Editor's Note:

Flowserve continues to climb and hit our exit target this afternoon. We also had plans to exit CTXS and PLL this morning. I have removed GMCR and WLP as potential trades.

Current Portfolio:


CALL Play Updates

Caterpillar, Inc. - CAT - close: 113.96 change: +1.43

Stop Loss: 111.95
Target(s): 119.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/16 update: CAT managed to rally +1.2%, which was better than the S&P 500 and the Dow Industrials. Yet shares remain under resistance at the $115.00 level.

I am suggesting a trigger to open bullish positions in CAT at $115.25. If triggered we'll use a stop loss at $111.95. Our initial target is $119.75. It's possible that the 2011 high near $116.50 could be resistance but I doubt it, not after CAT spent the last two weeks building up steam for a new leg higher.

FYI: The Point & Figure chart for CAT is bullish with a $165 target.

Trigger @ 115.25

- Suggested Positions -

buy the Mar $120 call (CAT1217C120)

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 7.5 million
Listed on February 14, 2012


Capital One Financial - COF - close: 49.29 change: +0.11

Stop Loss: 47.75
Target(s): 54.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/16 update: I am a little surprised by the trading action in COF today. Financial stocks were showing relative strength with the XLF ETF up +1.5% on Thursday. Yet COF gapped open lower and only managed a +0.2% gain.

Currently our plan is to launch bullish positions when COF trades at $50.25 or higher. Our multi-week exit target is $54.75. I am suggesting we keep our position size small to limit our risk.

Trigger @ $50.25 (small positions)

- Suggested Positions -

buy the Mar $50 call (COF1217C50)

Entry on February xx at $ xx.xx
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 15, 2012


CommVault Systems - CVLT - close: 54.49 change: +0.52

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:
02/16 update: CVLT is drifting higher. I still don't want to chase it. If CVLT doesn't cooperate tomorrow we'll likely drop it to make room for something else.

No changes from my prior comments yet. 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

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: 87.76 change: +0.07

Stop Loss: 84.75
Target(s): 89.75 & 92.50
Current Option Gain/Loss:(Feb$87.5c:+130.0%) & Mar$87.5c: +10.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/16 update: Hmm... DLTR did not truly participate in the market's rally today. Shares were moving lower after the early morning rally. The stock traded near $87.00 before finally paring its losses in the last hour of trading. The relative weakness today is worrisome.

I am not suggesting new positions at this time. Our exit target for the March calls is $92.50 but the $90.00 level could be round-number resistance.

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

02/14/12 scheduled close for the Feb. $87.50 calls at the closing bell tonight. bid on the call option was $1.15 (+130%).
02/13/12 prepare to exit our Feb. calls at the close tomorrow
02/09/12 trade opened
02/04/12 Only open small (half-sized) positions if DLTR hits our entry point at $86.75

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


3M Co. - MMM - close: 87.65 change: +0.64

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:
02/16 update: MMM managed a +0.7% rebound. Shares remain inside the four-week sideways consolidation. Currently the plan is to open bullish positions at $88.50.

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.

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


Sherwin-Williams - SHW - close: 99.74 change: +0.52

Stop Loss: 97.45
Target(s): 104.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Comments:
02/16 update: Traders bought the dip near SHW's rising 10-dma and shares almost erased yesterday's pull back. The stock continues to consolidate under resistance near the $100.00 mark. Our plan is to open bullish positions if SHW can trade at $100.25 or higher. If triggered we'll aim for $104.75.

Trigger @ $100.25

- Suggested Positions -

buy the Mar $100 call (SHW1217C100)

Entry on February xx at $ xx.xx
Earnings Date 04/23/12 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on February 14, 2012


S&P Oil ETF - XES - close: 38.24 change: +0.81

Stop Loss: 36.45
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: - 2.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/16 update: Energy stocks were showing some relative strength today and the XES rallied +2.1%. The close back above the $38.00 level is a positive. Today's bounce negates yesterday's bearish reversal candlestick. I am not suggesting new positions at this time.

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 Mar $36 call (XES1217C36) Entry $2.45

02/14/12 exited Feb. calls at the close: bid @ $0.70 (-48.1%)
02/13/12 prepare to exit our Feb. $37 calls at the closing bell tomorrow.

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


Oil & Gas Exploration ETF - XOP - close: 60.35 change: +1.13

Stop Loss: 56.45
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: +39.4% & Jun$60c: +18.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/16 update: The XOP continues to show strength. Traders quickly bought the dip this morning and the ETF closed at new multi-month highs. Shares were also able to close above potential round-number resistance at the $60.00 mark. FYI: The Point & Figure chart for XOP is bullish with a $74 target.

- Suggested Positions -

Long Mar $60 call (XOP1217C60) Entry $1.70

- or -

Long Jun $60 call (XOP1216F60) Entry $4.10

Entry on February 14 at $58.75
Earnings Date --/--/--
Average Daily Volume = 3.8 million
Listed on February 13, 2012


PUT Play Updates

Currently we do not have any active put trades.


CLOSED BULLISH PLAYS

Citrix Systems - CTXS - close: 75.55 change: +1.39

Stop Loss: 69.75
Target(s): Mar calls: $76.50
Current Option Gain/Loss: (Feb70c: + 8.1%) & Mar70c: +77.2%
Time Frame: 2 to 4 weeks
New Positions: , see below

Comments:
02/16 update: Yesterday the stock market looked poised for bigger declines so we decided to exit our CTXS positions at the opening bell this morning. Shares gapped open higher at $74.41 and eventually rallied to a +1.8% gain.

Earlier Comments:
The plan was to keep our position size small.

(small positions!) - Suggested Positions -

Mar $70 calls (CTXS1217C70) Entry $3.30 exit $5.85*(+77.2%)

02/16/12 exited positions at the opening bell
*option did not trade at time of our exit
02/15/12 prepare to exit at the opening bell tomorrow
CTXS almost hit our exit target today. Target = $76.50, high today = $76.45
02/13/12 new stop loss @ 69.75
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


Flowserve Corp. - FLS - close: 117.89 change: +1.31

Stop Loss: 115.40
Target(s): 114.50 for Feb call & 118.00 for April call
Current Option Gain/Loss: (Feb $110c: +48.2%) & Apr$115c: +91.2%.
Time Frame: 3 to 4 weeks
New Positions: , see below

Comments:
02/16 update: Target achieved.

We were planning to exit our FLS positions at the closing bell tonight but shares did us a favor and hit our exit target at $118.00 instead.

- Suggested Positions -

APR $115 call (FLS1221D115) Entry $4.00 exit $7.65 (+ 91.2%)

02/16/12 exit target hit at $118.00
02/15/12 prepare to exit positions at the close tomorrow
02/15/12 new stpo loss @ 115.40
02/13/12 new stop loss @ 114.40, readers may want to exit now. April $115 call (bid) is at $7.20 (+80.0%)
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


Pall Corp. - PLL - close: 63.81 change: +0.55

Stop Loss: 61.75
Target(s): 64.75
Current Option Gain/Loss:(Feb$60c: + 91.4%) & Mar$60c: +34.4%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/16 update: PLL opened lower by a few cents before dipping toward short-term support at $63.00 and bouncing higher. Shares ended the day up +0.8%. We had adjusted our plan to exit positions at the opening bell this morning.

- Suggested Positions -

MAR $60 call (PLL1217C60) Entry $2.90 exit $3.90 (+34.4%)

02/16/12 exited at the opening bell
02/15/12 prepare to exit positions at the opening bell tomorrow
02/13/12 readers may want to exit early to lock in gains on our March calls.
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


CLOSED BEARISH PLAYS

Green Mountain Coffee Roasters - GMCR - close: 69.05 change: +3.30

Stop Loss: 65.01
Target(s): 56.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/16 update: I am giving up on GMCR as a potential short-term put trade. The stock has continued to bounce with a little support from its rising 10-dma. Our trigger to buy puts was never hit.

Buy Puts Trigger @ $61.75 (small positions)

Trade did not open.

02/16/12 GMCR removed from the newsletter.

chart:

Entry on February xx at $ xx.xx
Earnings Date 05/03/12 (unconfirmed)
Average Daily Volume = 6.4 million
Listed on February 11, 2012


WellPoint Inc. - WLP - close: 66.23 change: +1.08

Stop Loss: 65.15
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/16 update: WLP continues to bounce and looks poised to breakout through the top of its recent trading range. Our trigger to open bearish positions was not hit and doesn't look like it will be hit any time soon.

Buy Puts Trigger @ 63.25

Trade did not open.

02/16/12 WLP removed from the newsletter.

chart:

Entry on February xx at $ xx.xx
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 4.1 million
Listed on February 11, 2012