Editor's Note:

Friday's mild market pull back was enough to snap 2012's five-week market rally. Actually the market's trend is still up but stocks remain overbought. Don't be surprised to see more profit taking soon.

Current Portfolio:


CALL Play Updates

Citrix Systems - CTXS - close: 71.46 change: -0.52

Stop Loss: 68.75
Target(s): Mar calls: $76.50
Current Option Gain/Loss: (Feb70c: + 8.1%) & Mar70c: +12.1%
Time Frame: 2 to 4 weeks
New Positions: , see below

Comments:
02/11 update: After almost two weeks of gains CTXS finally hit some profit taking. Traders did buy the dip on Friday morning and trimming losses to just -0.7%. If the market pull back continues we can look for potential support near $70.00 or the 200-dma near $69.00. I am not suggesting new bullish positions at this time.

It was our plan to exit our Feb. $70 calls at the opening bell on Friday.

Earlier Comments:
The plan was to keep our position size small. Our target is $76.50 for the March calls.

(small positions!) - Suggested Positions -

Feb $70 calls (CTXS1218B70) Entry $1.85 exit $2.00 (+ 8.1%)

- or -

Long Mar $70 calls (CTXS1217C70) Entry $3.30

02/10/12 planned exit for Feb. $70 calls @ the open.
bid on calls opened at $2.00 (+8.1%)
02/09/12 new stop loss @ 68.75
02/09/12 prepare to exit Feb. $70 calls at the open tomorrow. current bid $2.50 (+35%)

chart:

Entry on February 07 at $70.50
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on February 06, 2012


CommVault Systems - CVLT - close: 53.65 change: -0.68

Stop Loss: 49.75
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/11 update: CVLT gave up -1.25% after hitting record highs on Thursday. Our plan is to buy calls on a dip at $51.50. More conservative traders may want to wait and buy the bounce from this area. FYI: The Point & Figure chart for CVLT is bullish with a long-term $86 target.

NOTE: We want to keep our position size small because the option spreads on CVLT are a bit wide.

buy-a-dip trigger @ 51.50

- Suggested Positions - (small positions!)

buy Mar $55 call (CVLT1217C55)

02/09/12 trade did not open (barely). Adjust entry point strategy to buy a dip at $51.50, stop loss $49.75

chart:

Entry on February xx at $ xx.xx
Earnings Date 05/10/12 (unconfirmed)
Average Daily Volume = 531 thousand
Listed on February 08, 2012


Dollar Tree - DLTR - close: 86.90 change: +1.62

Stop Loss: 84.75
Target(s): 89.75 & 92.50
Current Option Gain/Loss: Feb$87.5c: -10.0% & Mar$87.5c: - 2.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/11 update: Profit taking in DLTR was pretty mild on Friday. Traders bought the dip near the $86.00 level Friday morning and DLTR almost made it back into positive territory. The intraday action looks bullish. If both DLTR and the S&P 500 index open positive on Monday I'd use it as a new entry point to buy calls.

I want to remind you that February options expire in five trading days.

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.

(small positions) - Suggested Positions -

Long Feb $87.50 call (DLTR1218B87.5) entry $0.50
exit target: 89.75

- or -

Long Mar $87.50 call (DLTR1217C87.5) entry $2.30
exit target: 92.50

02/09/12 trade opened
02/04/12 Only open small (half-sized) positions if DLTR hits our entry point at $86.75

chart:

Entry on February 09 at $86.75
Earnings Date 02/22/12 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on February 02, 2012


Flowserve Corp. - FLS - close: 115.35 change: -0.01

Stop Loss: 112.40
Target(s): 114.50 for Feb call & 118.00 for April call
Current Option Gain/Loss: (Feb $110c: +48.2%) & Apr$115c: +60.0%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
02/11 update: FLS gapped open lower on Friday morning but rallied off short-term technical support at its rising 10-dma. FLS managed to close almost unchanged on the session, which outperforms the major indices. I am not suggesting new positions at this time. We will raise our stop loss to $112.40. Readers might want to just lock in gains now.

- Suggested Positions -

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

02/11/12 new stop loss @ 112.40
02/09/12 new stop loss @ 111.75
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


3M Co. - MMM - close: 87.14 change: -0.88

Stop Loss: 86.45
Target(s): 94.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
02/11 update: The short-term bullish trend in MMM is in jeopardy. Shares gave up almost -1% on Friday after almost two weeks of failing to breakout past the $88.00 area. We don't want to give up just yet. The plan is to open bullish positions at $88.50. More nimble traders might want to consider buying calls on a dip near $86.00 or $85.00.

Earlier Comments:
The $90 level could be round-number resistance but we're setting our exit target at $94.00. FYI: The Point & Figure chart for MMM is bullish with a $109 target.

Breakout Trigger (buy calls) @ $88.50

- Suggested Positions -

buy the MAR $90 call (MMM1217C90)

02/09/12 removed the February call.

chart:

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on February 07, 2012


Pall Corp. - PLL - close: 63.27 change: -0.46

Stop Loss: 61.75
Target(s): 64.75
Current Option Gain/Loss:(Feb$60c: + 91.4%) & Mar$60c: +37.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/11 update: After two weeks of gains PLL hit some profit taking on Friday. Overall the pull back was pretty mild but it may not be over yet. If the market continues to correct lower this week I would look for a dip near $62.00 or the 10-dma. Further market declines could push PLL toward the rising 30-dma near $60.00.

We planned to exit our Feb. $60 calls at the open on Friday morning. Our exit target for the March calls remains $64.75. More aggressive traders could aim higher.

- Suggested Positions -

FEB $60 call (PLL1218B60) Entry $1.75 exit $3.35 (+ 91.4%)

- or -

Long MAR $60 call (PLL1217C60) Entry $2.90

02/10/12 exit Feb $60 call, bid @ $3.35 (+91.4%)
02/09/12 prepare to exit Feb calls at the open tomorrow. current bid is $3.60 (+105%)
02/09/12 new stop loss @ 61.75
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


S&P Oil ETF - XES - close: 37.51 change: -0.37

Stop Loss: 36.45
Target(s): 43.00
Current Option Gain/Loss: Feb37c: -51.8% & Mar36c: -14.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/11 update: As expected the XES has continued to pull back. Shares are nearing short-term technical support at the 10-dma. If this level fails we can look or a dip toward $37.00 or its 200-dma instead. Readers may want to wait for a bounce before considering new bullish positions.

I would not buy February options, which expire in five trading days.

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

chart:

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

Chicago Bridge & Iron - CBI - close: 43.42 change: -0.23

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:
02/11 update: It's been a week and CBI continues to slip lower. Traders did buy the dip on Friday morning but the short-term trend is lower. I might be tempted to buy a dip near $42.00 with a very tight stop loss. Nimble traders could buy a rally past $44.00. The newsletter is dropping CBI as a bullish candidate. We'll look at it again when shares near what appears to be major resistance at the $45.00 level.

Our trade to buy calls at $45.25 was not triggered.

(Buy Calls) Trigger @ $45.25

Trade did not open.

02/11/12 CBI removed from the newsletter. trade did not open.

chart:

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


iShares Transportation - IYT - close: 93.76 change: -1.05

Stop Loss: 93.90
Target(s): 98.50
Current Option Gain/Loss:(Jan$95c: -100%) Feb$95c: -68.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/11 update: We have been cautious on the transports all week with the IYT consolidating lower. Thursday we raised our stop loss to $93.90. Unfortunately, the IYT gapped open lower at $93.75 on Friday morning. If the market continues to slide then I would look for potential support in the $91-90 area.

- Suggested Positions -

Feb $95 call (IYT1218B95) entry $1.45 exit $0.45 (-68.9%)
target 98.50

02/10/12 stopped out on gap down at $93.75
02/09/12 new stop loss @ 93.90
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