Editor's Note:

The U.S. market produced a widespread bounce on Monday with the small cap Russell 2000 index adding +1.1%.

LMT and WDC hit our entry triggers.


Current Portfolio:


CALL Play Updates

Advance Auto Parts - AAP - close: 109.27 change: -0.58

Stop Loss: 107.95
Target(s): 117.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to January option expiration
New Positions: Yes, see below

Comments:
12/16/13: Hmm... our new AAP trade is not off to a strong start. The market produced a big bounce on Monday yet AAP failed to participate. Shares struggled with resistance near $110. I don't see any changes from my new play description from the weekend newsletter.

FYI: AAP will begin trading ex-dividend on December 18th. The quarterly cash dividend should be six cents.

We are suggesting a trigger to buy calls at $110.65. If triggered our short-term target is $117.50. Longer-term traders may want to aim higher since the Point & Figure chart for AAP is bullish with a $140 target.

Trigger @ 110.65

- Suggested Positions -

buy the Jan $110 call (AAP1418a110)

Entry on December -- at $---.--
Average Daily Volume = 923 thousand
Listed on December 14, 2013


Allergan, Inc. - AGN - close: 100.23 change: +3.66

Stop Loss: 94.95
Target(s): 104.00
Current Option Gain/Loss: +45.0%
Time Frame: Exit prior to January option expiration
New Positions: see below

Comments:
12/16/13: AGN displayed relative strength with a +3.78% rally and a close above potential round-number resistance at the $100.00 mark. Most of the gain happened in the first 30 minutes of trading as if AGN were reacting to news but I couldn't find any company-specific news to account for this surge higher.

Tonight I am adjusting our exit target to $104.00. I am not suggesting new positions at this time.

The Point & Figure chart for AGN is bullish with a $110 target.

- Suggested Positions -

Long 2014 Jan $100 call (AGN1418a100) entry $2.00

12/16/13 adjust exit target to $104.00
12/06/13 triggered on gap higher at $98.02, suggested trigger was $97.00

Entry on December 06 at $98.02
Average Daily Volume = 1.9 million
Listed on December 05, 2013


Aon Plc. - AON - close: 81.85 change: +0.24

Stop Loss: 80.75
Target(s): 85.00
Current Option Gain/Loss: -14.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/16/13: AON performance today is troubling. Shares underperformed the broader market indices. The bounce this morning failed near Friday's high. This could be a warning signal. More conservative traders may want to exit early now. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2014 Jan $82.50 call (AON1418a82.5) entry $1.70

12/07/13 new stop loss @ 80.75
11/23/13 new stop loss @ 79.85
11/18/13 new stop loss @ 79.45
11/13/13 new stop loss @ 78.75

Entry on November 08 at $80.50
Average Daily Volume = 2.3 million
Listed on November 06, 2013


3D Systems - DDD - close: 81.29 change: +0.32

Stop Loss: 78.90
Target(s): 89.00
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to January option expiration
New Positions: Yes, see below

Comments:
12/16/13: DDD got close but did not hit our entry trigger. The high today was $82.00. Our suggested entry point to buy calls is $82.05. I don't see any changes from the weekend newsletter's new play description.

Earlier Comments:
If this rally continues the stock could see some short covering. The most recent data listed short interest at almost 20% of the 95 million share float.

We're suggesting a trigger to buy calls at $82.05. More conservative traders may want to wait for DDD to trade above its December 11th high of $82.65 before initiating positions.

If our trade is triggered our target is $89.00. Keep in mind that DDD shares can be volatile. I am suggesting we keep our position size small to limit our risk.

Trigger @ 82.05 *small positions*

- Suggested Positions -

buy Jan $85 call (DDD1418a85)

Entry on December -- at $---.--
Average Daily Volume = 5.7 million
Listed on December 14, 2013


Illumina Inc. - ILMN - close: 102.60 change: +0.17

Stop Loss: 99.45
Target(s): 109.00
Current Option Gain/Loss: - 2.9%
Time Frame: Exit PRIOR to 2014 January option expiration
New Positions: see below

Comments:
12/16/13: ILMN rallied to a new high above $104 before paring its gains. The intraday pullback is a bit worrisome given the market's widespread gains. Tonight we're moving our stop loss to $99.45. I am not suggesting new positions at this time.

Earlier Comments:
Further gains could spark some short covering since the most recent data listed short interest at 26% of the 125 million-share float.

If triggered our target is $109.00. More aggressive traders may want to aim higher since the point & figure chart is bullish with a $146 target. P&F chart readers will also notice that ILMN is about to produce a new triple-top breakout buy signal.

NOTE: Biotech stocks can be volatile and the wrong headline could send shares gapping lower. Investors may want to limit their position size.

- Suggested Positions -

Long 2014 Jan $105 call (ILMN1418a105) entry $3.40

12/16/13 new stop loss @ 99.45

Entry on December 11 at $102.00
Average Daily Volume = 931 thousand
Listed on December 09, 2013


ITC holdings - ITC - close: 93.92 change: -0.42

Stop Loss: 92.40
Target(s): 98.50
Current Option Gain/Loss: -26.3%
Time Frame: four to six weeks.
New Positions: see below

Comments:
12/16/13: ITC's rally attempt this morning reversed at $95.41. Shares closed near their low for the day, which does not bode well for tomorrow. The fact that ITC did not participate in the market's rally today is a potential warning. I am not suggesting new positions.

Earlier Comments:
ITC can be a volatile stock. I could not find any explanation for the gap down on November 13th. Therefore I am suggesting small bullish positions to limit our risk. It's also worth noting that the $96.00 area and its simple 50-dma (also near $96) could be overhead resistance.

*small positions* - Suggested Positions -

Long 2014 Feb $95 call (ITC1422B95) entry $3.80*

12/14/13 new stop loss @ 92.40
12/11/13 trade opened on gap higher at $95.19, suggested trigger was $93.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on December 11 at $95.19
Average Daily Volume = 419 thousand
Listed on December 10, 2013


Michael Kors - KORS - close: 82.20 change: -0.07

Stop Loss: 79.90
Target(s): 89.00
Current Option Gain/Loss: -16.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/16/13: KORS is another stock that did not participate in the very widespread market rally on Monday. That could be a warning signal. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2014 Jan $85 call (KORS1418a85) entry $1.85

12/14/13 new stop loss @ 79.90
12/07/13 new stop loss @ 78.49, readers may want to consider an early exit right here
11/22/13 trigger hit at $81.05
11/21/13 adjust entry strategy. Instead of buying a dip at $76.50, move the entry trigger to $81.05. Adjust the stop loss to $77.75. Adjust the option strike to 2014 Jan. $85 call.

Entry on November 22 at $81.05
Average Daily Volume = 7.2 million
Listed on November 20, 2013



Lockheed Martin - LMT - close: 140.05 change: +1.02

Stop Loss: 137.75
Target(s): 149.00
Current Option Gain/Loss: - 4.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/16/13: Reuters had an interesting article about LMT today. The company said they continue to see strong demand for their cybersecurity services in spite of being involved with the global NSA surveillance scandal. That same scandal seems to be wreaking havoc with big tech companies like IBM and CSCO.

Shares of LMT continued to rise and pushed past the $140 level. Our trigger to buy calls was hit at $140.25.

Our multi-week target is $149.00. Keep in mind that the $144-145 area is currently overhead resistance.

I'm listing the March calls. If you want to take a more short-term approach then the 2014 January calls are much cheaper.

- Suggested Positions -

Long Mar $145 call (LMT1422C145) entry $3.35

Entry on December 16 at $140.25
Average Daily Volume = 2.0 million
Listed on December 14, 2013


United Parcel Service - UPS - close: 102.13 change: +0.75

Stop Loss: 100.45
Target(s): 108.00
Current Option Gain/Loss: -33.6%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/16/13: UPS issued a press release today that this week is "peak week" for the shipping company. They expect to pick up more than 34 million packages today and deliver more than 29 million tomorrow, a worldwide record.

The bounce in UPS today is encouraging but I remain cautious. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2014 Jan $105 call (UPS1418a105) entry $0.98

12/12/13 new stop loss @ 100.45
11/23/13 new stop loss @ 99.75
11/20/13 new stop loss @ 98.95

Entry on November 14 at $101.25
Average Daily Volume = 3.8 million
Listed on November 13, 2013


Western Digital Corp. - WDC - close: 81.66 change: +2.61

Stop Loss: 77.70
Target(s): 84.75
Current Option Gain/Loss: +27.8%
Time Frame: Exit PRIOR to January option expiration
New Positions: see below

Comments:
12/16/13: Our new play on WDC has been triggered. The stock shot higher this morning, pushing past resistance near $80.00, and climbing to a new record high. Our trigger to buy calls was hit at $80.25. If you missed our entry point you might want consider buying a dip in the $81-80 zone.

NOTE: I am listing the 2014 January $80 calls but you might want to consider the April $85 calls instead to give you more time.

- Suggested Positions -

Long 2014 Jan $80 call (WDC1418a80) entry $3.05

Entry on December 16 at $80.25
Average Daily Volume = 1.9 million
Listed on December 12, 2013




PUT Play Updates

Intl. Business Machines - IBM - close: 177.85 change: +5.05

Stop Loss: 178.65
Target(s): 170.25
Current Option Gain/Loss: - 22.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/16/13: Ouch! The market's widespread rally appears to have sparked some short covering in IBM. The stock just erased the last three days of declines with one big +2.9% bounce. You'll notice that the rebound today struggled with resistance near the $178.00 level. Our stop loss is at $178.65.

I am not suggesting new positions.

- Suggested Positions -

Long 2014 Jan $175 PUT (IBM1418m175) entry $3.15

12/14/13 readers may want to take profits now with IBM testing its October lows.
12/09/13 new stop loss @ 178.65

Entry on December 03 at $176.90
Average Daily Volume = 5.1 million
Listed on December 02, 2013


Kansas City Southern - KSU - close: 118.80 change: +1.36

Stop Loss: 119.50
Target(s): 114.00
Current Option Gain/Loss: -27.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/16/13: KSU was not immune to the market's big bounce today. The stock added +1.1%. What makes today interesting is that today's session has created a bullish engulfing candlestick reversal pattern. Follow through higher tomorrow might suggest a change in trend.

More conservative traders may want to exit early now. We are adjusting our stop loss down to $119.50.

- Suggested Positions -

Long 2014 Jan $115 PUT (KSU1418m115) entry $2.40*

12/16/13 new stop loss @ 119.50
12/11/13 triggered @ 117.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on December 11 at $117.75
Average Daily Volume = 486 thousand
Listed on December 07, 2013


Sears Holdings - SHLD - close: 44.10 change: -1.26

Stop Loss: 48.60
Target(s): 40.15
Current Option Gain/Loss: +15.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
12/16/13: The sell off in SHLD today is impressive. First, the stock ignored the widespread bounce in the market. Second, shares of SHLD broke down below potential support at the $45.00 mark. The stock may have gotten a push lower thanks to news it was being removed from the NASDAQ-100 index soon. Tonight we are adjusting our stop loss down to $48.60.

Earlier Comments:
Our short-term target is $40.15. Keep in mind that there are already a lot of bears in this stock. The most recent data listed short interest at 56% of the 50.7 million share float. That's plenty of fuel for a short squeeze if the stock can bounce. It's another reason to keep your position size small.

- Suggested Positions - *small positions*

Long 2014 Jan $39 PUT (SHLD1418m39) entry $1.66

12/16/13 new stop loss @ 48.60

Entry on December 12 at $46.18
Average Daily Volume = 1.5 million
Listed on December 11, 2013