Editor's Note:

The stock market saw a widespread decline this morning but the S&P 500 managed to rebound off round-number support near 1300.

We saw both MHK and OMC get stopped out on the market's widespread weakness this morning. Our XEC put play has been opened.

Current Portfolio:


CALL Play Updates

Berkshire Hathaway Inc. - BRK.B - close: 78.69 change: -0.73

Stop Loss: 77.75
Target(s): 84.00
Current Option Gain/Loss: -42.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/30 update: The stock market's widespread weakness on Monday morning pushed BRK.B to gap down and test support near $78.00. Any further weakness could hit our stop loss at $77.75. I am not suggesting new positions at current levels.

We do not want to hold over the late February earnings report.

- Suggested Positions -

Long Feb $80 call (BRKB1218B80) entry $0.90

01/28/12 new stop loss @ 77.75, adjusted exit to $84.00
01/25/12 new stop loss @ 77.45
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


Cognizant Technology - CTSH - close: 70.99 change: -0.34

Stop Loss: 68.75
Target(s): 76.50
Current Option Gain/Loss: -29.4%
Time Frame: exit prior to the Feb. 8th earnings
New Positions: see below

Comments:
01/30 update: CTSH also gapped down this morning. Traders bought the dip near its rising 10-dma. I would be tempted to wait for a bounce from the $70.00 level before considering new positions.

Our target is $76.50. We do not want to hold over the Feb. 8th earnings report. FYI: The Point & Figure chart for CTSH is bullish with an $85 target.

- Suggested Positions -

Long Feb $75 call (CTSH1218B75) Entry $0.85

01/24/12 trade opened at $71.05

Entry on January 24 at $71.05
Earnings Date 02/08/12 (confirmed)
Average Daily Volume = 2.3 million
Listed on January 21, 2012


Express Scripts, Inc. - ESRX - close: 51.19 change: -0.25

Stop Loss: 49.95
Target(s): 57.00
Current Option Gain/Loss: -36.5%
Time Frame: exit prior to February earnings
New Positions: see below

Comments:
01/30 update: Just as expected, a market drop has pushed ESRX toward support near $50.00. Shares pared their losses but still closed down -0.48%. A bounce back above the simple 10-dma near $51.50 could be used as a new bullish entry point.

Earlier Comments:
This stock could see more short covering. The most recent data listed short interest at almost 17% of the 482 million-share float. FYI: The Point & Figure chart for ESRX is bullish with a $75 target.

- Suggested Positions -

Long Feb $52.50 call (ESRX1218B52.5) Entry $2.00

Entry on January 26 at $52.67
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 6.6 million
Listed on January 25, 2012


Flowserve Corp. - FLS - close: 108.75 change: -0.37

Stop Loss: 105.75
Target(s): 114.50
Current Option Gain/Loss: Feb $110c: -18.9% & Apr$115c: -10.0%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
01/30 update: Profit taking in FLS was pretty mild thanks to the strong intraday bounce. If the S&P 500 and FLS both open positive tomorrow then readers could use it as a new entry point. I am raising our stop loss to $105.75.

I am setting our target at $114.50 but cautious traders may want to exit at $112.00 instead. FYI: The Point & Figure chart for FLS is bullish with a $139 target.

- Suggested Positions -

Long FEB $110 call (FLS1218B110) Entry $2.59

- or -

Long APR $115 call (FLS1221D115) Entry $4.00

01/30/12 new stop loss at $105.75
01/26/12 trade opened on FLS' gap open higher at $109.21.
01/25/12 adjusted entry point strategy to buy calls when FLS hits $109.05, and use a stop loss at $105.45

Entry on January 26 at $109.21
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 400 thousand
Listed on January 21, 2012


Starwood Hotel & Resorts - HOT - close: 54.19 change: -0.17

Stop Loss: 52.95
Target(s): 57.50
Current Option Gain/Loss: +59.2%
Time Frame: exit prior to Feb. 2nd earnings.
New Positions: see below

Comments:
01/30 update: Monday looked a lot like Friday for HOT. Shares gapped open lower and then spent the rest of the day inching higher. Don't forget that we only have two days left. We'll plan to exit on Wednesday, Feb. 1st to avoid holding over earnings on Thursday morning. Given our dwindling time frame I am inching up our stop loss to $52.65. I am not suggesting new positions at this time.

Please note our new stop loss at $52.95.

- Suggested Positions -

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

01/30/12 new stop loss @ 52.95
01/28/12 prepare to exit on Feb. 1st at the close
01/28/12 new stop loss @ 52.65
01/26/12 sold half @ the open. Bid was $2.95 (+76.6%)
01/25/12 prepare to sell half at the open tomorrow morning. bid on our call is currently at $3.20 (+91.6%). We will adjust the exit target on the remainder of our position to $57.50
01/25/12 new stop loss @ 52.40
01/24/12 new stop loss @ 51.45
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


iShares Russell 2000 ETF - IWM - close: 79.10 change: -0.62

Stop Loss: 75.45
Target(s): 82.50
Current Option Gain/Loss: - 7.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/30 update: Profit taking in the IWM was relatively mild. The ETF came close but did not touch its simple 10-dma yet, which is the first level of short-term technical support. I am not suggesting new positions at this time.

Earlier Comments:
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: 94.92 change: -0.46

Stop Loss: 91.75
Target(s): 98.50
Current Option Gain/Loss:(Jan$95c: -100%) Feb$95c: +13.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/30 update: IYT gave back just over half of Friday's gains. I don't see any changes from my prior comments. We're not suggesting new positions at this time.

- Suggested Positions -

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

01/28/12 new stop loss @ 91.75
01/21/12 new stop loss @ 91.40
01/21/12 January $95 calls have expired.
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: 90.92 change: -0.40

Stop Loss: 88.40
Target(s): 94.75
Current Option Gain/Loss: + 60.0%
Time Frame: up to the Feb. 10th earnings report.
New Positions: see below

Comments:
01/30 update: LH found support near $90 and its simple 10-dma on Monday morning. The intraday bounce is encouraging but I am reluctant to open new positions at this time.

We do not want to hold positions over the Feb. 10th earnings report. Our target is the $94.75 mark. FYI: The Point & Figure chart for LH is bullish with a $105 target.

- Suggested Positions -

Long Feb $90 call (LH1218B90) Entry $1.50

01/28/12 new stop loss @ 88.40
01/26/12 sold half @ the open, bid @ $2.65 (+76.6%)
01/25/12 sell half at the open tomorrow. Bid on the Feb. $90 call is at $3.10 (+106%).
01/25/12 new stop loss @ 87.90
01/24/12 rival DGX delivers a strong earnings report
01/23/12 trade triggered at $89.00
01/21/12 new stop loss at $86.90. Still waiting for LH to hit our entry point at $89.00.

Entry on January 23 at $89.00
Earnings Date 02/10/12 (confirmed)
Average Daily Volume = 564 thousand
Listed on January 10, 2012


Lufkin Industries - LUFK - close: 74.56 change: -0.81

Stop Loss: 73.40
Target(s): 82.00
Current Option Gain/Loss: - 30.5%
Time Frame: up to the Feb. 9th earnings report.
New Positions: see below

Comments:
01/30 update: LUFK gave up about -1% on Monday. Shares did test short-term support near $74.00. If the market drops again tomorrow we could see LUFK breakdown and hit our stop loss at $73.40. I am not suggesting new positions at this time.

Our target is $82.00 but we want to exit prior to the Feb. 9th earnings report. FYI: The Point & Figure chart for LUFK is bullish with an $85 target.

- Suggested Positions -

Long Feb $80 call (LUFK1218B80) Entry $2.95

01/25/12 triggered @ 76.60

Entry on January 25 at $76.60
Earnings Date 02/09/12 (confirmed)
Average Daily Volume = 300 thousand
Listed on January 24, 2012


Molycorp, Inc. - MCP - close: 31.12 change: -0.60

Stop Loss: 29.75
Target(s): 38.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
01/30 update: Our new trade on MCP is not open yet. The market and MCP gapped down at the open. MCP underperformed with a -1.9% decline. Nimble traders might want to wait and try and buy a dip near $30.00. I am suggesting we try our strategy from the weekend again.

I am suggesting we open small bullish positions at the open tomorrow but only if both MCP and the S&P 500 index open positive.

Earlier Comments:
This stock could see a short squeeze with the most recent data listing short interest at 38.6% of the 51.8 million-share float.

I do see potential resistance near $35 and its 100-dma but we're going to aim for $38.50 given the chance that MCP does see some short covering. FYI: The Point & Figure chart for MCP is bullish with a long-term $49 target.

Do not enter position unless MCP and the S&P500 are both positive at the open

- Suggested Positions -

buy the Feb $31 call (MCP1218B31)

- or -

buy the Mar $35 call (MCP1217C35)

01/30/12 not open yet. try again.

Entry on January xx at $ xx.xx
Earnings Date 03/08/12 (unconfirmed)
Average Daily Volume = 4.0 million
Listed on January 28, 2012


PVH Corp. - PVH - close: 76.62 change: -0.08

Stop Loss: 74.75
Target(s): 83.50
Current Option Gain/Loss: Feb77.50c: -47.9% & Mar$80c: -35.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/30 update: Losses were pretty mild for PVH on Monday but shares still broke down under short-term technical support at the 10-dma. At this point I would wait for a dip or a bounce near $75.00 before considering new bullish positions.

Earlier Comments:
The plan was to keep our position size small to limit risk. FYI: The Point & Figure chart for PVH is bullish with a $92 target.

- Suggested Positions - (small positions)

Long Feb $77.50 call (PVH1218B77.5) Entry $2.40

- or -

Long Mar $80 call (PVH1217C80) Entry $2.55

01/24/12 trade triggered at $77.60
01/23/12 trade still not open
new entry point strategy to use a trigger at $77.60, stop loss at $74.75
01/21/12 trade not open yet. try again.

Entry on January 24 at $77.60
Earnings Date 03/28/12 (unconfirmed)
Average Daily Volume = 867 million
Listed on January 19, 2012


SPX Corp. - SPW - close: 70.02 change: +0.45

Stop Loss: 67.90
Target(s): 74.75
Current Option Gain/Loss: Unopened
Time Frame: up to the Feb. 16 earnings report
New Positions: Yes, see below

Comments:
01/30 update: SPW displayed some relative strength today. The stock rallied off its morning lows to close up +0.6%. Aggressive traders may want to buy calls now. I'm suggesting readers use a trigger at $70.50 to open positions.

If triggered we will aim for the $74.75 mark but more aggressive traders could aim higher. We do not want to hold over the Feb. 16th earnings report. FYI: The Point & Figure chart for SPW is bullish with an $82 target.

Trigger @ 70.50

- Suggested Positions -

buy the Feb $70 call (SPW1218B70)

Entry on January xx at $ xx.xx
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 711 thousand
Listed on January 26, 2012


TJX Companies - TJX - close: 67.45 change: +0.08

Stop Loss: 66.49
Target(s): 68.50
Current Option Gain/Loss:(Jan$65c: +85.0%) & Feb$65c: +54.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
01/30 update: TJX also rebounded off its Monday morning lows and managed to close in positive territory. We do not want to hold over the 2-for-1 stock split on Feb. 2nd. If TJX does not hit our exit at $68.50 soon then we will exit on Feb. 1st at the closing bell. I am not suggesting new positions at this time.

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

01/30/12 prepare to exit soon!
01/26/12 new stop loss @ 66.49, Consider taking profits now!
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

Deckers Outdoor Corp. - DECK - close: 80.85 change: -1.77

Stop Loss: 84.25
Target(s): 77.00
Current Option Gain/Loss: - 8.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/30 update: DECK underperformed the market today with a -2.1% decline. If you look at an intraday chart you can see that the bounce failed twice under $83.00 today. I am lowering our stop loss to $84.25.

Earlier Comments:
Our target is $77.00. We want to keep our position size small because any unexpected rally might spark some short covering. The most recent data listed short interest at 14% of the relatively small 37.1 million-share float.

(Small Positions) - Suggested Positions -

Long FEB $80 PUT (DECK1218N80) Entry $3.10

01/30/12 new stop loss @ 84.25
01/25/12 DECK is not cooperating. Readers may want to exit immediately.

Entry on January 23 at $82.75
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 21, 2012


Cimarex Energy Co - XEC - close: 57.65 change: +0.12

Stop Loss: 60.25
Target(s): 51.00
Current Option Gain/Loss: -29.7%
Time Frame: exit prior to earnings on Feb. 15th
New Positions: see below

Comments:
01/30 update: Our new put play on XEC has been opened. Shares gapped open lower at $56.57. Our trigger to buy puts was $56.75 so the trade was opened immediately. The stock bounced near $56.00 and rebounded back to short-term resistance near $57.00. Look for XEC to show weakness again tomorrow morning (like a drop under $57.50) before opening new positions.

Our target is $51.00. We do not want to hold over the Feb 15th earnings report.

- Suggested Positions -

Long FEB $55 PUT (XEC1218N55) Entry $1.85

01/30/12 Trade opened on XEC gap down at $56.57

Entry on January 30 at $56.57
Earnings Date 02/15/12 (confirmed)
Average Daily Volume = 1.0 million
Listed on January 28, 2012


CLOSED BULLISH PLAYS

Mohawk Industries - MHK - close: 62.11 change: -1.34

Stop Loss: 61.95
Target(s): 67.50
Current Option Gain/Loss: -75.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/30 update: MHK underperformed the market today. The stock gapped open lower at $62.62 and then spiked down to $61.56 before paring its losses to -2.1% on the session. Our stop loss was hit at $61.95.

- Suggested Positions -

Feb $65 call (MHK1218B65) Entry $2.48 exit $0.60 (-75.8%)

01/30/12 stopped out at $61.95
01/28/12 new stop loss @ 61.95
01/26/12 new stop loss @ 61.75
01/17/12 MHK gapped open higher at $63.99

chart:

Entry on January 17 at $63.99
Earnings Date 02/22/12 (confirmed)
Average Daily Volume = 621 thousand
Listed on January 14, 2012


Omnicom Group - OMC - close: 46.26 change: -0.26

Stop Loss: 45.45
Target(s): 49.00
Current Option Gain/Loss: -19.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/30 update: OMC only lost 26 cents on the session but shares displayed a lot of weakness this morning. The stock gapped open lower at $45.67 and dropped to $44.97 before bouncing back. Our stop loss was hit at $45.45.

- Suggested Positions -

Feb $45 call (OMC1218B45) entry $1.80 exit $1.45*(-19.4%)

*exit price is an estimate. option did not trade at time of exit. 01/30/12 stopped out at $45.45
01/19/12 new stop loss @ 45.45, readers may want to take profits now (+66%)
01/18/12 new stop loss @ 44.75

chart:

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