Editor's Note:

The stock market's short-term rebound is starting to lose some momentum.

We did see HD hit our trigger. FOSL was stopped out. MON was removed.


Current Portfolio:


CALL Play Updates

Check Point Software Tech. - CHKP - close: 52.51 change: -0.21

Stop Loss: 50.75
Target(s): 54.50
Current Option Gain/Loss: +42.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/28/13: CHKP's rally stalled at the $53.00 level today. The stock looks poised to dip back toward the $52.00-51.75 area tomorrow. Readers may want to start inching up their stop loss again. 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: 121.52 change: -0.18

Stop Loss: 116.60
Target(s): 124.75
Current Option Gain/Loss: + 9.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/28/13: The transportation sector continued to rally and hit a new high before paring its gains almost back to unchanged by the closing bell. Shares of CP were not quite so strong and the stock hovered under the $122 level. Nimble traders may want to try and buy calls on a dip or a bounce near the $120.00 mark.

- Suggested Positions -

Long Mar $120 call (MAR1316c120) entry $2.75

Entry on February 27 at $120.25
Average Daily Volume = 795 thousand
Listed on February 23, 2012


Home Depot - HD - close: 68.50 change: +0.44

Stop Loss: 66.40
Target(s): 74.00
Current Option Gain/Loss: - 4.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/28/13: The rally in HD continued on Thursday with a new multi-year high. Shares hit $69.19 intraday before trimming its gains. Our entry point to buy calls was hit at $68.50 .

Earlier Comments:
It is possible that the $70.00 level could act as round-number, psychological resistance especially since the stock failed their multiple times in the 1999-2000 time frame. However, we are going to set our sights on a run to $74.00. FYI: The Point & Figure chart for HD is bullish with a long-term $95 target.

- Suggested Positions -

Long Apr $70 call (HD1320d70) entry $1.00

Entry on February 28 at $ 68.50
Average Daily Volume = 6.9 million
Listed on February 27, 2012


McDonald's - MCD - close: 95.90 change: +0.17

Stop Loss: 93.25
Target(s): 99.75
Current Option Gain/Loss: +42.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
02/28/13: MCD slowly drifted higher on Thursday. I don't see any changes from my prior comments. I would still consider new positions now at current levels.

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: 15.51 change: +0.78

Stop Loss: 11.45
Target(s): 19.90
Current Option Gain/Loss: + 7.8%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
02/28/13: The volatility index (VIX) produced a midday rebound as stocks started to pare their gains. If you were looking for a new entry point to buy calls on the VIX this could be it.

- 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: 51.03 change: -0.56

Stop Loss: 54.55
Target(s): 48.50
Current Option Gain/Loss: +52.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/28/13: COF underperformed the broader market with a -1.0% decline. Although shares have essentially been churning sideways the last couple of sessions. More conservative trades may want to exit early as COF nears the $50.00 mark. We are aiming for $48.50. I am not suggesting new positions at this time.

- 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


F5 Networks - FFIV - close: 94.43 change: +1.39

Stop Loss: 96.75
Target(s): 86.50
Current Option Gain/Loss: -20.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/28/13: FFIV spiked down to a new relative low this morning and then bounced. Shares managed to outperform the market with a +1.49% gain. Fortunately the rally did seem to struggle near the $95.00 level but I am not suggesting new positions at this time.

Please note we are making a correction in the entry price of our option. I have updated the entry price below to $3.55. Yesterday we listed values for one of the short-term weekly options by accident.

Earlier Comments:
It's possible the $90.00 level could act as round-number, psychological support but we are going to aim for the $86.50 level.

- Suggested Positions -

Long Mar $95 PUT (FFIV1316o95) entry $3.55

02/28/13 corrected the option entry price toe $3.55

Entry on February 27 at $93.50
Average Daily Volume = 1.4 million
Listed on February 26, 2012


iShares Dow Jones Transports - IYT - close: 103.59 change: +0.20

Stop Loss: 108.25
Target(s): 100.25
Current Option Gain/Loss: - 6.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/28/13: This morning was our aggressive entry point on the IYT. The transportation ETF managed to tick higher and hit a new all-time high before trimming its gains and closing almost unchanged on the session. Optimistic bears might call that a failed rally. Our stop loss is at $108.25 but more conservative traders may want to adjust their stop closer to today's high of $107.46. I would still consider new positions at current levels.

Small Positions - Suggested Positions -

Long Apr $105 PUT (IYT1320p105) entry $2.20

Entry on February 28 at $106.61
Average Daily Volume = 610 thousand
Listed on February 26, 2012


CLOSED BEARISH PLAYS

Fossil, Inc. - FOSL - close: 102.77 change: +0.78

Stop Loss: 103.30
Target(s): 93.25
Current Option Gain/Loss: -75.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/28/13: The rebound in FOSL continued on Thursday and shares hit our stop loss at $103.30. We initially wanted to buy puts on the breakdown below support at $100 and the 50-dma. Unfortunately there was no follow through lower on the breakdown and FOSL reversed with a three-day bounce. There is still a chance the stock rolls over in the $103-105 zone but our play is closed.

- Suggested Positions -

Mar $95 PUT (FOSL1316o95) entry $1.60 exit $0.40*(-75.0%)

02/28/13 stopped out at $103.30
*option exit price is an estimate since the option did not trade at the time our play was closed.

chart:

Entry on February 26 at $ 99.21
Average Daily Volume = 1.1 million
Listed on February 25, 2012


Monsanto Company - MON - close: 101.03 change: +0.63

Stop Loss: 100.65
Target(s): 92.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/28/13: MON has continued to rebound with the stock now up three days in a row. I would not be surprised to see shares roll over under the $102 level but our trade has not opened yet (trigger was 97.80). Since the trade is not open yet we're dropping MON as an active candidate.

Trade not open yet.

02/28/13 removed from the newsletter

chart:

Entry on February -- at $---.--
Average Daily Volume = 2.5 million
Listed on February 25, 2012