Editor's Note:

The U.S. stock market surged higher on Tuesday with the Dow Jones Industrial Average hitting new all-time high.

The S&P 500 index broke out to a new multi-year high. We saw several trades hit our bullish entry triggers (CERN, ICE, PCYC, TM). We also closed CHKP and IYT this morning. I am suggesting an early exit in EMN at the open tomorrow.


Current Portfolio:


CALL Play Updates

Cerner Corp. - CERN - close: 92.28 change: +2.68

Stop Loss: 87.25
Target(s): 97.50
Current Option Gain/Loss: +36.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/05/13: The stock market's widespread rally on Tuesday fueled a bullish breakout in CERN past resistance at the $90.00 level. Shares hit our trigger to buy calls at $90.25.

FYI: The Point & Figure chart for CERN is bullish with a long-term $141 target.

- Suggested Positions -

Long Apr $90 call (CERN1320d90) entry $3.15

Entry on March 05 at $90.25
Average Daily Volume = 916 thousand
Listed on March 02, 2012


Home Depot - HD - close: 70.47 change: +0.18

Stop Loss: 66.40
Target(s): 74.00
Current Option Gain/Loss: +76.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/05/13: HD is now up six days in a row but momentum definitely seemed to slow today. After yesterday's bullish breakout past $70.00, the stock just sort of churned sideways today. I would not be surprised to see a pullback into the $69-68 area.

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


IntercontinentalExchange - ICE - close: 158.53 change: +1.96

Stop Loss: 152.75
Target(s): 164.50
Current Option Gain/Loss: + 6.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/05/13: Our ICE trade is open. The plan was to use a trigger at $156.85 to buy calls but ICE gapped open higher at $157.08 this morning, triggering our play. The stock surged to new four-year highs with today's +1.25% gain. The rally did stall this morning under the $160.00 mark. If the market rally does pause we might see ICE dip back into the $157-155 zone.

Earlier Comments:
ICE can be a volatile stock so I am suggesting small positions.

*Small Positions* - Suggested Positions -

Long Apr $160 call (ICE1320d160) entry $3.30

03/05/13 trade opened on gap open higher at $157.08, above our trigger of $156.85

Entry on March 05 at $157.08
Average Daily Volume = 1.2 million
Listed on March 04, 2012


McDonald's - MCD - close: 95.81 change: +0.74

Stop Loss: 94.75
Target(s): 99.75
Current Option Gain/Loss: +30.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/05/13: MCD erased yesterday's losses with a sharp rally this morning. Although the gains today did stall near the $96.00 level. It's worth noting that MCD underperformed the S&P 500 today. Today's high was $96.10 and a rally past today's high could be used as a new bullish entry point.

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

- Suggested *Small* Positions -

Long Apr $95 call (MCD1320d95) entry $1.66

03/04/13 new stop loss @ 94.75
03/02/13 new stop loss @ 94.25

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


Pharmacyclics Inc. - PCYC - close: 92.76 change: +1.35

Stop Loss: 87.95
Target(s): 99.00
Current Option Gain/Loss: - 6.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/05/13: Our new trade on PCYC has been opened. Shares opened higher at $91.71 and quickly hit our trigger to buy calls at $91.75. Shares gained +1.47% to close at new highs.

Earlier Comments:
PCYC can be a volatile stock so we do want to keep our position size small to limit our risk.

*Small Positions* - Suggested Positions -

Long Apr $95 call (PCYC1320d95) entry $4.80

Entry on March 05 at $91.75
Average Daily Volume = 788 thousand
Listed on March 04, 2012


Toyota Motors - TM - close: 103.30 change: +0.86

Stop Loss: 99.95
Target(s): 108.00
Current Option Gain/Loss: - 3.1%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/05/13: The Monday afternoon rally in TM continued today and shares hit our trigger to buy calls at $103.25. I would still consider new positions now at current levels.

Earlier Comments:
Our target is $108.00. More aggressive traders could aim higher.

I do want to warn you that shares of TM tend to gap open (up or down) each day as the U.S. shares adjust for trading that occurs back home in Japan.

- Suggested Positions -

Long Apr $105 call (TM1320d105) entry $2.25

Entry on March 05 at $103.25
Average Daily Volume = 686 thousand
Listed on March 02, 2012


CBOE Volatility Index - VIX - close: 13.48 change: -0.53

Stop Loss: 11.45
Target(s): 19.90
Current Option Gain/Loss: -28.9%
Time Frame: 8 to 9 weeks
New Positions: see below

Comments:
03/05/13: I cautioned readers that if the stock market continued to rally we would see the VIX retreat lower. Today saw a -3.7% pullback in the VIX. I am not suggesting new positions at this time.

- 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

Eastman Chemical - EMN - close: 71.12 change: +1.34

Stop Loss: 72.05
Target(s): 65.25
Current Option Gain/Loss: -47.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/05/13: We have been talking about how EMN is churning sideways and looked poised to breakout one way or the other. Shares broke out higher today from its pennant-shaped consolidation pattern. Bears can argue that the $72.00 level is still overhead resistance. However, I am suggesting we abandon ship and exit at the open tomorrow morning.

*Small Positions* - Suggested Positions -

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

03/05/13 prepare to exit at the open tomorrow morning
03/01/13 trade opened on EMN's gap down

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


F5 Networks - FFIV - close: 93.43 change: +0.78

Stop Loss: 96.75
Target(s): 86.50
Current Option Gain/Loss: -19.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/05/13: The stock market's widespread rally is starting to have an affect on shares of FFIV. More conservative traders may want to exit early now or lower their stop loss. I am not suggesting new positions at this time.

We have the March puts. These expire in less than two weeks and thus they're going to be a lot more volatile to any movement in shares of FFIV.

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 to $3.55

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


CLOSED BULLISH PLAYS

Check Point Software Tech. - CHKP - close: 51.75 change: +0.15

Stop Loss: 50.75
Target(s): 54.50
Current Option Gain/Loss: -2.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
03/05/13: The recent performance in CHKP has been disappointing. Last night we decided the best move was to exit positions today at the opening bell. Shares opened at $51.80. The stock's failure to participate in the widespread rally today reinforces our concern for the stock.

*Small Positions* - Suggested Positions -

Mar $50 call (CHKP1316c50) entry $1.90 exit $1.85 (-2.6%)

03/05/13 planned exit at the open
03/04/13 prepare to exit tomorrow morning
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


CLOSED BEARISH PLAYS

iShares Dow Jones Transports - IYT - close: 109.40 change: +1.63

Stop Loss: 108.25
Target(s): 100.25
Current Option Gain/Loss: -40.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/05/13: Our aggressive bet on a pullback in the transports did not pay off. The close at a new high yesterday was a clear sign our play was not working. Last night we decided the best move was to exit immediately at the open this morning. Unfortunately shares of IYT gapped open higher at $108.54.

Small Positions - Suggested Positions -

Apr $105 PUT (IYT1320p105) entry $2.20 exit $1.30 (-40.9%)

03/05/13 planned exit at the open
03/04/13 prepare to exit at the open tomorrow morning

chart:

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