Editor's Note:

Tomorrow is the last day of trading for January options. The market continues to extend its gains higher into this new year.

Our new play on NOC has been opened but our OPNT put play has been stopped out.

Current Portfolio:


CALL Play Updates

Boeing Co. - BA - close: 75.56 change: +0.50

Stop Loss: 73.65
Target(s): 76.00
Current Option Gain/Loss: -35.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: BA managed to outperform both the S&P 500 and the Dow Industrial average today with a +0.6% gain but it wasn't enough. Last night we lowered the exit target down to $76.00 but BA stalled at $75.92. It's time for us to exit at the open tomorrow. I'm worried BA will probably settle on the $75.00 level for option expiration.

- Suggested Positions -

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

01/19/12 prepare to exit at the open tomorrow
01/18/12 adjust exit target to $76.00, only 2 days left
01/17/12 only three trading days left
01/12/12 new stop loss @ 73.65
01/07/12 new stop loss @ 72.65
01/05/12 new stop loss @ 72.25
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


Berkshire Hathaway Inc. - BRK.B - close: 79.59 change: +0.67

Stop Loss: 76.75
Target(s): 83.50
Current Option Gain/Loss: +28.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: BRK.B is still moving higher and outperformed the major indices with a +0.8% gain today. The $80.00 mark might be some short-term round-number resistance. Don't be surprised to see the stock pause or pull back there. Our multi-week target is $83.50. We do not want to hold over the late February earnings report.

- Suggested Positions -

Long Feb $80 call (BRKB1218B80) entry $0.90

01/18/12 triggered at $78.75
01/14/12 adjusted entry point strategy to use a trigger @ 78.75
01/13/12 BRK.B gapped lower, negating our entry point. Trade did not open.

Entry on January 18 at $78.75
Earnings Date 02/27/12 (unconfirmed)
Average Daily Volume = 4.4 million
Listed on January 12, 2012


Starwood Hotel & Resorts - HOT - close: 53.30 change: +1.33

Stop Loss: 49.75
Target(s): 55.75
Current Option Gain/Loss: +54.4%
Time Frame: exit prior to earnings
New Positions: see below

Comments:
01/19 update: HOT was a strong performer today. Shares rallied +2.5% and broke out to new relative highs. Today's gain also puts HOT above one if its significant multi-month trend lines of lower highs (a.k.a. resistance). More conservative traders may want to start raising their stop loss.

Don't forget that we plan to exit prior to the Feb. 2nd earnings.

- Suggested Positions -

Long Feb $52.50 call (HOT1218B52.5) entry: 1.67

01/18/12 new stop loss @ $49.75
01/13/12 Triggered on a dip at $51.00
01/10/12 initial entry point did not work. New strategy: buy a dip at $51.00.

Entry on January 13 at $51.00
Earnings Date 02/02/12 (confirmed)
Average Daily Volume = 2.4 million
Listed on January 09, 2012


Humana Inc. - HUM - close: 94.94 change: +0.44

Stop Loss: 92.95
Target(s): 99.75
Current Option Gain/Loss: -30.7%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
01/19 update: HUM managed to hold support at the $94.00 level and bounced, gaining +0.4%. I would be tempted to buy calls here if both HUM and the S&P 500 open positive tomorrow.

Our target is $99.75 since the $100 level might be round-number, psychological resistance. We do not want to hold over the early February earnings report. FYI: The Point & Figure chart for HUM is bullish with a $109 target.

- Suggested Positions -

Long Feb $100 call (HUM1218B100) entry $1.30

01/17/12 HUM gapped open higher at $95.75, above our trigger at $95.25

Entry on January 17 at $95.75
Earnings Date 02/06/12 (confirmed)
Average Daily Volume = 1.2 million
Listed on January 14, 2012


InterOil Corp. - IOC - close: 62.21 change: -0.29

Stop Loss: 58.40
Target(s): 66.00
Current Option Gain/Loss: - 7.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: IOC hit a little bit of profit taking today but shares first spiked up to $64.46 before reversing lower. Look for support near $60.00 and its rising 10-dma.

Earlier Comments:
If IOC breaks out higher it could see a big move. That's because IOC could see a possible short squeeze. The most recent data listed short interest at more than 22% of the 33.4 million share float. Our target is $66.00. FYI: The Point & Figure chart for IOC is bullish with a long-term $91 target.

- Suggested Positions -

Long Feb $65 call (IOC1218B65) Entry $5.60*

01/18/12 new stop loss @ 58.40
* entry price is an estimate based on when IOC hit our trigger.

Entry on January 18 at $61.00
Earnings Date 03/22/12 (unconfirmed)
Average Daily Volume = 537 thousand
Listed on January 17, 2012


iShares Russell 2000 ETF - IWM - close: 78.20 change: +0.48

Stop Loss: 75.45
Target(s): 82.50
Current Option Gain/Loss: - 1.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: Small caps continued to rally. The IWM gapped open higher at $78.13 and then spent most of the day consolidating sideways on either side of the $78.00 level. I would still consider new positions now or you could wait for a dip closer to the $77.00 level.

You may want to consider a stop closer to the 10-dma instead (currently 75.95). Our multi-week target is $82.50. Keep in mind the $80.00 level might offer some overhead resistance. FYI: The Point & Figure chart for IWM is bullish with a $90 target.

- Suggested Positions -

Long Feb $80 call (IWM1218B80) Entry $1.14

01/19/12 IWM gapped open higher at $78.13

Entry on January 19 at $78.13
Earnings Date --/--/--
Average Daily Volume = 40 million
Listed on January 18, 2012


iShares Transportation - IYT - close: 94.52 change: +1.53

Stop Loss: 89.45
Target(s): 94.75 or 98.50
Current Option Gain/Loss: Jan$95c: - 50% & Feb$95c: +31.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/19 update: I am somewhat surprised to see that the January $95 calls actually traded at 25 cents today (that's the ask). The calls currently have a bid/ask of $0.10/0.35. If they still have any value at the open tomorrow we want to exit immediately although I expect them to open with a bid of $0.00.

Our Feb. $95 calls look a lot healthier thanks to today's +1.6% rally in the IYT. The $95 level could be round-number resistance so readers might want to consider taking profits soon. I am not suggesting new positions at this time.

Don't forget that January options expire after Friday (tomorrow).

- Suggested Positions -

Long Jan $95 call (IYT1221A95) entry $0.20

- or -

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

01/12/12 new stop loss @ 89.45
01/07/12 new stop loss @ 88.75
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


Laboratory Corp. - LH - close: 88.83 change: +0.36

Stop Loss: 85.95
Target(s): 94.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
01/19 update: The sideways consolidation in LH is coiling more tightly, like a spring, the stock looks poised to leap higher if it can just break through resistance. The intraday high was $88.89. I suspect if the market is positive tomorrow we could see LH hit our entry point at $89.00.

Our target is the $94.75 mark. More aggressive traders could aim for the $97-100 zone instead. FYI: The Point & Figure chart for LH is bullish with a $105 target.

NOTE: We do not want to hold over the earnings report around Feb. 9th (still an unconfirmed date).

Trigger @ 89.00

- Suggested Positions -

buy the Feb $90 call (LH1218B90)

Entry on January xx at $ xx.xx
Earnings Date 02/09/12 (unconfirmed)
Average Daily Volume = 564 thousand
Listed on January 10, 2012


Mohawk Industries - MHK - close: 65.18 change: -0.13

Stop Loss: 59.90
Target(s): 67.50
Current Option Gain/Loss: - 3.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: The rally in MHK took a day off. Shares drifted sideways and settled with a minor loss. I am not suggesting new positions at this time. I would not be surprised to see MHK settle near $65.00 for option expiration tomorrow. More conservative traders may want to start raising their stop loss.

Our target is $67.50 but we do not want to hold over the February earnings report. More aggressive traders could aim higher.

Investors will be interested to note that the most recent data listed short interest at 5% of the 57 million share float. That's not excessive but it's a bit high and could boost any new gains as bears cover their shorts. FYI: The Point & Figure chart for MHK is bullish with a $90 target.

- Suggested Positions -

Long Feb $65 call (MHK1218B65) Entry $2.48

01/17/12 MHK gapped open higher at $63.99

Entry on January 17 at $63.99
Earnings Date 02/21/12 (unconfirmed)
Average Daily Volume = 621 thousand
Listed on January 14, 2012


Northrop Gruman - NOC - close: 61.31 change: +1.14

Stop Loss: 57.90
Target(s): 64.00
Current Option Gain/Loss: +23.5%
Time Frame: up to NOC's early February earnings report.
New Positions: see below

Comments:
01/19 update: Our new trade on NOC has been opened. The stock opened at $60.34 and outperformed the market with a +1.8% gain. I am already tempted to raise our stop closer to the $59.00 level.

We plan to exit prior to NOC's earnings report in early February. FYI: The Point & Figure chart for NOC is bullish with a $71 target.

- Suggested Positions -

Long Feb $60 call (NOC1218B60) Entry $1.70

Entry on January 19 at $60.34
Earnings Date 02/01/12 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on January 18, 2012


Omnicom Group - OMC - close: 47.69 change: +0.60

Stop Loss: 45.45
Target(s): 49.00
Current Option Gain/Loss: +66.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: OMC continues to surge and added another +1.2% today. Readers may want to start thinking about taking profits already. The simple 10-dma is at $45.65. I am raising our stop loss to $45.45. I am not suggesting new positions at this time.

Our target is $49.00. We do not want to hold over the mid February earnings report. FYI: The Point & Figure chart for OMC is bullish with a $64 target.

- Suggested Positions -

Long Feb $45 call (OMC1218B45) entry $1.80

01/19/12 new stop loss @ 45.45, readers may want to take profits now (+66%)
01/18/12 new stop loss @ 44.75

Entry on January 12 at $45.75
Earnings Date 02/14/12 (unconfirmed)
Average Daily Volume = 1.6 million
Listed on January 11, 2012


Teva Pharmaceuticals - TEVA - close: 45.79 change: +0.39

Stop Loss: 43.75
Target(s): 49.50
Current Option Gain/Loss: +12.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: TEVA was consistently drifting higher almost all day long. If you're looking for a new entry point consider waiting for a dip or a new bounce near $45.00.

Our target is $49.50 but we'll plan to exit prior to the earnings report in early February. FYI: The Point & Figure chart for TEVA is bullish with a $57 target.

(Small Positions)- Suggested Positions -

Long Feb $45 call (TEVA1218B45) entry $1.50

01/18/12 TEVA has rebounded. Use it as a new entry point.
01/17/12 Be careful. TEVA hit our trigger and reversed to close back under $45.00

Entry on January 17 at $45.25
Earnings Date 02/08/12 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on January 14, 2012


TJX Companies - TJX - close: 66.92 change: +0.07

Stop Loss: 64.75
Target(s): 68.50
Current Option Gain/Loss:(Jan$65c: +85.0%) & Feb$65c: +51.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/19 update: TJX has stalled at short-term resistance near $67.00. I would not be surprised to see the stock pull back toward the $66-65 zone and settle near $65 thanks to options expiration. I am not suggesting new positions at this time.

Readers may want to exit our February calls now with a +50% move.

Earlier Comments:
On January 5th, management announced a 2-for-1 stock split payable on February 2nd, 2012.

- Suggested Positions -

Long Feb $65 call (TJX1218B65) Entry $1.75

01/18/12 adjusted exit target to $68.50
01/18/12 closed Jan $65 calls @ $1.85 (+85.0%)
01/17/12 prepare to exit January calls at close tomorrow
01/17/12 new stop loss @ 64.75
01/12/12 new stop loss @ 63.75
01/07/12 readers may want to take profits now (Jan$65call +90%, Feb$65call +57%)
01/05/12 new stop loss @ 63.25, TJX announced strong same-store sales and a 2:1 split.
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


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BEARISH PLAYS

OPNET Technologies - OPNT - close: 34.93 change: +2.03

Stop Loss: 33.85
Target(s): 30.00
Current Option Gain/Loss: -40.9% (wide spreads)
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/19 update: Bearish trades are not panning out in this market. Even though OPNT slipped to new relative lows yesterday the stock exploded higher today. I couldn't find any news or catalyst to explain today's +6.1% gain. It just looks like a little short squeeze. OPNT hit our stop loss at $33.85.

Earlier Comments:
We want to keep our position size small because OPNT has above average short interest at 11.7% of the 14.8 million share float. That raises the risk of a short squeeze should the stock reverse higher. FYI: The Point & Figure chart for OPNT is bearish with a $20 target. The spreads are a little wide as well, which is another reason to keep our position size small.

(small positions) - Suggested Positions -

Feb $30 PUT (OPNT1218B30) Entry $1.10, exit $0.65*(-40.9%)

01/19/12 stopped out at $33.85
* exit price is an estimate. option did not trade very much on Thursday.

chart:

Entry on January 18 at $32.70
Earnings Date 02/07/12 (confirmed)
Average Daily Volume = 252 thousand
Listed on January 17, 2012