Editor's Note:

The S&P 500 index inched to another high and briefly traded above the 1520 level.

We are removing DRC and FIRE as candidates. Neither trade opened.

MHK was triggered. We want to exit our SPW trade tomorrow.


Current Portfolio:


CALL Play Updates

BP Prudhoe Bay Royalty Trust - BPT - close: 79.73 change: +0.59

Stop Loss: 78.25
Target(s): 87.50
Current Option Gain/Loss: Unopened
Time Frame: Exit prior to earnings in early March
New Positions: Yes, see below

Comments:
02/12/13: The energy sector and oil prices both rallied today. Yet shares of BPT remain below resistance at the $80.00 mark. There is no change from my prior comments.

I am suggesting a trigger to open small bullish positions at $80.25. If triggered our target is $87.50. FYI: The Point & Figure chart for BPT is bullish with a $110 target.

Trigger @ 80.25 *Small Positions*

- Suggested Positions -

buy the Mar $80 call (BPT1316c80)

Entry on February -- at $---.--
Average Daily Volume = 131 thousand
Listed on February 07, 2012


Check Point Software Tech. - CHKP - close: 51.77 change: +0.70

Stop Loss: 49.40
Target(s): 54.50
Current Option Gain/Loss: +26.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/12/13: CHKP rebounded with a +1.3% gain. The sideways consolidation below resistance at $52.00 is narrowing. The stock seems to be coiling for another breakout higher.

*Small Positions* - Suggested Positions -

Long Mar $50 call (CHKP1316c50) entry $1.90

02/06/13 new stop loss @ 49.40

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


The Cooper Companies - COO - close: 104.61 change: +0.56

Stop Loss: 99.90
Target(s): 107.50
Current Option Gain/Loss: + 5.5%
Time Frame: Exit prior to earnings on Mar. 7th
New Positions: see below

Comments:
02/12/13: Shares of COO slowly drifted higher today. The stock did manage to outperform the S&P 500.

Earlier Comments:
Please note that we do want to keep our position size small because the option spreads are a little bit wide. COO is scheduled to report earnings on March 7th. We do not want to hold over the report. FYI: The Point & Figure chart for COO is bullish with a $125 target.

*Small Positions* - Suggested Positions -

Long Mar $105 call (COO1316c105) entry $2.70

Entry on February 06 at $102.60
Average Daily Volume = 303 thousand
Listed on February 02, 2012


Lumber Liquidators - LL - close: 62.25 change: +1.13

Stop Loss: 58.40
Target(s): 66.00
Current Option Gain/Loss: + 9.6%
Time Frame: Exit PRIOR to earnings on Feb. 20th
New Positions: see below

Comments:
02/12/13: Our LL trade is off to a strong start. Shares opened at $61.36 and the stock outperformed the market with a +1.8% gain. Readers may want to already start adjusting their stop loss higher.

Earlier Comments:
We do not want to hold over the Feb. 20th earnings report. Shares could see a short squeeze. The most recent data listed short interest at 22% of the very small 23.9 million share float. FYI: The P&F chart is bullish with a $74 target.

- Suggested Positions -

Long Mar $65 call (LL1316c65) entry $1.55

Entry on February 12 at $61.36
Average Daily Volume = 568 thousand
Listed on February 11, 2012


Mohawk Industries - MHK - close: 106.38 change: +1.54

Stop Loss: 101.85
Target(s): 109.75
Current Option Gain/Loss: + 9.5%
Time Frame: Exit PRIOR to earnings on Feb. 21st
New Positions: Yes, see below

Comments:
02/12/13: The homebuilders were a bright spot in the market today and that helped fuel the rally in shares of MHK. The stock shot higher and rallied past $105.00 early this morning. Our trigger to buy calls was hit at $105.35.

Earlier Comments:
We do not want to hold over the Feb. 21st earnings report.

- Suggested Positions -

Long Mar $105 call (MHK1316c105) entry $3.65

Entry on February 12 at $105.35
Average Daily Volume = 588 thousand
Listed on February 11, 2012


3M Company - MMM - close: 103.46 change: +0.84

Stop Loss: 100.70
Target(s): 106.50
Current Option Gain/Loss: +20.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/12/13: MMM surged to another new high with today's +0.8% gain. We should expect a gap down tomorrow morning. MMM will begin trading ex-dividend tomorrow (Feb. 13th) and the quarterly dividend is 63.5 cents. Look for MMM to find support at its rising 10-dma.

Earlier Comments:
I am suggesting we keep our position size small to limit our risk.

- Suggested Positions -

long Mar $100 call (MMM1316c100) entry $2.95

Entry on February 06 at $102.25
Average Daily Volume = 3.0 million
Listed on February 05, 2012


Rock-Tenn Company - RKT - close: 82.44 change: +0.57

Stop Loss: 79.45
Target(s): 84.85
Current Option Gain/Loss: +11.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/12/13: RKT has rallied toward its all-time highs set last Friday near $82.50. A breakout past this level could spark a surge toward $85.00. We are aiming for $84.85. More aggressive traders could aim higher.

Earlier Comments:
FYI: The Point & Figure chart for RKT is bullish with a long-term $117 target.

- Suggested Positions -

Long Mar $80 call (RKT1316c80) entry $3.05

Entry on February 06 at $81.05
Average Daily Volume = 743 thousand
Listed on February 02, 2012


Starbucks Corp. - SBUX - close: 56.26 change: +0.12

Stop Loss: 54.75
Target(s): 59.85
Current Option Gain/Loss: - 20.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/12/13: SBUX's +0.2% gain today managed to outperform the S&P 500 and the NASDAQ. Yet the stock's recent performance these last few days has definitely been uninspiring. I would still wait for a new rise past $56.65 before considering new positions .

Earlier Comments:
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.

- Suggested Positions -

Long Mar $55 call (SBUX1316c55) entry $2.51

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


SPX Corp. - SPW - close: 76.23 change: +0.39

Stop Loss: 74.75
Target(s): 78.00
Current Option Gain/Loss: +80.7%
Time Frame: Exit prior to earnings on Feb. 14th
New Positions: see below

Comments:
02/12/13: SPW continues to push higher. Unfortunately we are out of time. I am suggesting we exit positions tomorrow (Feb. 13th) at the closing bell to avoid holding over SPW's earnings report on Feb. 14th. More conservative traders will want to exit immediately tomorrow morning instead. I am raising our stop loss up to $74.75.

- Suggested Positions -

Long Feb $75 call (SPW1316B75) entry $1.30

02/12/13 new stop loss @ 74.75, prepare to exit tomorrow at the closing bell
02/06/13 new stop loss @ 73.95
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

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


CBOE Volatility Index - VIX - close: 12.64 change: -0.30

Stop Loss: 11.45
Target(s): 22.00-25.00 range
Current Option Gain/Loss: -15.7%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
02/12/13: Equities continue to rally and that's pushing the VIX lower. Eventually stocks are going to see a correction lower but we all know that the market can remain overbought way longer than anyone reasonably expects it can.

Readers may want to consider an alternative entry point for VIX calls. One idea would be to wait for the S&P 500 index to close below its simple 10-dma again and then buy puts on the VIX.

- Suggested Positions -

Long Apr $16 call (VIX1317D16) entry $1.90

Entry on February -- at $---.--
Average Daily Volume = n/a
Listed on February 09, 2012


Zimmer Holdings - ZMH - close: 75.44 change: -0.21

Stop Loss: 73.40
Target(s): 79.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/12/13: ZMH continues to churn sideways below resistance at the $76.00 level. I am not suggesting new positions at this time.

Earlier Comments:
I am suggesting we keep our position size small to limit our risk. FYI: The Point & Figure chart for ZMH is bullish with a long-term $89 target.

- Suggested Positions - *small positions*

Long Mar $75 call (ZMH1316c75) entry $1.60

02/09/13 new stop loss @ 73.40

Entry on February 07 at $75.24
Average Daily Volume = 1.2 million
Listed on February 06, 2012


PUT Play Updates

EV Energy Partners - EVEP - close: 55.50 change: +0.66

Stop Loss: 57.25
Target(s): 50.50
Current Option Gain/Loss: -17.8%
Time Frame: exit prior to earnings on Feb. 27
New Positions: see below

Comments:
02/12/13: A bounce in oil prices and the energy sector helped EVEP produce an oversold bounce. It does look like the rebound reversed near the $56.25 level. I would wait for a new drop below $54.75 before initiating new bearish positions.

- Suggested Positions -

Long Mar $55 put (EVEP1316o55) entry $3.65

Entry on February 11 at $54.75
Average Daily Volume = 300 thousand
Listed on February 09, 2012


Blue Nile Inc. - NILE - close: 30.97 change: -0.16

Stop Loss: 33.05
Target(s): 27.00
Current Option Gain/Loss: + 8.1%
Time Frame: To be determined (see below)
New Positions: see below

Comments:
02/12/13: NILE continues to underperform the market. Shares dipped to $30.27 before paring its losses. Yesterday we made the decision to hold over NILE's earnings report, which came out tonight. We were anticipating that NILE would disappoint. Sure enough the company missed the profit estimate, missed the revenue estimate. Management's guidance was mixed.

Shares of NILE traded down toward $28.50 afterhours but managed a bounce back to $30.00. We should definitely expect some volatility tomorrow morning.

Earlier Comments:
We want to keep our position size small to limit our risk.

*Small Positions* - Suggested Positions -

Long Mar $30 PUT (NILE1316o30) entry $1.85

02/11/13 more conservative traders will want to exit prior to the earnings announcement tomorrow after the closing bell. We have decided to hold the position over the report. Please note our new stop loss at $33.05 and our target at $27.00.

Entry on February 07 at $31.45
Average Daily Volume = 319 thousand
Listed on February 06, 2012


CLOSED BULLISH PLAYS

Dresser-Rand Group - DRC - close: 60.59 change: +0.04

Stop Loss: 59.75
Target(s): 64.90
Current Option Gain/Loss: Unopened
Time Frame: Exit prior to earnings on Feb. 28
New Positions: Yes, see below

Comments:
02/12/13: The S&P 500 tagged a new relative high today. DRC doesn't seem to be participating in the market's rally. Shares of DRC have been stuck in the $60-61 zone for several days. Our trade has not opened yet. I am removing DRC from the newsletter. Readers could keep the stock on their watch list for a close above $61.25 as a potential bullish entry point.

Trade did not open.

02/12/13 removed from the newsletter

chart:

Entry on February -- at $---.--
Average Daily Volume = 450 thousand
Listed on February 09, 2012


CLOSED BEARISH PLAYS

SourceFire, Inc. - FIRE - close: 43.06 change: +2.95

Stop Loss: 41.55
Target(s): 35.25
Current Option Gain/Loss: Unopened
Time Frame: exit prior to earnings on Feb. 21
New Positions: see below

Comments:
02/12/13: We are dropping FIRE as a bearish candidate. The stock has not hit our entry point to launch positions. Shares moved the opposite direction today with a +7.3% surge. Evidently the stock's show of strength today is tied to a story that President Obama is expected to sign some sort of bill that would increase U.S. spending on cyber security, which could benefit FIRE's business.

Trade did not open.

02/12/13 removed from then newsletter.

chart:

Entry on February -- at $---.--
Average Daily Volume = 890 thousand
Listed on February 05, 2012