Editor's Note:

The market rally continued on Wednesday and the S&P 500 index briefly touched a new all-time high before closing under round-number resistance near 1850.

DWRE hit our bullish exit target. We have removed NOW as an active candidate. STX and TMO hit our entry triggers.
We want to exit our SLXP trade tomorrow morning.


Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 82.77 change: +0.83

Stop Loss: 79.65
Target(s): 89.50
Current Option Gain/Loss: + 0.0%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
01/15/14: CBI's bounce from support near $80 continues and shares managed to outperform the market with a +1.0% gain. The stock is now testing resistance at the top of its $80-83 trading range.

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


General Dynamics - GD - close: 95.59 change: +0.19

Stop Loss: 93.85
Target(s): 99.50
Current Option Gain/Loss: + 4.0%
Time Frame: exit PRIOR to earnings on January 22nd
New Positions: see below

Comments:
01/15/14: GD began trading ex-dividend today (56 cents). The stock briefly hit a new high before paring its gains. I am not suggesting new positions at this time.

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: 108.60 change: +3.30

Stop Loss: 104.65
Target(s): 109.75
Current Option Gain/Loss: +40.0%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
01/15/14: The rally in N accelerated today with a +3.1% surge to new two-month highs. I am raising our stop loss to $104.65. More conservative traders may want to just take profits now.

Earlier Comments:
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

01/15/14 new stop loss @ 104.65
01/14/14 adjust exit target to $109.75
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: 117.88 change: +0.77

Stop Loss: 114.65
Target(s): 124.00
Current Option Gain/Loss: +14.8%
Time Frame: exit PRIOR to earnings on January 30th
New Positions: see below

Comments:
01/15/14: The rally lifted shares to a new all-time high. I want to remind readers that the $120 mark might be round-number resistance. We will plan on exiting prior to earnings on January 30th.

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.

- Suggested Positions -

Long FEB $120 call (NOC1422B120) entry $1.35

01/14/14 new stop loss @ 114.65
01/10/14 triggered @ 116.50

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


Salix Pharmaceuticals - SLXP - close: 95.30 change: -1.28

Stop Loss: 92.75
Target(s): 98.50
Current Option Gain/Loss: +56.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/15/14: Uh-oh! Today's session could spell trouble for SLXP. The stock did not participate in the market's widespread rally today. Instead SLXP underperformed with a -1.3% decline. I am suggesting an immediate exit tomorrow morning to lock in potential gains. Our option closed with a bid/ask of $3.90/4.40.

- Suggested Positions -

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

01/15/14 prepare to exit tomorrow morning
01/14/14 new stop loss @ 92.75, readers may want to take profits now
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


Seagate Technology - STX - close: 60.84 change: +0.51

Stop Loss: 58.45
Target(s): 65.00
Current Option Gain/Loss: - 3.2%
Time Frame: exit PRIOR to earnings on January 27th.
New Positions: see below

Comments:
01/15/14: Our new trade on STX has opened. The stock garnered bullish analyst comments again this morning. Shares rallied to new all-time highs and our suggested entry point was hit at $60.85.

Earlier Comments:
Our short-term target is $65.00. Investors with a longer time horizon could aim higher since the Point & Figure chart is bullish with a $77.00 target. However, we will plan to exit prior to STX's earnings report on January 27th.

- Suggested Positions -

Long Feb $60 call (STX1422B60) entry $3.10

01/15/14 triggered @ 60.85

Entry on January 15 at $60.85
Average Daily Volume = 3.5 million
Listed on January 14, 2014


Thermo Fisher Scientific - TMO - close: 115.52 change: +0.76

Stop Loss: 112.65
Target(s): 119.75
Current Option Gain/Loss: - 4.4%
Time Frame: Exit PRIOR to earnings in late January or Early February
New Positions: see below

Comments:
01/15/14: TMO is breaking through potential resistance at the $115 level. Our suggested entry point to buy calls was hit at $115.25. I would still be tempted to buy calls at current levels.

Earlier Comments:
Our target is $119.75. We will plan on exiting prior to earnings. At the moment there is no confirmed earnings date. It should be near the end of January or early February.

- Suggested Positions -

Long Feb $115 call (TMO1422B115) entry $3.35*

01/15/14 triggered @ 115.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 15 at $115.25
Average Daily Volume = 1.8 million
Listed on January 14, 2014


United Technologies - UTX - close: 114.07 change: +1.44

Stop Loss: 111.75
Target(s): 118.50
Current Option Gain/Loss: -26.1%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/15/14: I was starting to worry about our UTX trade. Fortunately shares bounced from support and outperformed the market with a +1.2% gain today. The stock did close near short-term resistance in the $114.25 area.

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

01/14/14 UTX did not participate in the rally. Readers may want to exit early now
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: 100.48 change: +0.04

Stop Loss: 103.55
Target(s): 97.00
Current Option Gain/Loss: + 2.7%
Time Frame: Exit PRIOR to earnings on January 28th
New Positions: see below

Comments:
01/15/14: The fact that shares of RKT did not participate in today's market rally is very encouraging if you're holding puts. Cautious traders may want to inch their stop loss lower. I am not suggesting new positions at this time.

- 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


Sears Holding Corp. - SHLD - close: 36.70 change: +1.04

Stop Loss: 38.05
Target(s): 30.25
Current Option Gain/Loss: -21.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/15/14: SHLD has tried to bounce two days in a row. The stock was successful today with a +2.9% gain. Yet both today and yesterday saw SHLD stall at the $37.50 level. More conservative traders may want to adjust their stop closer to $37.50. I am not suggesting new positions at this time.

Earlier Comments:
Please note that traders may want to use small positions. There is a high amount of short interest. The most recent data listed short interest at 54% of the 50.7 million share float. That could spark a short squeeze if the stock were to suddenly move higher.

- Suggested Positions -

Long MAR $30 PUT (SHLD1422o30) entry $2.04

Entry on January 14 at $34.85
Average Daily Volume = 2.2 million
Listed on January 13, 2014



CLOSED BULLISH PLAYS

Demandware, Inc. - DWRE - close: 69.54 change: +1.56

Stop Loss: 65.40
Target(s): 69.50
Current Option Gain/Loss: +42.8%
Time Frame: exit PRIOR to earnings in mid February
New Positions: see below

Comments:
01/15/14: Target achieved.

DWRE has rallied to round-number resistance near $70.00. The intraday high was $70.10. Our exit target was hit at $69.50.

- Suggested Positions -

Feb $70 call (DWRE1422B70) entry $2.45* exit $3.50 (+42.8%)

01/15/14 target hit
01/14/14 new stop loss @ 65.40, DWRE downgraded this morning
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.

chart:

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


ServiceNow, Inc. - NOW - close: 60.31 change: +2.68

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:
01/15/14: NOW delivered an impressive move today. Shares outperformed the market with a +4.65% gain. Today's move is also a bullish breakout above the $60.00 mark. I am almost tempted to buy calls on this move. However, we do not want to chase a nearly +5% one-day jump since this probably inflates the option premiums. Another concern we see is the trend line of higher highs (see chart). Nimble traders may want to consider buying calls on a dip (maybe in the $58.50 area). We are actually choosing to remove NOW as a candidate. I would keep it on your watch list. We'll look at it again in a few days.

Trade did not open.

01/15/14 removed from the newsletter. did not open.
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

chart:

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