Editor's Note:

The stock market's sell-off that began last week continued on Monday. The intraday bounce has rolled over suggesting the correction is not done yet.

GMCR hit our stop loss. QQQ hit our entry point. We are adjusting our entry point on the IWM trade.


Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 75.71 change: -0.07

Stop Loss: 72.40
Target(s): 82.50
Current Option Gain/Loss: -11.7%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
01/27/14: The sell-off in CBI continued this morning. Shares opened at $76.17 and then plunged to $73.22 before bouncing back to $76.00. Our plan was to buy calls at the open but I suggested more nimble traders buy a dip near $75 or its 100-dma (near 74.50). More conservative traders may want to wait for a rally above today's high (76.47) before initiating positions.

- Suggested Positions -

Buy the Mar $80 call (CBI1422C80) entry $1.70

Entry on January 27 at $76.17
Average Daily Volume = 1.5 million
Listed on January 25, 2014


Honeywell Intl. - HON - close: 90.29 change: +1.82

Stop Loss: 84.75
Target(s): 94.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
01/27/14: Shares of HON displayed relative strength today thanks to a couple of analyst upgrades and some $100 price targets. Today's bounce (+2.0%) completely erased Friday's decline. Currently our plan is still a buy-the-dip trigger at $87.25 but if we see HON breakout past the $91.50 area we might switch and buy calls on the breakout to new highs.

Trigger @ 87.25

- Suggested Positions -

Buy the Mar $90 call (HON1422C90)

Entry on January -- at $---.--
Average Daily Volume = 2.2 million
Listed on January 25, 2014


iShares Russell 2000 ETF - IWM - close: 111.79 change: -1.66

Stop Loss: 108.85
Target(s): 118.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
01/27/14: The profit taking in the small caps continued and the IWM hit an intraday low of $111.15. That's not low enough since our suggested entry point was $111.00. The afternoon bounce failed near $113.00. We suspect that the market could see another sell-off tomorrow thanks to weakness in shares of AAPL. Tonight we're adjusting our entry point strategy here in the IWM and moving it down to $110.30. We are essentially aiming for the simple 100-dma (currently at $110.26). We'll adjust the stop loss to $108.85.

Trigger @ $110.30

- Suggested Positions -

Buy the Mar $115 call (IWM1422C115) current ask $1.66

01/27/14 adjust the entry point trigger to $110.30 and move the stop loss to $108.85.

Entry on January -- at $---.--
Average Daily Volume = 31.7 million
Listed on January 25, 2014


NASDAQ-100 ETF - QQQ - close: 85.90 change: -0.84

Stop Loss: 83.90
Target(s): 92.00
Current Option Gain/Loss: - 7.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/27/14: As expected the sell-off continued and the QQQ hit our new buy-the-dip trigger at $86.00. Shares actually hit an intraday low of $85.25. I am worried that the QQQs could hit new relative lows tomorrow as the market reacts to Apple's (AAPL) earnings. AAPL is one of the biggest stocks inside the NASDAQ-100 index and AAPL is currently down -$43.00 in after hours trading tonight. I am adjusting our stop loss to $83.90. That does raise our risk on this trade.

*small positions* - Suggested Positions -

Long Mar $87 call (QQQ1422C87) entry $1.60

01/27/14 adjust stop loss to $83.90
01/27/14 triggered at $86.00

Entry on January 27 at $86.00
Average Daily Volume = 29 million
Listed on January 25, 2014




PUT Play Updates


Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

Green Mountain Coffee Roasters - GMCR - close: 77.63 change: -1.05

Stop Loss: 77.95
Target(s): 88.00
Current Option Gain/Loss: -50.5%
Time Frame: exit PRIOR to earnings on February 5th
New Positions: see below

Comments:
01/27/14: I cautioned readers over the weekend that GMCR would likely hit our stop loss today if the market continued to sink on Monday morning. Sure enough GMCR broke down below short-term support near $78.00 and hit our stop at $77.95.

- Suggested Positions -

Feb $85 call (GMCR1422B85) entry $3.66 exit $1.81 (-50.5%)

01/27/14 stopped out
01/23/14 triggered @ 81.75

chart:

Entry on January 23 at $81.75
Average Daily Volume = 2.3 million
Listed on January 22, 2014