Editor's Note:

The stock market surged to new relative highs on Friday fueled by better than expected job numbers.

IWM hit our exit target. FLS also hit our exit target for the February calls. LNN was triggered. XEC was stopped out. We closed BRK.B, ESRX, LUFK, and PVH on Friday morning.

Current Portfolio:


CALL Play Updates

Cognizant Technology - CTSH - close: 73.35 change: +0.74

Stop Loss: 71.45
Target(s): 76.50
Current Option Gain/Loss: +23.5%
Time Frame: exit prior to the Feb. 8th earnings
New Positions: see below

Comments:
02/04 update: We only have two days left. CTSH is due to report earnings on Feb. 8th before the opening bell. We will plan to exit on Tuesday at the close unless shares hit our stop or exit target first. I am raising our stop loss to $71.45. No new positions at this time.

- Suggested Positions -

Long Feb $75 call (CTSH1218B75) Entry $0.85

02/04/12 new stop loss @ 71.45
02/01/12 new stop loss @ 69.75
01/24/12 trade opened at $71.05

chart:

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


Dollar Tree - DLTR - close: 86.03 change: +0.35

Stop Loss: 84.75
Target(s): 89.75 & 92.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/04 update: DLTR's performance on Friday was very disappointing. If shares can't breakout to new highs while the market is surging higher then when will DLTR move higher? I am suggesting we only open small positions if DLTR hits our trigger at $86.75.

Earlier Comments:
I am setting individual targets for our options below. Keep a wary eye on the $90.00 level since it might be round-number resistance. FYI: The Point & Figure chart for DLTR is bullish with a long-term $113 target.

(Buy Calls) Trigger @ 86.75 (small positions)

- Suggested Positions -

buy the Feb $87.50 call (DLTR1218B87.5)
exit target: 89.75

- or -

buy the Mar $87.50 call (DLTR1217C87.5)
exit target: 92.50

02/04/12 Only open small (half-sized) positions if DLTR hits our entry point at $86.75

chart:

Entry on February xx at $ xx.xx
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on February 02, 2012


Flowserve Corp. - FLS - close: 114.43 change: +2.46

Stop Loss: 109.45
Target(s): 114.50 for Feb call & 118.00 for April call
Current Option Gain/Loss: Feb $110c: +48.2% & Apr$115c: +45.0%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
02/04 update: Target achieved. FLS gapped open higher at $113.63 and rallied to a new multi-month high above $114.00. Our exit target for the February calls was hit at $114.50. The bid on the Feb. $110 call was $5.00 (+48.2%).

We still have the April $115 calls. I am not suggesting new positions at this time. We are raising our stop loss to $109.45. Readers may want to raise their stop even higher but I wouldn't be surprised to see a dip back toward the 10-dma. FYI: The Point & Figure chart for FLS is bullish with a $139 target.

- Suggested Positions -

FEB $110 call (FLS1218B110) Entry $2.59, Exit $5.00 (+48.2%)
exit target: $114.50

- or -

Long APR $115 call (FLS1221D115) Entry $4.00
exit target: $118.00

02/04/12 new stop loss @ 109.45
02/03/12 exit target hit at $114.50 for Feb. $110 calls. exit $5.00 (+48.2%)
02/02/12 new stop loss @ 107.95
02/01/12 new stop loss @ 106.95
02/01/12 adjusted exit targets: $114.50 for Feb call, $118.00 for Apr call
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

chart:

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


iShares Transportation - IYT - close: 95.82 change: +1.07

Stop Loss: 93.40
Target(s): 98.50
Current Option Gain/Loss:(Jan$95c: -100%) Feb$95c: +20.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/04 update: IYT rallied +1.1% to close at new six-month highs. The trend is definitely up but the transports might have done better on Friday if oil prices hadn't seen a bounce as well.

I am not suggesting new positions at this time. We are raising the stop loss to $93.40. More conservative traders may want to adjust their stop closer to $94.00 instead.

- Suggested Positions -

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

02/04/12 new stop loss @ 93.40
01/31/12 new stop loss @ 92.45
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

chart:

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


Laboratory Corp. - LH - close: 93.09 change: +0.67

Stop Loss: 90.75
Target(s): 94.00
Current Option Gain/Loss: +140.0%
Time Frame: up to the Feb. 10th earnings report.
New Positions: see below

Comments:
02/04 update: LH closed at new six-month highs. We only have four trading days left on this trade. More conservative traders may want to exit early now. I am adjusting our exit target down to $94.00 and our stop loss up to $90.75. I am not suggesting new positions at this time. Remember, we plan to exit prior to the Feb. 10th earnings report.

- Suggested Positions -

Long Feb $90 call (LH1218B90) Entry $1.50

02/04/12 new stop loss @ 90.75, adjust target to $94.00
02/01/12 new stop loss @ 89.65
01/31/12 If you haven't done so yet readers may want to take profits now (+80%)
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.

chart:

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


Lindsay Corp. - LNN - close: 65.68 change: +2.13

Stop Loss: 61.75
Target(s): 69.75
Current Option Gain/Loss: Feb65c: +68.1% & Mar65c: +32.0%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/04 update: Our new trade on LNN is off to a strong start. Shares gapped higher on Friday at $64.75 and surged to $66.58 (+4.7%) before paring its gains to just +3.3%. We had a trigger to buy calls at $64.50 so the play was opened on Friday morning. Our exit target is $69.75. FYI: The Point & Figure chart for LNN is bullish with a long-term $87 target.

(small positions) - Suggested Positions -

Long Feb $65 call (LNN1218B65) Entry $1.10

- or -

Long Mar $65 call (LNN1217C65) Entry $2.50

02/03/12 LNN gapped open higher at $64.75, above our trigger at $64.50

chart:

Entry on February 03 at $64.75
Earnings Date 03/29/12 (unconfirmed)
Average Daily Volume = 150 thousand
Listed on February 02, 2012


Monsanto - MON - close: 82.15 change: +0.02

Stop Loss: 78.99
Target(s): 86.90
Current Option Gain/Loss: Feb85c: -40.0% & Mar$85c: -18.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/04 update: Warning! MON did not participate in the market-wide rally on Friday. I find this lack of strength worrisome. We will plan to cut our losses on Monday morning and exit at the open.

Earlier Comments:
MON can be somewhat volatile so we want to keep our position size small. If triggered our target is $86.90. FYI: The Point & Figure chart for MON is bullish with a long-term $113 target.

(small positions) - Suggested Positions -

Long FEB $85 call (MON1218B85) Entry $0.80

- or -

Long MAR $85 call (MON1217C85) Entry $1.80

02/04/12 MON did not participate with the market rally on Friday. Plan to exit early on Monday morning at the open

chart:

Entry on January 31 at $82.75
Earnings Date 01/05/12
Average Daily Volume = 4.8 million
Listed on January 30, 2012


Pall Corp. - PLL - close: 62.19 change: +1.36

Stop Loss: 59.45
Target(s): 64.75
Current Option Gain/Loss: Feb$60c: +22.8% & Mar$60c: +20.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/04 update: PLL produced a strong surge to new all-time highs on Friday. Shares hit $62.76 before paring its gains. I am raising our stop loss up to $59.45. Our target is $64.75.

FYI: The Point & Figure chart for PLL is bullish with an $83 target.

- Suggested Positions -

Long FEB $60 call (PLL1218B60) Entry $1.75

- or -

Long MAR $60 call (PLL1217C60) Entry $2.90

02/04/12 new stop loss @ 59.45

chart:

Entry on February 02 at $61.00
Earnings Date 03/12/12 (unconfirmed)
Average Daily Volume = 769 thousand
Listed on January 31, 2012


SPX Corp. - SPW - close: 73.64 change: +2.94

Stop Loss: 69.90
Target(s): 74.75
Current Option Gain/Loss: +91.1%
Time Frame: up to the Feb. 16 earnings report
New Positions: see below

Comments:
02/04 update: SPW was a strong outperformer on Friday with a +4.1% gain. The stock surged to $74.31 intraday. Our exit target is $74.75 but more conservative traders may want to go ahead and exit early now. I am not suggesting new positions at this time. We are raising our stop loss to $69.90.

Earlier Comments:
Our target is 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.

- Suggested Positions -

Long Feb $70 call (SPW1218B70) Entry $2.25

02/04/12 new stop loss @ 69.90, readers may want to exit now to lock in gains.

chart:

Entry on January 31 at $70.50
Earnings Date 02/16/12 (unconfirmed)
Average Daily Volume = 711 thousand
Listed on January 26, 2012


Wellcare Health Plans - WCG - close: 60.55 change: -0.70

Stop Loss: 59.45
Target(s): 64.50
Current Option Gain/Loss: - 3.2%
Time Frame: exit prior to earnings on Feb. 15th
New Positions: see below

Comments:
02/04 update: WCG and many of its peers underperformed the market on Friday. I couldn't find any specific news for the group's underperformance. WCG's failure to participate in the market's rally is troubling. More consrevative traders may want to go ahead and exit now. I am not suggesting new positions although technically broken resistance near $60.00 should be new support. Please note our new stop loss at $59.45.

Earlier Comments:
Our target is $64.50. We do not want to hold over the Feb. 15th earnings report. FYI: The Point & Figure chart for WCG is bullish with a long-term $74 target.

- Suggested Positions -

Long Feb $60 call (WCG1218B60) Entry $2.79

02/04/12 new stop loss @ 59.45. Cautious traders may want to exit early now since WCG did not rise with the market on Friday
02/01/12 trade opened on gap higher at $60.28, above our trigger of $60.25

chart:

Entry on February 01 at $60.28
Earnings Date 02/15/12 (confirmed)
Average Daily Volume = 485 thousand
Listed on January 31, 2012


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Berkshire Hathaway Inc. - BRK.B - close: 80.00 change: +1.27

Stop Loss: 77.75
Target(s): 84.00
Current Option Gain/Loss: -48.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/04 update: BRK.B had been underperforming and on Thursday night we decided to close BRK.B at the open on Friday. Shares opened at $79.56 and rallied to resistance at $80.00. If the stock can breakout and close over $80.00 I would be tempted to buy calls again.

- Suggested Positions -

Feb $80 call (BRKB1218B80) entry $0.90, exit $0.46 (-48.8%)

02/03/12 closed at the open $79.56
02/02/12 prepare to exit at the open tomorrow morning.
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.

chart:

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


Express Scripts, Inc. - ESRX - close: 52.08 change: +0.33

Stop Loss: 49.95
Target(s): 57.00
Current Option Gain/Loss: -39.0%
Time Frame: exit prior to February earnings
New Positions: see below

Comments:
02/04 update: The plan was to exit our ESRX positions at the open on Friday. Shares gapped higher at $52.12 and spent the rest of the day drifting sideways. The overall pattern is bullish but short-term momentum has stalled.

- Suggested Positions -

Feb $52.50 call (ESRX1218B52.5) Entry $2.00 exit $1.22 (-39.0%)

02/03/12 exit at the open
02/02/12 ESRX is not performing. We want to exit early at the open tomorrow.

chart:

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


iShares Russell 2000 ETF - IWM - close: 82.95 change: +1.77

Stop Loss: 77.95
Target(s): 82.50
Current Option Gain/Loss: +154.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/04 update: Target achieved.

The IWM gapped open higher at $82.47 and surged to $83.22 before trimming its gains. Our exit target was hit at $82.50 early Friday morning.

- Suggested Positions -

Feb $80 call (IWM1218B80) Entry $1.14 exit $2.90 (+154.3%)

02/03/12 target hit at $82.50
02/02/12 new stop loss @ 78.75
02/01/12 new stop loss @ 77.95
01/31/12 new stop loss @ 77.45
01/19/12 IWM gapped open higher at $78.13

chart:

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


Lufkin Industries - LUFK - close: 77.93 change: +1.82

Stop Loss: 73.40
Target(s): 82.00
Current Option Gain/Loss: - 42.3%
Time Frame: up to the Feb. 9th earnings report.
New Positions: see below

Comments:
02/04 update: The stock market's big rally on Friday pushed LUFK to gap open higher at $77.41. The stock has broken out to new relative highs. Shares are facing potential resistance at $80.00. It was our plan to exit positions on Friday at the open.

- Suggested Positions -

Feb $80 call (LUFK1218B80) Entry $2.95 exit $1.70 (-42.3%)

02/03/12 closed on Friday morning
02/02/12 exit tomorrow at the open.
01/25/12 triggered @ 76.60

chart:

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


PVH Corp. - PVH - close: 78.11 change: +1.85

Stop Loss: 74.75
Target(s): 83.50
Current Option Gain/Loss: Feb77.50c: -75.0% & Mar$80c: -29.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/04 update: The stock market's widespread gains on Friday finally produced the move we have been looking for in PVH. Shares broke out past resistance near $78.00 to close at new highs. Yet we had already decided to close our position on Friday morning for PVH's lack of movement. Nimble traders may want to reconsider new positions here if PVH sees any follow through higher on Monday. Our trade was closed with the open on Friday at $77.11.

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)

Feb $77.50 call (PVH1218B77.5) Entry $2.40 exit $0.60 (-75.0%)

- or -

Mar $80 call (PVH1217C80) Entry $2.55 exit $1.80 (-29.4%)

02/03/12 exit at the open
02/02/12 prepare to exit at the open tomorrow.
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.

chart:

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


CLOSED BEARISH PLAYS

Cimarex Energy Co - XEC - close: 61.45 change: +1.68

Stop Loss: 60.25
Target(s): 51.00
Current Option Gain/Loss: -74.5%
Time Frame: exit prior to earnings on Feb. 15th
New Positions: see below

Comments:
02/04 update: The rally in XEC continued thanks to the market-wide surge fueled by better than expected jobs data. Shares of XEC gapped open higher at $60.56 before climbing toward its 50-dma. Our stop loss was $60.25 so the trade was closed at the opening bell.

- Suggested Positions -

Long FEB $55 PUT (XEC1218N55) Entry $1.85 exit $0.47 (-74.5%)

02/03/12 stopped out at gap open $60.56
01/30/12 Trade opened on XEC gap down at $56.57

chart:

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