Medical Sys. - VAR - close: 69.30 change: +2.17

Stop Loss: 65.35
Target(s): 69.25
Current Option Gain/Loss: +67.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: Target hit.
Analyst upgrades this morning helped fuel big gains for VAR. The stock surged toward the $70.00 level. The high was $69.77. Our exit target was $69.25.

- Suggested Positions -

JAN $65 call (VAR1221A65) entry $2.65 exit $4.45 (+67.9%)

01/03/12 target hit @ 69.25
12/31/11 new stop loss @ 65.35
12/29/11 new stop loss @ 64.40
12/27/11 adjust exit target to $69.25
12/14/11 adjust stop loss to $62.49

chart:

Entry on December 13 at $65.25
Earnings Date 01/25/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on December 12, 2011


CLOSED BEARISH PLAYS

BMC Software Inc. - BMC - close: 33.19 change: +0.41

Stop Loss: 33.55
Target(s): 30.05
Current Option Gain/Loss: -57.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/03 update: The market's strong rally this morning was too much for BMC. The stock gapped higher at $33.47 and advanced to $33.67 before paring its gains. Our stop was hit at $33.55. The overall pattern on BMC is still bearish so I would keep it on your watch list as a potential put candidate.

- Suggested Positions -

2012Jan $32.50 PUT (BMC1221M32.5) entry $1.05 exit $0.45 (-57.1%)

01/03/12 stopped out at $33.55
12/31/11 new stop loss @ 33.55
12/28/11 new stop loss @ 34.55
12/21/11 trigger hit at $32.75

chart:

Entry on December 21 at $32.75
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 1.7 million
Listed on December 14, 2011