Editor's Note:

The U.S. market ended the session with widespread declines but losses were generally mild. Financials were underperformers.

Current Portfolio:


CALL Play Updates

BorgWarner Inc. - BWA - close: 80.22 change: -0.09

Stop Loss: 78.75
Target(s): 89.00
Current Option Gain/Loss: -67.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/22 update: It was a quiet day for stocks and BWA bouncing along support near the $80.00 level. The high today was $80.83. Readers may want to consider waiting for a rally past $80.85 or $81.00 before considering new bullish positions.

Earlier Comments:
A breakout would mean new record highs and could produce a some short covering in BWA. The most recent data listed short interest at 14% of the 108 million share float. FYI: The Point & Figure chart for BWA is bullish with a $108 target.

- Suggested Positions -

Long Mar $85 call (BWA1217C85) Entry $1.55

02/17/12 trade opened on BWA's gap open higher at $82.49

Entry on February 17 at $82.49
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 1.3 million
Listed on February 16, 2012


Caterpillar, Inc. - CAT - close: 115.81 change: +0.81

Stop Loss: 111.95
Target(s): 119.75
Current Option Gain/Loss: - 3.4%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/22 update: CAT displayed relative strength with a strong surge higher this morning. Yet the stock stalled near $116.50 for the second day in a row. CAT still managed to outperform the major indices with a +0.7% gain. If both CAT and the S&P 500 index open positive tomorrow I would be tempted to buy calls here.

FYI: You'll notice that CAT is struggling to get past the 2011 highs near $116.50.

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

- Suggested Positions -

Long Mar $120 call (CAT1217C120) Entry $1.15

Entry on February 21 at $115.25
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 7.5 million
Listed on February 14, 2012


Capital One Financial - COF - close: 48.25 change: -0.41

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:
02/22 update: Financial stocks were some of the worst performers today. The pull back in COF wasn't that bad. However, if shares don't bounce soon we'll probably drop it as a potential candidate. Currently we're waiting for shares to breakout past resistance near $50.00. I am suggesting a trigger to buy calls at $50.25. We want to keep our position size small to limit our risk. Our multi-week exit target is $54.75.

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


Eastman Chemical Co. - EMN - close: 53.93 change: -0.46

Stop Loss: 53.25
Target(s): 59.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/22 update: EMN dipped toward the bottom of its prior, two-week trading range near $53.50 before paring its losses today. If shares don't rebound soon we'll probably drop it as a bullish candidate. More aggressive traders might consider bearish positions on a breakdown below $53.00.

I am suggesting a trigger to open small bullish positions at $55.05 with a stop loss at $53.25. Our target is $59.00. More conservative traders may want to wait for EMN to trade past its all-time high of $55.36 (set in 2011) before initiating positions. FYI: The Point & Figure chart for EMN is bullish with a long-term $91 target.

Trigger @ $55.05

- Suggested Positions -

buy the Mar $55 call (EMN1217C55)

Entry on February xx at $ xx.xx
Earnings Date 04/30/12 (unconfirmed)
Average Daily Volume = 2.6 million
Listed on February 18, 2012


Goldman Sachs - GS - close: 114.36 change: -2.27

Stop Loss: 114.75
Target(s): 125.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/22 update: Financial stocks were some of the market's worst performers today and GS helped lead the charge lower with a -1.9% decline. The stock's close under its 10-dma and exponential 200-dma is certainly short-term bearish. If shares do not recover soon we'll likely drop it as a bullish candidate.

Currently we are waiting for a breakout past resistance near $118.00 with a trigger to buy calls (small positions) at $118.25. GS can be a volatile stock at times so we want to keep our position size small. If triggered at $118.25 we will aim for $125.00.

Trigger @ $118.25 (small positions)

- Suggested Positions -

buy the Mar $120 call (GS1217C120) current ask $1.96

Entry on February xx at $ xx.xx
Earnings Date 04/19/12 (unconfirmed)
Average Daily Volume = 6.2 million
Listed on February 21, 2012


Jones Lang LaSalle - JLL - close: 80.95 change: -1.02

Stop Loss: 79.95
Target(s): 89.50
Current Option Gain/Loss: -58.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/22 update: JLL is down about two dollars in two days. The stock looks poised to test support near $80.00 soon. Nimble traders could buy a dip (or wait for a bounce) near the $80.00 level. We have a stop loss at $79.95.

- Suggested Positions -

Long Mar $85 call (JLL1217C85) Entry $2.40

Entry on February 17 at $83.75
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 518 thousand
Listed on February 16, 2012


3M Co. - MMM - close: 87.76 change: +0.16

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:
02/22 update: MMM displayed some minor strength with a gain but shares are essentially drifting sideways inside its nearly four-week trading range.

Currently I am suggesting a trigger to buy calls when MMM trades at $88.50 or higher. More conservative traders may want to wait for MMM to actually close over $88.50 before considering bullish positions.

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


Rockwell Automation - ROK - close: 82.20 change: -1.31

Stop Loss: 79.90
Target(s): 89.50
Current Option Gain/Loss: -51.6%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/22 update: Hmm... ROK erased yesterday's gains with today's -1.5% decline. Trades did buy the dip near its 10-dma midday. If both ROK and the S&P 500 open higher tomorrow I would still buy calls here. FYI: The Point & Figure chart for ROK is bullish with a $95 target.

- Suggested Positions -

Long Mar $85 call (ROK1217C85) Entry $1.55

Entry on February 21 at $82.75
Earnings Date 04/26/12 (unconfirmed)
Average Daily Volume = 1.2 million
Listed on February 18, 2012


Sherwin-Williams - SHW - close: 99.97 change: -0.61

Stop Loss: 98.25
Target(s): 104.75
Current Option Gain/Loss: -28.5%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
02/22 update: SHW saw some minor profit taking today. The trend is still higher. However, if the market does breakdown soon we should expect SHW to follow it lower. We will raise our stop loss to $98.25.

- Suggested Positions -

Long Mar $100 call (SHW1217C100) Entry $2.10

02/22/12 new stop loss @ 98.25

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: 39.15 change: +0.50

Stop Loss: 36.90
Target(s): 43.00
Current Option Gain/Loss:(Feb37c: -48.1%) & Mar36c: +22.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/22 update: The oil & gas equipment and services ETF is showing some strength today with a +1.3% gain. The close over the $39.00 level is encouraging.

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.

(small positions) - Suggested Positions -

Long Mar $36 call (XES1217C36) Entry $2.45

02/18/12 new stop loss @ $36.90
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: 60.32 change: -0.61

Stop Loss: 56.45
Target(s): 63.00
Current Option Gain/Loss: Mar$60c: +11.7% & Jun$60c: + 8.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/22 update: Hmm... the XOP saw its rally stall and pull back a bit today. Shares lost about 1%. A little profit taking now and then is normal and healthy. Look for a dip toward the rising 10-dma as a potential entry point (10-dma is currently at $59.15. 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.