Editor's Note:

The market surged to new highs on Friday. The S&P 500 is at new five-year highs and the Dow Industrials closed above 14,000.

Our CHKP, SBUX, and SHPG trades all hit our entry triggers. IYT hit our stop loss.


Current Portfolio:


CALL Play Updates

Check Point Software Tech. - CHKP - close: 50.98 change: +0.98

Stop Loss: 48.25
Target(s): 54.50
Current Option Gain/Loss: + 7.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/02/13: Our CHKP entry point was hit at $50.25. CHKP's rally continued on Friday with a bullish breakout past resistance at $50.00. Shares rallied straight to the 300-dma and potential resistance at $52.00 before it started paring its gains. I would not be surprised to see CHKP retest $50 as new support and readers can use the dip as a new entry point.

*Small Positions* - Suggested Positions -

Long Mar $50 call (CHKP1316c50) entry $1.90

chart:

Entry on February 01 at $50.25
Average Daily Volume = 2.7 million
Listed on January 31, 2012


Starwood Hotels - HOT - close: 61.87 change: +0.46

Stop Loss: 59.75
Target(s): 64.50
Current Option Gain/Loss: +37.5%
Time Frame: exit prior to earnings on Feb. 7th
New Positions: see below

Comments:
02/02/13: HOT inched higher on Friday but failed to keep pace with the market's +1.0% gain. We only have three trading days left. HOT is scheduled to report earnings on Feb. 7th and we do not want to hold over the announcement. I am not suggesting new positions.

- Suggested Positions -

Long Feb $60 call (HOT1316B60) entry $1.81

01/28/13 new stop loss @ 59.75

chart:

Entry on January 22 at $60.60
Average Daily Volume = 1.9 million
Listed on January 15, 2012


Noble Energy - NBL - close: 109.19 change: +1.40

Stop Loss: 106.95
Target(s): 114.00
Current Option Gain/Loss: +21.7%
Time Frame: Exit prior to earnings on Feb. 7th!
New Positions: see below

Comments:
02/02/13: CVX missed earnings but XOM beat earnings when the two companies reported this morning. Shares of NBL seemed to ignore them both. NBL outpaced both the energy sector and the broader market with a +1.29% gain on Friday.

Please note that we only have three trading days left. NBL is scheduled to report earnings on Feb. 7th and we do not want to hold over the announcement. I am not suggesting new positions.

- Suggested Positions -

Long Feb $110 call (NBL1316B110) entry $1.15

01/30/13 new stop loss @ 106.95
01/29/13 new stop loss @ 105.75
01/26/13 new stop loss @ 104.65
01/22/13 new stop loss @ 103.75
01/17/13 new stop loss @ 102.75

chart:

Entry on January 14 at $105.31
Average Daily Volume = 820 thousand
Listed on January 12, 2012


Starbucks Corp. - SBUX - close: 56.86 change: +0.74

Stop Loss: 54.75
Target(s): 59.85
Current Option Gain/Loss: + 1.9%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/02/13: We wanted to buy calls when SBUX rallied to $56.50. The stock gapped open at $56.57 this morning, immediately triggering our play. I would still consider new positions now. Nimble traders could wait and hope for a dip back toward $56.00.

Our target is $59.85. More aggressive traders could aim for the all-time highs in the $62 area set last year. FYI: The Point & Figure chart for SBUX is bullish with a long-term $67 target.

NOTE: SBUX has a quarterly cash dividend of 21 cents payable on Feb. 22nd. The stock will begin trading ex-dividend on the morning of Feb. 5th. Don't be surprised to see shares gap down about 20 cents on the 5th.

- Suggested Positions -

Long Mar $55 call (SBUX1316c55) entry $2.51

chart:

Entry on February 01 at $56.57
Average Daily Volume = 6.8 million
Listed on January 30, 2012


Shire Plc - SHPG - close: 101.63 change: +1.49

Stop Loss: 99.75
Target(s): 104.90
Current Option Gain/Loss: - 5.2%
Time Frame: Exit prior to earnings on Feb. 14th
New Positions: see below

Comments:
02/02/13: Shares of SHPG rallied midday on news of a settlement with the U.S. government. Federal regulators launched a civil investigation back in 2009 regarding SHPG's marketing practices for some of its ADHD treatments. The company has agreed to a $57.5 million settlement that will be included in its Q4 earnings report. The stock soared to new multi-month highs by day's end.

Our trigger to open new bullish positions was hit at $101.15.

Earlier Comments:
This is a short-term trade. We do not want to hold positions over the Feb. 14th earnings report. For that reason I am listing the February calls, which expire after the 15th. Otherwise I would probably choose the March calls. Looking at Februarys I would play either the Feb. $100s or the Feb $105s. The spread is wider on the $105s but your capital outlay is less. FYI: The Point & Figure chart for SHPG is bullish with a long-term $137 target.

- Suggested Positions -

Long Feb $105 call (SHPG1316b105) entry $0.95*

*02/01/13 entry point on the option is an estimate. there was not a lot of volume during today's session.

chart:

Entry on February 01 at $101.15
Average Daily Volume = 323 thousand
Listed on January 29, 2012


SPX Corp. - SPW - close: 75.01 change: +0.38

Stop Loss: 73.75
Target(s): 78.00
Current Option Gain/Loss: +42.3%
Time Frame: Exit prior to earnings on Feb. 14th
New Positions: see below

Comments:
02/02/13: Friday's trading in SPW is a little bit worrisome. The stock did post a gain but failed to keep pace with the broader market. The stock seems stuck to round-number resistance at the $75.00 level. I am not suggesting new positions at this time. More conservative traders may want to start taking money off the table here.

- Suggested Positions -

Long Feb $75 call (SPW1316B75) entry $1.30

01/30/13 new stop loss @ 73.75
01/29/13 new stop loss @ 71.95, adjust exit to $78.00
readers may want to just take profits right now
01/28/13 new stop loss @ 71.40

chart:

Entry on January 23 at $72.42
Average Daily Volume = 832 thousand
Listed on January 22, 2012


Whole Foods Market - WFM - close: 96.22 change: -0.03

Stop Loss: 93.75
Target(s): 99.50
Current Option Gain/Loss: +65.7%
Time Frame: Exit PRIOR to earnings on Feb. 13th
New Positions: see below

Comments:
02/02/13: After outperforming the market on Thursday there was no follow through in WFM on Friday. Shares struggled with its highs from Monday (near 96.75ish). I am not suggesting new positions at this time. Readers may want to start taking some money off the table here.

Earlier Comments:
We do not want to hold over the Feb. 13th earnings report.
NOTE: because of a previous dividend the option strike for February is an odd one (95.50)

- Suggested Positions -

Long Feb $95.50 call (WFM1316B95.5) entry $1.90

01/30/13 new stop loss @ 93.75
01/29/13 new stop loss @ 92.25, expect a pullback soon

chart:

Entry on January 24 at $94.25
Average Daily Volume = 1.5 million
Listed on January 23, 2012


PUT Play Updates

Herbalife Ltd. - HLF - close: 35.07 change: -1.25

Stop Loss: 40.55
Target(s): 31.00
Current Option Gain/Loss: +50.0%
Time Frame: Exit prior to earnings on Feb. 19th
New Positions: see below

Comments:
02/02/13: HLF continues to underperform the broader market. The stock was down every day this week. Shares are currently testing potential round-number support at $35.00. I do think the $35 level will break but HLF could certainly see a little oversold bounce first. Our option position is up +50% and readers may just want to take the money and run. You could always jump back in on a new failed rally under what should be resistance at $40.00.

I am not suggesting new positions at this time. We are aiming for $31.00 but aggressive traders could aim for the $26 area instead (if you have March or May puts).

Earlier Comments:
I want to warn you that HLF can be a volatile stock. We consider this an aggressive, higher-risk trade.

*Small Positions*- Suggested Positions -

Long Feb $37.50 PUT (HLF1316n37.5) entry $2.40

chart:

Entry on January 29 at $38.50
Average Daily Volume = 13.6 million
Listed on January 28, 2012


Monster Beverage Corp. - MNST - close: 47.65 change: -0.25

Stop Loss: 50.15
Target(s): 41.00
Current Option Gain/Loss: -18.9%
Time Frame: Exit PRIOR to the late February earnings report
New Positions: see below

Comments:
02/02/13: Relative weakness is what we want to see in our bearish plays. MNST definitely fits the bill. Shares failed to participate with the market's widespread rally on Friday. Yet readers may want to wait for a drop under $46.50 or under $46.00 before initiating new positions.

Earlier Comments:
Please note that MNST has been a very volatile stock in the past. This should be considered an aggressive, higher-risk trade.

- Suggested Positions - *Small Positions*

Long Mar $45 PUT (MNST1316o45) entry $2.90

chart:

Entry on January 28 at $46.91
Average Daily Volume = 2.0 million
Listed on January 26, 2012



CLOSED BEARISH PLAYS

iShares DJ Transportation Avg.(ETF) - IYT - close: 103.93 chg: +0.88

Stop Loss: 105.05
Target(s): 98.25
Current Option Gain/Loss: (see below)
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
02/02/13: Our IYT trade was a bet that the extremely overbought transportation sector would see a correction lower. I still think it will see a correction lower but on a short-term basis the market's mood remains bullish. The IYT gapped open higher at $103.95 on Friday morning. Less than two minutes later this ETF saw a spike to $105.53 that just as quickly vanished. Unfortunately our stop loss was hit at $105.05. Our only blessing was the gap open higher dropped our entry price on the options.

- Suggested Positions -

Feb $102 PUT (IYT1316n102) entry $0.85 exit $0.45 (-47.0%)

- or -

Mar $102 PUT (IYT1316o102) entry $1.85 exit $1.55 (-16.2%)

02/01/13 stopped out at $105.05
02/01/13 trade opens on gap open higher @ 103.95

chart:

Entry on February 01 at $103.95
Average Daily Volume = 683 thousand
Listed on January 31, 2012