Editor's Note:

The U.S. market posted widespread declines on Monday. Retail stocks helped lead the market lower with the XRT retail ETF plunging -2.88%.

HON and PII were closed this morning.
We are removing CHKP as a trade tonight.
NOW has a new entry point.
NTES, PANW, and Z were all stopped out.


Current Portfolio:


CALL Play Updates

Advance Auto Parts - AAP - close: 114.29 change: -1.35

Stop Loss: 111.75
Target(s): 117.50
Current Option Gain/Loss: +17.9%
Time Frame: exit PRIOR to earnings in February
New Positions: see below

Comments:
01/13/14: The stock market's widespread loss on Monday knocked AAP to a -1.1% decline, which eliminated most of Friday's gains. Shares should find some support near $112 or the simple 10-dma. I am not suggesting new positions at this time.

Earlier Comments:
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.

- Suggested Positions -

Long Mar $115 call (AAP1422c110) entry $3.90*

01/11/14 new stop loss @ 111.75
01/07/14 new stop loss @ 109.75
01/04/14 new stop loss @ 108.75
12/24/13 triggered @ 110.65
*option entry price is an estimate since the option did not trade at the time our play was opened.
12/21/13 adjust the option strike from the January $110 to the March $115 call

Entry on December 24 at $110.65
Average Daily Volume = 923 thousand
Listed on December 14, 2013


Chicago Bridge & Iron - CBI - close: 80.45 change: -1.77

Stop Loss: 79.65
Target(s): 89.50
Current Option Gain/Loss: -24.1%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
01/13/14: Today's market weakness helped push CBI to a -2.1% decline and toward round-number support near $80.00. Any further weakness could see shares hit our stop loss.

Earlier Comments:
Our target is $89.50. We want to exit prior to CBI's earnings report in February.

- Suggested Positions -

Long April $85 call (CBI1419D85) entry $3.10

12/28/13 new stop loss @ 79.65

Entry on December 19 at $80.35
Average Daily Volume = 1.5 million
Listed on December 18, 2013


Demandware, Inc. - DWRE - close: 68.03 change: -0.41

Stop Loss: 64.75
Target(s): 69.50
Current Option Gain/Loss: +22.4%
Time Frame: exit PRIOR to earnings in mid February
New Positions: see below

Comments:
01/13/14: DWRE actually held up pretty well during Monday's market sell off. Shares closed down -0.59% versus a -1.4% drop in the NASDAQ. This stock could see short-term support at the 10-dma (near 66.50) or more likely near the $65.00 level. I am not suggesting new positions.

FYI: The Point & Figure chart for DWRE is bullish with a $77 target.

- Suggested Positions -

Long Feb $70 call (DWRE1422B70) entry $2.45*

01/08/14 new stop loss @ 64.75
01/06/14 new stop loss @ 63.45
01/06/14 triggered @ 65.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 06 at $65.25
Average Daily Volume = 275 thousand
Listed on January 02, 2014


General Dynamics - GD - close: 95.01 change: -0.09

Stop Loss: 93.85
Target(s): 99.50
Current Option Gain/Loss: -23.0%
Time Frame: exit PRIOR to earnings on January 17th
New Positions: see below

Comments:
01/13/14: GD actually hit a new relative high this morning before succumbing to the market's broad-base sell off. Losses were mild at less than 10 cents. I am not suggesting new positions at this time.

FYI: GD should begin trading ex-dividend on January 15th. The quarterly cash dividend is 56 cents.

Earlier Comments:
Our target is $99.50. More aggressive traders may want to aim higher since the Point & Figure chart for GD is bullish with a $105 target. The plan was to keep our position size small.

*small positions* - Suggested Positions -

Long Feb $95 call (GD1422B95) entry $2.21

Entry on December 31 at $95.25
Average Daily Volume = 1.1 million
Listed on December 28, 2013


NetSuite Inc. - N - close: 103.00 change: -2.21

Stop Loss: 101.90
Target(s): 110.00
Current Option Gain/Loss: -25.0%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
01/13/14: After a four-week rally N was due for a little profit taking. Shares retreated to short-term support at the rising 10-dma today. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $110.00. However, we will plan to exit prior to their earnings report in late January or early February. FYI: The Point & Figure chart for N is bullish with a $129 target.

- Suggested Positions -

Long Feb $110 call (N1422B110) entry $3.00

01/11/14 new stop loss @ 101.90

Entry on January 08 at $103.75
Average Daily Volume = 410 thousand
Listed on January 07, 2014


Northrop Grumman - NOC - close: 115.63 change: -0.74

Stop Loss: 113.75
Target(s): 124.00
Current Option Gain/Loss: -33.3%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
01/13/14: Profit taking in NOC today was relatively minor. Shares hit new highs this morning before reversing course. I would hesitate to launch positions given the market's weakness today.

Earlier Comments:
Our target is $124.00. I'll confess that might be a little bit optimistic since the $120 level could be round-number resistance. We will plan on exiting prior to NOC's earnings in very late January or early February (no date yet).

- Suggested Positions -

Long FEB $120 call (NOC1422B120) entry $1.35

01/10/14 triggered @ 116.50

Entry on January 10 at $116.50
Average Daily Volume = 1.3 million
Listed on January 09, 2014


ServiceNow, Inc. - NOW - close: 57.09 change: -2.29

Stop Loss: 53.90
Target(s): 64.75
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on January 29th
New Positions: Yes, see below

Comments:
01/13/14: Shares of NOW garnered new bullish analyst comments and a $70 price target this morning. That probably accounts for the small gap open higher. Yet the rally reversed near resistance at $60.00. When the market started to sink midday shares of NOW collapsed. The stock fell to short-term technical support at the 10-dma and closed down -3.8%. Technically today's move has created a bearish engulfing candlestick reversal pattern.

We are opting to adjust our entry point strategy since it seems unlikely that NOW will hit our suggested breakout entry point trigger at $60.25. The stock should find support in the $54.00-56.00 zone. We're suggesting a buy-the-dip trigger to buy calls at $55.50. We'll move the stop loss down to $53.90.

We will plan to exit prior to NOW's earnings report on January 29th. FYI: The Point & Figure chart for NOW is bullish with an $80 target.

Trigger @ 55.50

- Suggested Positions -

buy the Feb $60 call (NOW1422B60) current ask $2.20

01/13/14 adjust entry point strategy. Move the trigger from $60.25 to a buy-the-dip trigger at $55.50. Adjust the stop loss to $53.90

Entry on January -- at $---.--
Average Daily Volume = 1.2 million
Listed on January 11, 2014


Salix Pharmaceuticals - SLXP - close: 95.49 change: +1.87

Stop Loss: 91.95
Target(s): 98.50
Current Option Gain/Loss: +48.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/13/14: SLXP offered positive guidance this morning. Shares rallied to a new high, hitting $97.22 before paring its gains. I am raising our stop loss to $91.95.

Earlier Comments:
SLXP is poised to breakout past resistance at the $90.00 level. If shares can breakout past $90 the next major milestone would be the $100 mark. If triggered our multi-week target is $98.50.

- Suggested Positions -

Long Feb $95 call (SLXP1422B95) entry $2.50*

01/13/14 new stop loss @ 91.95
01/11/14 new stop loss @ 89.40
01/07/14 new stop loss @ 87.80
01/03/14 triggered @ 90.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 03 at $90.25
Average Daily Volume = 790 thousand
Listed on December 31, 2013


United Technologies - UTX - close: 112.80 change: -1.03

Stop Loss: 111.75
Target(s): 118.50
Current Option Gain/Loss: -44.4%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/13/14: UTX erased all of last week's gains with a -0.9% drop today. Monday's close below short-term technical support at its 10-dma is technically bearish. The next level of potential support should be $112.00.

Earlier Comments:
Our target is $118.50 but we'll plan on exiting prior to UTX's earnings report in late January. More aggressive investors might want to consider aiming higher. The Point & Figure chart for UTX is bullish with a $139 target.

- Suggested Positions -

Long Feb $115 call (UTX1422B115) entry $1.80

01/09/14 new stop loss @ 111.75
12/31/13 trade opened on gap higher at $113.16. Suggested trigger was $113.05

Entry on December 31 at $113.16
Average Daily Volume = 2.8 million
Listed on December 26, 2013




PUT Play Updates

Rock-Tenn Co. - RKT - close: 99.66 change: -1.50

Stop Loss: 103.55
Target(s): 97.00
Current Option Gain/Loss: +18.9%
Time Frame: Exit PRIOR to earnings on January 28th
New Positions: see below

Comments:
01/13/14: RKT continued to sink with a -1.48% decline. Today's close below the $100 level is good news for the bears. However, shares settled right on potential technical support at the simple 50-dma. I would not be surprised to see RKT try to bounce tomorrow morning. The 200-dma is at $103.35. We'll lower our stop loss to $103.55.

- Suggested Positions -

Long FEB $100 PUT (RKT1422N100) entry $3.70

01/13/14 new stop loss @ 103.55
01/11/14 adjust exit target from $96.00 to $97.00

Entry on January 09 at $101.96
Average Daily Volume = 656 thousand
Listed on January 08, 2014



CLOSED BULLISH PLAYS

Check Point Software - CHKP - close: 63.30 change: -1.74

Stop Loss: 63.35
Target(s): 69.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on January 28th
New Positions: see below

Comments:
01/13/14: CHKP was a big underperformer on Monday with a -2.6% plunge toward short-term support near $63.00. Our play has not opened yet and after today's relative weakness we are removing it as an active candidate.

Trade did not open.

01/13/14 removed from the newsletter. trigger was $65.25

chart:

Entry on January -- at $---.--
Average Daily Volume = 821 thousand
Listed on January 04, 2014


Honeywell Intl. - HON - close: 88.87 change: -1.29

Stop Loss: 89.65
Target(s): 94.75
Current Option Gain/Loss: -25.7%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/13/14: HON underperformed the Dow Industrials and the S&P 500 with a -1.4% decline. We had already decided in the previous newsletter to exit positions this morning. HON gapped down at $89.87.

- Suggested Positions -

Mar $92.50 call (HON1422c92.5) entry $1.75* exit $1.30**(-25.7%)

01/13/14 planned exit
01/11/14 prepare to exit on Monday morning
01/08/14 new stop loss @ 89.65
12/28/13 new stop loss @ 88.40
12/24/13 triggered @ 90.30
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 24 at $90.30
Average Daily Volume = 2.4 million
Listed on December 23, 2013


NetEase, Inc. - NTES - close: 81.77 change: +2.00

Stop Loss: 78.90
Target(s): 87.50
Current Option Gain/Loss: -42.1%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
01/13/14: Ouch! It was a rough day for all of the Chinese Internet stocks. NTES was no exception and plunged -4.1% to breakdown below its 10-dma. Our stop was hit at $78.90.

- Suggested Positions -

Long Feb $85 call (NTES1422B85) entry $2.85* exit $1.65** (-42.1%)

01/13/14 stopped out
***option exit price is an estimate since the option did not trade at the time our play was closed.
01/11/14 new stop loss @ 78.90
01/09/14 Warning! Today's session has created a bearish reversal pattern
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 08 at $80.75
Average Daily Volume = 661 thousand
Listed on January 07, 2014


Palo Alto Networks, Inc. - PANW - close: 60.65 change: +0.01

Stop Loss: 57.65
Target(s): 64.00
Current Option Gain/Loss: - 4.0%
Time Frame: exit PRIOR to February option expiration
New Positions: see below

Comments:
01/13/14: PANW was hit hard at the open. Shares gapped down at $60.25 and then plunged to just below $57.00 in the first minute of trading. Our stop was hit at $57.65 on the way down. PANW produced a decent bounce. Readers may want to keep this stock on their watch list for anther entry point.

- Suggested Positions -

Feb $60 call (PANW1422B60) entry $2.45* exit $2.35** (- 4.0%)

01/09/14 new stop loss @ 57.65
01/07/14 new stop loss @ 56.75
01/06/14 triggered @ 58.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 06 at $58.25
Average Daily Volume = 1.1 million
Listed on January 04, 2014


Polaris Industries, Inc. - PII - close: 138.97 change: -4.69

Stop Loss: 142.40
Target(s): 149.00
Current Option Gain/Loss: -25.2%
Time Frame: EXIT prior to earnings on January 28th
New Positions: see below

Comments:
01/13/14: PII underperformed the broader market with a -3.26% plunge on Monday. We were already concerned about this stock's performance and in the weekend letter stated we could exit at the opening bell today. PII opened at $143.63.

- Suggested Positions -

Mar $150 call (PII1422c150) entry $4.48* exit $3.35**(-25.2%)

01/13/14 planned exit
**option exit price is an estimate since the option did not trade at the time our play was closed.
01/11/14 prepare to exit on Monday morning
01/08/14 new stop loss @ 142.40
01/07/14 new stop loss @ 141.75
12/30/13 new stop loss @ 139.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on December 23 at $142.25
Average Daily Volume = 457 thousand
Listed on December 21, 2013


Zillow, Inc. - Z - close: 85.74 change: -4.08

Stop Loss: 85.90
Target(s): 99.00
Current Option Gain/Loss: -42.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/13/14: It was a volatile day for shares of Z. The stock opened higher, rallied to $90.68, and then plunged to $84.35 before paring its losses. That was a -6.9% drop from today's intraday high. Our suggested entry point was hit at $90.25 this morning and our stop was hit at $85.90 this afternoon.

I had warned readers that Z could be volatile and that this was an aggressive, higher-risk trade. The plan was to use small positions to limit our exposure.

*small positions* - Suggested Positions -

Feb $95 call (Z1422B95) entry $5.00* exit $2.90* (-42.0%)

01/13/14 stopped out at $85.90
01/13/14 triggered @ 90.25
*our option entry and exit prices are estimates since the option did not trade at the exact times our play was triggered and stopped out.

Annotated Chart:

Entry on January 13 at $90.25
Average Daily Volume = 959 thousand
Listed on January 11, 2014