Editor's Note:

The U.S. market ended a three-day sell-off with a bounce on Tuesday.

GD hit our entry trigger. We have removed HON. Tonight we are adding a new entry trigger on IWM.


Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 77.18 change: +1.47

Stop Loss: 73.15
Target(s): 82.50
Current Option Gain/Loss: +14.7%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
01/28/14: So far so good. The oversold bounce in CBI continued on Tuesday with shares outperforming the broader market with a +1.9% gain. The next challenge for the bulls will be potential resistance at the simple 50-dma near $79.30 and the $80.00 level. I am raising our stop loss to $73.15.

- Suggested Positions -

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

01/28/14 new stop loss @ 73.15

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


General Dynamics - GD - close: 100.50 change: +0.55

Stop Loss: 97.75
Target(s): 107.00
Current Option Gain/Loss: - 3.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/28/14: Our new trade on GD has been triggered. The plan was to buy calls at $100.50. Shares rallied up toward short-term resistance near $102.00 before paring its gains this afternoon.

- Suggested Positions -

Long Mar $100 call (GD1422C100) entry $3.00*

01/28/14 triggered @ 100.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 28 at $100.50
Average Daily Volume = 2.6 million
Listed on January 27, 2014


iShares Russell 2000 ETF - IWM - close: 112.97 change: +1.18

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:
01/28/14: The IWM didn't see the follow through lower we were looking for. The ETF bounced near its trend line of higher lows. After hours tonight the central bank of Turkey raised rates almost 5% points to 12% to stop the sell-off in their currency and that seems to be supporting emerging markets and we're seeing a bounce in U.S. equities after hours. If this bounce continues we want to be ready to buy calls on the IWM. Therefore I am adding a secondary entry point to buy calls if the IWM can trade at $114.15. If that occurs we'll raise the stop loss to $109.90. Essentially we now have two different entry points on the IWM depending on which direction it decides to go.

Buy the Dip Trigger @ $110.30, stop loss 108.85

- or - Buy Trigger @ $114.15, stop loss @ 109.90.

- Suggested Positions -

Buy the Mar $115 call (IWM1422C115) current ask $2.00

01/28/14 add a secondary entry point to buy calls at $114.15
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: 85.85 change: -0.05

Stop Loss: 83.90
Target(s): 92.00
Current Option Gain/Loss: -15.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/28/14: I am honestly surprised that the QQQ did not see more weakness considering the big gap down in shares of AAPL this morning. The QQQ saw a small gap down at $85.42 but there was almost no follow through lower. If you're looking for a new entry point I would be tempted to buy calls again if the QQQ rises above $86.25.

*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

Philip Morris Intl. - PM - close: 80.81 change: +0.02

Stop Loss: 81.55
Target(s): 75.25
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on Feb 6th
New Positions: Yes, see below

Comments:
01/28/14: Tuesday proved to be a quiet session for PM with the stock drifting sideways. I do not see any changes from our Monday night new play description (below).

Earlier Comments:
We're suggesting a trigger to buy puts at $79.85. If triggered our short-term target is $75.25. Please note that this is a short-term trade. PM is due to report earnings on February 6th and we do not want to hold over the report.

Trigger @ 79.85

- Suggested Positions -

Buy the Feb $80 PUT (PM1422N80)

Entry on January -- at $---.--
Average Daily Volume = 5.9 million
Listed on January 27, 2014



CLOSED BULLISH PLAYS

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: see below

Comments:
01/28/14: It was somewhat of a disappointing session for HON. Shares continue to struggle with resistance near $91.00-91.50. We have decided to drop HON as a bullish candidate. Our trade has not opened yet (suggested trigger was a dip at $87.25). I would keep HON on your watch list. A breakout past $91.50 could prove to be a new bullish entry point.

Trade did not open.

01/28/14 removed from the newsletter. did not hit our trigger at $87.25

chart:

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