Editor's Note:

The U.S. market collapsed with the major averages all down more than -2% today. This is the worst start to February since 1933.

Our plan was to close our CBI trade at the opening bell.
ENOC was stopped out. SJM hit our entry trigger.

We want to exit our PM trade immediately to lock in potential gains.


Current Portfolio:


CALL Play Updates

Biotech ETF - BBH - close: 94.25 change: -2.63

Stop Loss: 93.75
Target(s): 109.00
Current Option Gain/Loss: -41.9%
Time Frame: 6 to 7 weeks
New Positions: see below

Comments:
02/03/14: Stocks were crushed lower on Monday and the BBH gave up -2.7% to settle on its 20-dma. The low today was $93.92. Our stop is at $93.75. I am not suggesting new positions at this time.

Earlier Comments:
We're listing the March calls. You may want to consider the June calls. The Point & Figure chart for BBH is bullish with a $111.00 target.

Caution: The BBH does not see a lot of option volume. Traders may want to use small positions to limit their exposure.

- Suggested Positions -

Long MAR $100 call (BBH1422C100) entry $3.10*

01/30/14 triggered on gap open higher at $97.49. suggested trigger was $97.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 30 at $97.49
Average Daily Volume = 164 thousand
Listed on January 29, 2014


Salesforce.com - CRM - close: 58.47 change: -2.06

Stop Loss: 59.40
Target(s): 67.50
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings in late February
New Positions: Yes, see below

Comments:
02/03/14: CRM reversed lower today and underperformed the market with a -3.4% decline. Shares settled on their 20-dma, which was support a few days ago. Right now our suggested entry point is $61.75. We'll see how CRM performs tomorrow and potentially adjust our entry point strategy or remove CRM.

Earlier Comments:
CRM has short-term resistance at $61.50. I am suggesting a trigger to buy calls at $61.75. If triggered our target is $67.50. However, we will plan on exiting prior to CRM's earnings report in late February (no confirmed date yet).

FYI: The Point & Figure chart for CRM is bullish with an $82 target.

Trigger @ 61.75

- Suggested Positions -

Buy the Mar $62.50 call (CRM1422C62.5)

Entry on February -- at $---.--
Average Daily Volume = 4.8 million
Listed on February 01, 2014


General Dynamics - GD - close: 98.47 change: -2.84

Stop Loss: 97.75
Target(s): 107.00
Current Option Gain/Loss: -30.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/03/14: GD reversed all of its recent gains with a -2.8% decline and a close below its simple 10-dma today. The stock is poised to retest short-term support near $98.00 soon.

- 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: 108.65 change: -3.51

Stop Loss: 103.75
Target(s): 113.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
02/03/14: The stock market's widespread decline on Monday hit the small caps pretty hard. The IWM broke down below support near $111 and its 100-dma. It is unlikely that the IWM will hit our suggested entry point at $114.15 any time soon. Therefore we are making major adjustments to our strategy.

The simple 200-dma could be support (currently near $105). We are now suggesting a buy-the-dip trigger at $106.00 with a stop loss at $103.75. If triggered our target is $113.00. I am adjusting our option strike.

Trigger @ $106.00, stop loss @ 103.75.

- Suggested *SMALL* Positions -

Buy the Mar $110 call (IWM1422C110) current ask $2.69

02/03/14 STRATEGY adjustment: New trigger buy the dip at $106.00,
move the stop loss to $103.75, change the option strike.
02/01/14 remove trigger at $110.30. Adjust stop loss higher.
02/01/14 *Use small positions to limit risk*
01/29/14 adjust stop on buy-the-dip entry point to 108.65
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.

chart:

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


NASDAQ-100 ETF - QQQ - close: 84.29 change: -1.98

Stop Loss: 83.90
Target(s): 92.00
Current Option Gain/Loss: -44.3%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/03/14: The market's weakness has pulled the QQQ down to support near $84.00. If there is any follow through lower tomorrow we could see the QQQ hit our stop at $83.90. I am not suggesting new positions at this time.

*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


SBA Communications - SBAC - close: 91.99 change: -0.76

Stop Loss: 89.90
Target(s): 99.50
Current Option Gain/Loss: - 25.6%
Time Frame: Exit PRIOR to earnings on February 25th
New Positions: see below

Comments:
02/03/14: SBAC held up pretty well today. Shares only fell -0.8% versus a -2.2% drop in the S&P 500. If this pullback continues we can watch for support near $90.00. P> FYI: The Point & Figure chart for SBAC is bullish with a $107 target. A move above $93.00 would produce a new buy signal.

- Suggested Positions -

Long MAR $95 call (SBAC1422C95) entry $1.95

01/31/14 triggered at $93.05

Entry on January 31 at $93.05
Average Daily Volume = 1.3 million
Listed on January 30, 2014




PUT Play Updates

Philip Morris Intl. - PM - close: 75.39 change: -2.75

Stop Loss: 80.15
Target(s): 75.25
Current Option Gain/Loss: +232.1%
Time Frame: Exit PRIOR to earnings on Feb 6th
New Positions: see below

Comments:
02/03/14: PM almost hit our target today. The intraday low was $75.28. Our suggested exit target has been $75.25. The stock is looking pretty oversold with a -3.5% drop on top of its recent losses.

We are suggesting an immediate exit to lock in potential gains. Exit at the opening bell tomorrow morning.

- Suggested Positions -

Long Feb $80 PUT (PM1422N80) entry $1.43

02/03/14 prepare to exit immediately
02/01/14 new stop loss @ 80.15, prepare to exit before Feb. 6th
01/29/14 triggered @ 79.85

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


Restoration Hardware - RH - close: 54.85 change: -1.89

Stop Loss: 58.25
Target(s): 51.00
Current Option Gain/Loss: + 0.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/03/14: RH looks good. The stock displayed some relative weakness with a -3.3% decline. Shares are poised to breakdown below their simple 300-dma very soon. Tonight I am adjusting our stop loss down to $58.25.

Earlier Comments:
Please note that I do consider this a somewhat more aggressive, higher-risk trade because RH does have above average short interest (about 10% of the 34 million-share float). Our multi-week target is $51.00. More aggressive traders could aim lower. The Point & Figure chart for RH is bearish with a $43 target.

*Small Positions* - Suggested Positions -

Long MAR $55 PUT (RH1422o55) entry $3.00*

02/03/14 new stop loss @ 58.25
01/29/14 trade opened this morning. RH gapped down at $56.47.
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on January 29 at $56.47
Average Daily Volume = 981 thousand
Listed on January 28, 2014


Sears Holding - SHLD - close: 35.23 change: -1.14

Stop Loss: 38.55
Target(s): 30.25
Current Option Gain/Loss: + 4.9%
Time Frame: exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/03/14: Shares of SHLD also underperformed the market today with a -3.1% decline. SHLD is on the verge of breaking down below the $35.00 mark. I would consider new positions now or you could wait for a drop below $35.00.

Earlier Comments:
I do consider this a more aggressive trade because there is so much short interest. The shorts are probably right on this stock but SHLD could still see short-term spikes if some of the weaker shorts rush to cover on any unexpected good news. The most recent data listed short interest at 54% of the 50.7 million share float.

Our target is $30.25. More aggressive traders could aim lower since the Point & Figure chart for SHLD is bearish with a $20 target. However, I would not hold over the earnings report expected in late February.

- Suggested Positions -

Long MAR $30 PUT (SHLD1422o30) entry $1.63

01/31/14 triggered @ $35.85

Entry on January 31 at $35.85
Average Daily Volume = 2.6 million
Listed on January 29, 2014


The J.M.Smucker Company - SJM - close: 93.93 change: -2.46

Stop Loss: 98.25
Target(s): 90.50
Current Option Gain/Loss: +30.9%
Time Frame: Exit PRIOR to earnings on Feb. 14th
New Positions: see below

Comments:
02/03/14: SJM broke down sharply with a -2.5% decline. Our suggested entry point was hit right after the opening bell at $96.25. I would not launch new positions at current levels.

Our target is $90.50. More aggressive traders could aim lower since the Point & Figure chart for SJM is bearish with an $86 target. However, our target at $90.50 may already be too optimistic. SJM is scheduled to report earnings on February 14th and we do not want to hold over the report. We have two weeks. Nimble traders might want to use the February options. I am suggesting the March $95 put.

- Suggested Positions -

Long MAR $95 PUT (SJM1422o95) entry $2.75

02/03/14 triggered @ 96.25

Entry on February 03 at $96.25
Average Daily Volume = 896 thousand
Listed on February 01, 2014



CLOSED BULLISH PLAYS

Chicago Bridge & Iron - CBI - close: 73.23 change: -1.76

Stop Loss: 73.15
Target(s): 82.50
Current Option Gain/Loss: -26.4%
Time Frame: Exit PRIOR to CBI's earnings report in February
New Positions: see below

Comments:
02/03/14: We had decided in the weekend newsletter to immediately exit our CBI trade. The stock opened at $74.92 and then plunged to $70.76 by midday.

- Suggested Positions -

Buy the Mar $80 call (CBI1422C80) entry $1.70 exit $1.25 (-26.4%)

02/03/14 planned exit this morning
02/01/14 prepare to exit immediately on Monday morning
01/30/14 CBI not performing well today. This could be a warning signal.
01/28/14 new stop loss @ 73.15

chart:

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


EnerNOC, Inc. - ENOC - close: 20.68 change: -1.72

Stop Loss: 21.90
Target(s): 25.75
Current Option Gain/Loss: -40.5%
Time Frame: EXIT PRIOR to earnings on February 13th
New Positions: see below

Comments:
02/03/14: ENOC got crushed today. I didn't see any news to explain the relative weakness. The stock opened near its 10-dma and then plunged to a -7.6% decline. Our stop was hit at $21.90.

- Suggested Positions -

MAR $22.50 call (ENOC1422C22.5) entry $1.85* exit $1.10** (-40.5%)

02/03/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
02/01/14 new stop loss @ 21.90
01/30/14 triggered at $23.10
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on January 30 at $23.10
Average Daily Volume = 485 thousand
Listed on January 28, 2014