Editor's Note:

The market's major indices drifted sideways.

N hit our bullish exit target. SLXP was closed this morning to lock in potential gains. SHLD hit our stop loss.


Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 82.90 change: +0.13

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:
01/16/14: CBI underperformed the market this morning but shares bounced near $81.60 and managed to rebound back into positive territory. Shares actually managed to outperform by the closing bell. Shares look poised to breakout past resistance near $83.00.

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


Cigna Corp. - CI - close: 88.82 change: -1.04

Stop Loss: 88.40
Target(s): 95.00
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on February 7th
New Positions: Yes, see below

Comments:
01/16/14: A number of the Healthcare stocks underperformed today and CI followed its peers lower with a -1.1% decline. Shares settled on short-term support at the 10-dma. We are waiting for a move higher.

I am suggesting a trigger to buy calls at $90.25. If you prefer an alternative entry point could be $90.75, which would mean waiting for a breakout past its highs from last week. If we are triggered at $90.25 I am suggesting a $95.00 target. However, we'll plan on exiting prior to the earnings report on February 7th.

FYI: The Point & Figure chart for CI is bullish with a $119 target.

Trigger @ 90.25

- Suggested Positions -

buy the Feb $90 call (CI1422B90)

Entry on January -- at $---.--
Average Daily Volume = 1.0 million
Listed on January 15, 2014


Cognizant Tech. - CTSH - close: 100.30 change: -0.73

Stop Loss: 99.40
Target(s): 108.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on February 5th
New Positions: Yes, see below

Comments:
01/16/14: CTSH drifted lower toward round-number support at $100.00. I don't see any changes from our new play comments last night.

Earlier Comments:
I am suggesting a trigger to buy calls at $101.50. If triggered our target is $108.50. However, we will plan on exiting positions prior to the earnings report on February 5th.

Trigger @ 101.50

- Suggested Positions -

buy the Feb $105 call (CTSH1422B105)

Entry on January -- at $---.--
Average Daily Volume = 1.6 million
Listed on January 15, 2014


General Dynamics - GD - close: 95.40 change: -0.19

Stop Loss: 93.85
Target(s): 99.50
Current Option Gain/Loss: - 2.7%
Time Frame: exit PRIOR to earnings on January 22nd
New Positions: see below

Comments:
01/16/14: GD drifted lower on relatively light volume. More conservative traders might want to adjust their stop loss higher. 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



Northrop Grumman - NOC - close: 118.29 change: +0.41

Stop Loss: 114.65
Target(s): 124.00
Current Option Gain/Loss: +25.9%
Time Frame: exit PRIOR to earnings on January 30th
New Positions: see below

Comments:
01/16/14: Defense names continued to move higher today. NOC drifted higher and outperformed the market with a +0.3% gain.

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


Seagate Technology - STX - close: 60.66 change: -0.18

Stop Loss: 58.45
Target(s): 65.00
Current Option Gain/Loss: - 4.8%
Time Frame: exit PRIOR to earnings on January 27th.
New Positions: see below

Comments:
01/16/14: It was a quiet session for shares of STX, which followed the market's sideways drift on Thursday. I would still consider new positions now or you could wait for a rise above today's high (61.10).

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: 116.11 change: +0.59

Stop Loss: 112.65
Target(s): 119.75
Current Option Gain/Loss: + 7.4%
Time Frame: Exit PRIOR to earnings in late January or Early February
New Positions: see below

Comments:
01/16/14: TMO continued to show relative strength today with a +0.5% gain. Readers might want to adjust their stops closer to the simple 10-dma (currently near $113.40).

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: 114.22 change: +0.15

Stop Loss: 111.75
Target(s): 118.50
Current Option Gain/Loss: - 8.3%
Time Frame: exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/16/14: UTX, like the major indices, churned sideways today but it did so with a slightly bullish tilt. Shares look poised to breakout past this 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: 100.18 change: -0.30

Stop Loss: 102.55
Target(s): 97.00
Current Option Gain/Loss: + 5.4%
Time Frame: Exit PRIOR to earnings on January 28th
New Positions: see below

Comments:
01/16/14: RKT is still churning sideways inside the $100-102 zone. I am adjusting our stop loss down to $102.55. I am not suggesting new positions at this time.

- Suggested Positions -

Long FEB $100 PUT (RKT1422N100) entry $3.70

01/16/14 new stop loss @ 102.55
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

NetSuite Inc. - N - close: 110.61 change: +2.01

Stop Loss: 104.65
Target(s): 109.75
Current Option Gain/Loss: +55.0%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
01/16/14: Target achieved.

Shares of N were upgraded this morning. This news sparked a gap open higher at $109.68. N continued to rally and closed up +1.85%. Our exit target was hit at $109.75 early this morning.

- Suggested Positions -

Feb $110 call (N1422B110) entry $3.00 exit $4.65 (+55.0%)

01/16/14 target hit
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

chart:

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


Salix Pharmaceuticals - SLXP - close: 96.43 change: +1.13

Stop Loss: 92.75
Target(s): 98.50
Current Option Gain/Loss: +40.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/16/14: Hmm... we may have been a little early on pulling the rip cord for our SLXP trade. After yesterday's underperformance we decided in last night's newsletter to exit this morning. SLXP opened at $95.31. The stock then bounced and outperformed the market with a +1.1% gain. Unfortunately the option gapped down this morning at $4.00 (from yesterday's close at $4.40).

- Suggested Positions -

Feb $95 call (SLXP1422B95) entry $2.50* exit $3.50 (+40.0%)

01/16/14 planned exit
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.

chart:

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


CLOSED BEARISH PLAYS

Sears Holding Corp. - SHLD - close: 38.37 change: +1.67

Stop Loss: 38.05
Target(s): 30.25
Current Option Gain/Loss: -36.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/16/14: Retail stocks were unpopular thanks to the crash and burn in shares of BBY today. Yet SHLD actually rallied. The stock displayed significant strength with a +4.5% gain. SHLD was up +8.8% at its best levels of the day. The stock hit our stop loss at $38.05 before lunchtime.

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 -

MAR $30 PUT (SHLD1422o30) entry $2.04 exit $1.30 (-36.2%)

01/16/14 stopped out at $38.05

chart:

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