Editor's Note:

Looks like stocks suffered a little Super Bowl hangover on Monday. Energy stocks showed relative strength but most of the market felt some profit taking.

LNN was stopped out thanks to a downgrade. WCG was stopped out. We closed the MON trade as planned. XES was triggered.

Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 44.40 change: -0.50

Stop Loss: 43.25
Target(s): 49.25
Current Option Gain/Loss: Unopened
Time Frame: up to the Feb. 23rd earnings report
New Positions: Yes, see below

Comments:
02/06 update: CBI tried to rally this morning but failed at the $45.00 level thanks to a lackluster day in the market. Shares faded lower throughout the session. We are waiting for a breakout.

I am suggesting a trigger to open bullish positions at $45.25. If triggered we'll use a stop at $43.25. Our exit target is $49.25. We do not want to hold over the Feb 23rd earnings report. FYI: The Point & Figure chart for CBI is bullish with a long-term $70 target.

(Buy Calls) Trigger @ $45.25

- Suggested Positions -

buy the MAR $45 call (CBI1217C45)

Entry on February xx at $ xx.xx
Earnings Date 02/23/12 (unconfirmed)
Average Daily Volume = 852 thousand
Listed on February 04, 2012


Cognizant Technology - CTSH - close: 72.37 change: -0.98

Stop Loss: 71.45
Target(s): 76.50
Current Option Gain/Loss: -17.6%
Time Frame: exit prior to the Feb. 8th earnings
New Positions: see below

Comments:
02/06 update: After big gains last week CTSH hit some profit taking today with a -1.3% decline. The stock found support near $72.00. Tomorrow is our last day. We plan to exit Tuesday at the closing bell to avoid holding over earnings.

- 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

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: 85.83 change: +0.18

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:
02/06 update: DLTR rebounded off its Monday morning lows near $85.00 but didn't have enough fuel to get past the $86.00 level. We are still waiting for a breakout to new highs. 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

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: 114.95 change: +0.52

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: +47.5%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
02/06 update: FLS continues to show relative strength. Traders bought the dip this morning and FLS rallied to a +0.4% gain and a new relative high.

I am not suggesting new positions at this time. Readers may want to raise their stop 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 -

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

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: 95.19 change: -0.63

Stop Loss: 93.40
Target(s): 98.50
Current Option Gain/Loss:(Jan$95c: -100%) Feb$95c: -10.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/06 update: The IYT saw some minor profit taking on Monday but it still underperformed the S&P 500. Look for short-term support near $94.00.

I am not suggesting new positions at this time.

- 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

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


Laboratory Corp. - LH - close: 91.00 change: -2.09

Stop Loss: 90.75
Target(s): 94.00
Current Option Gain/Loss: + 50.0%
Time Frame: up to the Feb. 10th earnings report.
New Positions: see below

Comments:
02/06 update: Ouch! LH really underperformed today with a -2.2% drop. I couldn't find any specific news behind today's relative weakness. Probably just profit taking after a strong two-week rally. The low today was $90.79 so our trade is still open. Our new stop is $90.75. More aggressive traders will want to seriously consider keeping their stop under the $90.00 mark, which is probably round-number support. Our call option went from +140% to +50%. Readers may want to exit early now. 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.

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


Pall Corp. - PLL - close: 62.33 change: +0.14

Stop Loss: 59.45
Target(s): 64.75
Current Option Gain/Loss: Feb$60c: +42.8% & Mar$60c: +20.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/06 update: PLL rebounded off its morning lows to post another gain. If the market corrects lower I would look for PLL to dip toward the $61-60 zone. 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

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: 73.42 change: -0.22

Stop Loss: 69.90
Target(s): 74.75
Current Option Gain/Loss: +77.7%
Time Frame: up to the Feb. 16 earnings report
New Positions: see below

Comments:
02/06 update: After Friday's big gain I am surprised that today's profit taking wasn't stronger. I don't see any changes from my prior comments. 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.

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.

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


S&P Oil ETF - XES - close: 38.16 change: +0.61

Stop Loss: 36.45
Target(s): 43.00
Current Option Gain/Loss: Feb37c: -14.8% & Mar36c: + 4.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/06 update: The XES continued to rally on Monday. This oil services ETF outperformed the major indices and hit our trigger to buy calls at $37.75.

The P&F chart now sports a brand new buy signal with a $49 target.

Earlier Comments:
The option spreads on the XES a bit wide, which makes this a higher-risk trade. I am suggesting we keep our position size small to limit our risk. Our multi-week exit target is $43.00. I prefer the March calls but short-term traders can use February options but these expire in two weeks.

(small positions) - Suggested Positions -

Long Feb $37 call (XES1218B37) Entry $1.35

- or -

Long Mar $36 call (XES1217C36) Entry $2.45

Entry on February 06 at $37.75
Earnings Date --/--/--
Average Daily Volume = 177 thousand
Listed on February 04, 2012


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Lindsay Corp. - LNN - close: 63.74 change: -1.94

Stop Loss: 61.75
Target(s): 69.75
Current Option Gain/Loss: Feb65c: -22.7% & Mar65c: - 8.0%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/06 update: Shares of LNN were downgraded from a "buy" to a "neutral" this morning. The stock reacted with a gap open lower at $64.36 and a quick plunge to $61.32 (-6.6%) before bouncing back. Our stop loss was hit at $61.75.

The overall trend is still bullish so I'd keep an eye on this stock.

(small positions) - Suggested Positions -

Feb $65 call (LNN1218B65) Entry $1.10 exit $0.85 (-22.7%)

- or -

Mar $65 call (LNN1217C65) Entry $2.50 exit $2.30 (- 8.0%)

02/06/12 stopped out at $61.75 thanks to an analyst downgrade.
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: 79.65 change: -2.50

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:
02/06 update: Over the weekend we were unhappy with the lack of progress in MON and decided to close positions at the opening bell on Monday. Unfortunately shares gapped open lower at $81.33 before falling to a -4% loss intraday.

Earlier Comments:
MON can be somewhat volatile so we want to keep our position size small.

(small positions) - Suggested Positions -

FEB $85 call (MON1218B85) Entry $0.80 exit $0.30 (-62.5%)

- or -

MAR $85 call (MON1217C85) Entry $1.80 exit $1.09 (-39.4%)

02/06/12 planned exit at the open. MON gapped open lower @ 81.33
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


Wellcare Health Plans - WCG - close: 59.96 change: -0.59

Stop Loss: 59.45
Target(s): 64.50
Current Option Gain/Loss: -30.1%
Time Frame: exit prior to earnings on Feb. 15th
New Positions: see below

Comments:
02/06 update: The healthcare sector underperformed today. WCG broke down under what should have been support near $60.00. Shares hit our stop loss at $59.45.

- Suggested Positions -

Feb $60 call (WCG1218B60) Entry $2.79 exit $1.95 (-30.1%)

02/06/12 stopped out at $59.45
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