Editor's Note:

After a punishing decline on Monday the U.S. market managed a widespread bounce today.

We closed our PM trade this morning to lock in potential gains.


Current Portfolio:


CALL Play Updates

Biotech ETF - BBH - close: 95.59 change: +1.34

Stop Loss: 93.75
Target(s): 109.00
Current Option Gain/Loss: -30.6%
Time Frame: 6 to 7 weeks
New Positions: see below

Comments:
02/04/14: The BBH recovered almost exactly half of yesterday's decline. Today is technically an "inside day" so while the bounce is encouraging it doesn't really tell us much. I am not suggesting new positions at this time.

(An inside day is when all of one day's trading is inside the prior day's trading range. It's normally seen as a sign of indecision by traders.)

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:
02/04/14: CRM managed to completely erase yesterday's -3.4% decline with a +4.25% bounce today. Today's move got a boost from an upgrade this morning. Shares are once again testing resistance near $61.50.

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) current ask $2.90

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


General Dynamics - GD - close: 99.68 change: +1.21

Stop Loss: 97.75
Target(s): 107.00
Current Option Gain/Loss: -15.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/04/14: GD delivered a +1.2% bounce but shares remain inside their $98-102 trading range. I am not suggesting new positions at this time.

- 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: 109.47 change: +0.82

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:
02/04/14: The small cap IWM ETF only recovered about 25% of yesterday's losses. Shares remain between the rising 150-dma and the $110.00 mark, which could be overhead resistance.

There is no change from yesterday's comments where we adjusted our entry trigger to a buy-the-dip trigger at $106.00.

Trigger @ $106.00, stop loss @ 103.75.

- Suggested *SMALL* Positions -

Buy the Mar $110 call (IWM1422C110)

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.

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


NASDAQ-100 ETF - QQQ - close: 84.91 change: +0.62

Stop Loss: 83.90
Target(s): 92.00
Current Option Gain/Loss: -37.5%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/04/14: The QQQ produced a +0.73% gain, which kept pace with the S&P 500 index but lagged the broader NASDAQ composite (+0.8%). 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: 91.62 change: -0.37

Stop Loss: 89.90
Target(s): 99.50
Current Option Gain/Loss: - 30.7%
Time Frame: Exit PRIOR to earnings on February 25th
New Positions: see below

Comments:
02/04/14: I'm not sure what to make of the relative weakness in SBAC today. Shares spiked lower this morning but traders bought the dip near round-number support at the $90.00 mark. SBAC pared its losses but still underperformed the market with a -0.4% decline. I am not suggesting new positions at the moment. 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

Intl. Business Machines - IBM - close: 172.84 change: -0.06

Stop Loss: 176.55
Target(s): 161.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
02/04/14: IBM continued to underperform the market today and did not participate in the widespread market bounce. Shares slipped to a new relative low at $172.36 before paring its losses. We are still on the sidelines.

Earlier Comments:
I am suggesting we limit our risk by using small positions. We'll use a trigger to buy puts at $172.25. If triggered our target is $161.00. FYI: The Point & Figure chart for IBM is bearish with a $156 target.

Trigger @ 172.25

- Suggested Positions -

Buy the MAR $170 PUT (IBM1422o170) current ask $3.45

Entry on February -- at $---.--
Average Daily Volume = 6.0 million
Listed on February 03, 2014


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

Stop Loss: 58.25
Target(s): 51.00
Current Option Gain/Loss: -16.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/04/14: The market's widespread bounce today helped RH rebound from support near $55.00. Shares added +2.5%. I am not suggesting new positions at current levels. Look for shares to find resistance near $58.00.

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: 33.99 change: -1.24

Stop Loss: 38.55
Target(s): 30.25
Current Option Gain/Loss: +24.5%
Time Frame: exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/04/14: It was a good day for SHLD bears. The stock underperformed the broader market with a -3.5% decline and a new two-year closing low. More conservative investors may want to adjust their stop loss lower.

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: 93.71 change: -0.22

Stop Loss: 98.25
Target(s): 90.50
Current Option Gain/Loss: +34.5%
Time Frame: Exit PRIOR to earnings on Feb. 14th
New Positions: see below

Comments:
02/04/14: It was encouraging to see SJM fail to participate in the market's broad-based bounce on Tuesday. The stock lost -0.2% and closed at a new relative low.

Earlier Comments:
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 BEARISH PLAYS

Philip Morris Intl. - PM - close: 76.88 change: +1.49

Stop Loss: 80.15
Target(s): 75.25
Current Option Gain/Loss: +198.6%
Time Frame: Exit PRIOR to earnings on Feb 6th
New Positions: see below

Comments:
02/04/14: Our plan was to exit our PM trade this morning at the opening bell to lock in gains. Unfortunately the market's widespread bounce helped spark a gap open higher in the stock. PM gapped higher at $75.85. This move higher in the stock produced a gap down in the option. Instead of exiting at $4.95 the option opened at $4.47. Minus the 20-cent spread our potential exit was $4.27.

- Suggested Positions -

Feb $80 PUT (PM1422N80) entry $1.43 exit $4.27 (+198.6%)

02/04/14 planned exit this morning
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

chart:

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