Editor's Note:

The U.S. market initially rallied on Monday but equities reversed into a sharp, widespread sell-off.

We have removed CAM as a trade.
KMB was closed to lock in gains.
MMM, PNRA, VAR were stopped out.
We want to exit our EVEP trade at the open tomorrow.


Current Portfolio:


CALL Play Updates

Check Point Software Tech. - CHKP - close: 51.94 change: -0.29

Stop Loss: 50.75
Target(s): 54.50
Current Option Gain/Loss: +21.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/25/13: CHKP held up pretty well today. The stock tagged a new relative high at $52.76 before fading lower. Shares only lost -0.5% versus the -1.4% in the NASDAQ. However, if the market sell-off continues CHKP will likely follow. More conservative traders may want to exit early now to avoid a loss. I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

Long Mar $50 call (CHKP1316c50) entry $1.90

02/25/13 market looks weak, readers may want to exit now
02/20/13 new stop loss @ 50.75
02/16/13 CHKP looks poised to dip back toward support at $50.00
02/13/13 new stop loss @ 49.90
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


Canadian Pacific Railway - CP - close: 117.22 change: -1.09

Stop Loss: 116.60
Target(s): 124.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/25/13: Bullish analyst comments helped keep CP afloat for a little while today. Eventually the stock succumbed to the market's widespread sell-off. Aggressive traders might consider buying a dip or a bounce near the rising 20-dma with a tight stop loss. Overall I don't see any changes from my prior comments.

I am suggesting a trigger to buy calls at $120.25. Our short-term target is $124.75. More aggressive traders could aim higher.

FYI: On Friday CP announced a quarterly dividend of 35 cents (Canadian$) payable on April 29, 2013 to shareholders of record on March 28th.

Trigger @ 120.25

- Suggested Positions -

buy the Mar $120 call (MAR1316c120)

Entry on February -- at $---.--
Average Daily Volume = 795 thousand
Listed on February 23, 2012


McDonald's - MCD - close: 96.14 change: +0.89

Stop Loss: 93.25
Target(s): 99.75
Current Option Gain/Loss: +39.7%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/25/13: Dow-component MCD managed to shrug off the market's sell-off. The stock continues to show relative strength and hit a new relative high before trimming its gains.

FYI: The Point & Figure chart for MCD is bullish with a $115 target.

- Suggested *Small* Positions -

Long Apr $95 call (MCD1320d95) entry $1.66

Entry on February 25 at $95.38
Average Daily Volume = 4.9 million
Listed on February 23, 2012


CBOE Volatility Index - VIX - close: 18.99 change: +4.82

Stop Loss: 11.45
Target(s): 19.90
Current Option Gain/Loss: +34.2%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
02/25/13: We are finally seeing the big surge higher in the VIX that we've been expecting. The volatility index soared +34% today. We are adjusting our exit target down to 19.90. More aggressive trades may want to aim higher (maybe somewhere in the 22-25 range).

- Suggested Positions -

Long Apr $16 call (VIX1317D16) entry $1.90

02/25/13 adjust exit target to 19.90

Entry on February 10 at $13.37
Average Daily Volume = n/a
Listed on February 09, 2012


PUT Play Updates

Capital One Financial - COF - close: 50.80 change: -1.48

Stop Loss: 54.55
Target(s): 48.50
Current Option Gain/Loss: +85.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25/13: COF underperformed the market with a -2.8% decline to new multi-month lows. Traders might want to consider an early exit now since the put option value has risen +85%, especially since the $50.00 level could be round-number, psychological support. The newsletter is going to keep our exit target at $48.50.

- Suggested Positions - *Small Positions*

Long Mar $52.50 PUT (COF1316o52.5) entry $1.23

02/23/13 be careful here. COF is holding support at the $52 level. Shares could be poised to bounce.

Entry on February 20 at $52.25
Average Daily Volume = 5.9 million
Listed on February 19, 2012


EV Energy Partners - EVEP - close: 55.11 change: +0.48

Stop Loss: 56.15
Target(s): 50.50
Current Option Gain/Loss: -20.5%
Time Frame: exit prior to earnings on Mar 1st.
New Positions: see below

Comments:
02/25/13: It's time to hit the eject button and exit our EVEP trade. The stock did not participate in the market's widespread decline today. Instead shares rallied +0.8% and broke through short-term technical resistance at the simple 10-dma. I am suggesting we exit immediately at the opening bell tomorrow.

- Suggested Positions -

Long Mar $55 put (EVEP1316o55) entry $3.65

02/25/13 prepare to exit at the opening bell tomorrow
02/23/13 new stop loss @ 56.15, prepare to exit on Feb. 28th or sooner.

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


Time Warner Cable Inc. - TWC - close: 86.61 change: +0.22

Stop Loss: 86.30
Target(s): 80.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/25/13: If TWC doesn't start to cooperate soon we'll probably drop it as a bearish candidate. The stock did not participate in the market's sharp sell-off today. That doesn't mean the stock looks bullish. The rally stalled near its simple 10-dma.

I am suggesting we launch small bearish positions at $84.50. If triggered our short-term target is $80.25. We do want to keep our position size small because TWC is arguably already oversold.

FYI: The Point & Figure chart for TWC is bearish with a $70 target. Plus, you may also want to note that TWC has a 65-cent dividend coming up soon and the ex-dividend date is Feb. 26th.

Trigger @ 84.50 *Small Positions*

- Suggested Positions -

buy the Mar $82.50 PUT (TWC1316o82.5)

Entry on February -- at $---.--
Average Daily Volume = 3.6 million
Listed on February 21, 2012


CLOSED BULLISH PLAYS

Cameron Intl. - CAM - close: 61.98 change: -1.97

Stop Loss: 64.75
Target(s): 69.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25/13: The market is reversing lower and CAM is reversing as well with a failed rally this morning. Our trade has not opened yet. I am removing CAM as a candidate. Shares are unlikely to hit our suggested entry point any time soon.

trade did not open.

02/25/13 removed from the newsletter

chart:

Entry on February -- at $---.--
Average Daily Volume = 3.0 million
Listed on February 14, 2012


Kimberly-Clark Corp. - KMB - close: 94.24 change: -0.26

Stop Loss: 89.25
Target(s): 94.75
Current Option Gain/Loss: Mar$90c:+165.9% & Apr95.5c:+168.1%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
02/25/13: Over the weekend we suggested everyone lock in gains and exit on Monday morning. KMB was kind enough to gap open higher at $94.61. The rally continued with a surge toward $96.00 before reversing.

- Suggested Positions -

Mar $90 call (KMB1316c90) entry $1.88 exit $5.00 (+165.9%)

- or -

Apr $92.50 call (KMB1320c92.5) entry $1.10 exit $2.95 (+168.1%)

02/25/13 exit at the open this morning
02/23/13 prepare to exit on Monday morning Feb. 25th

chart:

Entry on February 18 at $91.33
Average Daily Volume = 2.2 million
Listed on February 16, 2012


3M Company - MMM - close: 101.75 change: -1.79

Stop Loss: 101.85
Target(s): 104.85
Current Option Gain/Loss: - 8.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25/13: MMM got caught up in the market's meltdown on Monday. Shares hit our stop loss at $101.85.

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

- Suggested Positions - *Small Positions*

Mar $100 call (MMM1316c100) entry $2.95 exit $2.70 (-8.4%)

02/25/13 stopped out
02/19/13 new stop loss @ 101.85, adjust exit target to $104.85
02/16/13 new stop loss @ 101.30

chart:

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


CLOSED BEARISH PLAYS

Panera Bread - PNRA - close: 157.47 change: +0.30

Stop Loss: 158.05
Target(s): 141.00
Current Option Gain/Loss: -54.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25/13: The stock market actually rallied early this morning before reversing lower. That early strength helped shares of PNRA push past its 200-dma and the stock hit our stop loss at $158.05.

- Suggested Positions -

Mar $150 PUT (PNRA1316o150) entry $2.30 exit $1.05 (-54.3%)

02/25/13 stopped out at $158.05

chart:

Entry on February 21 at $154.00
Average Daily Volume = 731 thousand
Listed on February 20, 2012


Varian Medical Sys. - VAR - close: 69.21 change: -0.91

Stop Loss: 71.00
Target(s): 66.00
Current Option Gain/Loss: -44.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/25/13: Sometimes the market or a stock is just too volatile. VAR sold off -1.29% and looks poised for more weakness. Today's session looks like a new bearish reversal and failed rally at its 20-dma. Unfortunately, the market's early morning strength helped push VAR to $71.00 and hit our stop loss before reversing.

This play is closed for the newsletter but readers may want to try again with a stop above today's high.

- Suggested Positions -

Mar $70 PUT (VAR1316o70) entry $1.80 exit $1.00 (-44.4%)

02/25/13 stopped out at $71.00

chart:

Entry on February 21 at $69.50
Average Daily Volume = 874 thousand
Listed on February 20, 2012