Editor's Note:

After all the hype about the March 1st sequestration date the market didn't seem to care. Traders bought the dip on Friday morning.

We want to exit our COF trade on Monday morning.


Current Portfolio:


CALL Play Updates

Check Point Software Tech. - CHKP - close: 51.84 change: -0.68

Stop Loss: 50.75
Target(s): 54.50
Current Option Gain/Loss: +10.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/02/13: On Thursday I cautioned readers that CHKP looked headed for the $51.75 area. Shares dipped to $51.65 on Friday afternoon. The relative weakness on Friday (-1.2%) is a bit disappointing but the overall trend is still up. More conservative traders might want to adjust their stop loss into the $51.25-51.50 zone. 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

chart:

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


Canadian Pacific Railway - CP - close: 123.52 change: +2.00

Stop Loss: 119.65
Target(s): 124.75
Current Option Gain/Loss: +52.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/02/13: CP displayed relative strength on Friday with a +1.6% gain and a new all-time high. If this strength continues we could easily see CP hit our exit target at $124.75. More aggressive traders may want to aim higher. I am raising our stop loss to $119.65.

- Suggested Positions -

Long Mar $120 call (MAR1316c120) entry $2.75

03/02/13 new stop loss @ 119.65

chart:

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


Home Depot - HD - close: 69.03 change: +0.53

Stop Loss: 66.40
Target(s): 74.00
Current Option Gain/Loss: +21.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/02/13: The rally in HD continues. The stock is up four days in a row and closing at new 12-year highs. The next hurdle is the $70.00 level. I am not suggesting new positions at this time.

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

chart:

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


McDonald's - MCD - close: 95.68 change: -0.22

Stop Loss: 94.25
Target(s): 99.75
Current Option Gain/Loss: +34.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/02/13: The news on Friday brought headlines that MCD was tweaking its menu. The company is dropping the fruit & walnut salad and the chicken selects items from its U.S. menus. The company is also considering whether or not to eliminate its Angus burgers.

Technically the stock dipped to short-term support near $95.00 on Friday morning and bounced. I would still consider buying calls at current levels but we will raise our stop loss to $94.25.

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

- Suggested *Small* Positions -

Long Apr $95 call (MCD1320d95) entry $1.66

03/02/13 new stop loss @ 94.25

chart:

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


CBOE Volatility Index - VIX - close: 15.36 change: -0.15

Stop Loss: 11.45
Target(s): 19.90
Current Option Gain/Loss: +15.7%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
03/02/13: The VIX initially spiked higher on the stock market's Friday morning weakness. Yet as stocks recovered off their lows the VIX retreated. Our April options still managed to see improvement on Friday.

- Suggested Positions -

Long Apr $16 call (VIX1317D16) entry $1.90

02/25/13 adjust exit target to 19.90

chart:

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: 51.87 change: +0.84

Stop Loss: 54.55
Target(s): 48.50
Current Option Gain/Loss: + 8.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/02/13: Shares of COF are not cooperating. I cautioned readers that the $50.00 level might be support and that conservative traders may want to exit near $50. The stock gapped open lower on Friday at $50.21 and then rebounded sharply. By Friday's closing bell COF outperformed the market with a +1.6% gain. The financial sector has been moving sideways the last several days. Even though the financials are arguably still overbought they could breakout higher again. If that happens COF might follow the sector higher. Given Friday's big bounce from support we don't want to hold on.

I am suggesting an early exit on Monday morning at the open.

- Suggested Positions - *Small Positions*

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

03/02/13 prepare to exit on Monday morning
02/23/13 be careful here. COF is holding support at the $52 level. Shares could be poised to bounce.

chart:

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


Eastman Chemical - EMN - close: 69.71 change: -0.02

Stop Loss: 72.05
Target(s): 65.25
Current Option Gain/Loss: -23.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/02/13: The gap down in EMN shares on Friday morning really didn't help our entry point. The stock opened at $69.09 and slowly recovered toward the $70.00 level by the closing bell. EMN closed almost unchanged on the session and I don't see any changes from my Thursday night comments.

*Small Positions* - Suggested Positions -

Long Apr $67.50 PUT (EMN1320p67.5) entry $2.30

03/01/13 trade opened on EMN's gap down

chart:

Entry on March 01 at $69.09
Average Daily Volume = 1.8 million
Listed on February 28, 2012


F5 Networks - FFIV - close: 93.58 change: -0.85

Stop Loss: 96.75
Target(s): 86.50
Current Option Gain/Loss: -11.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/02/13: There was no follow through on FFIV's bounce from Thursday. Shares underperformed the market on Friday with a -0.9% decline. I would still consider new bearish positions at current levels. However, readers may want to try and reduce their risk by lowering the stop loss.

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

chart:

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


iShares Dow Jones Transports - IYT - close: 106.51 change: -0.16

Stop Loss: 108.25
Target(s): 100.25
Current Option Gain/Loss: - 4.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/02/13: Please note I have corrected the closing price for the IYT tonight. Previously it was listed too low.

The transportation ETF spiked lower at the open on Friday like most of the market but only managed a minor bounce. We are still expecting a correction from what are new all-time highs in the $107.00 area. This remains a higher-risk, more aggressive trade.

Our stop loss is at $108.25 but more conservative traders may want to adjust their stop closer to Thursday'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

chart:

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