Editor's Note:

Thursday's +1.2% bounce in the Dow Jones Industrial Average marked the best day of 2014 for that particular index. The rest of the major U.S. indices closed higher with most up more than +1%.

Our LMT call play was triggered. Our MCD put play was stopped out.

The market could be volatile tomorrow in reaction to the January jobs report. Analysts are expecting +175,000 new jobs but the real number could be a lot lower. December's jobs report was huge miss that market pundits blamed on the weather. Well January's weather was just as bad as December's (if not worse) and many are expecting the BLS numbers tomorrow to miss the estimate.


Current Portfolio:


CALL Play Updates

Salesforce.com - CRM - close: 61.70 change: +0.07

Stop Loss: 59.40
Target(s): 67.50
Current Option Gain/Loss: - 3.0%
Time Frame: Exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/06/14: CRM delivered a disappointing session on Thursday. The stock spiked higher this morning only to pare its gains by the close and barely close in positive territory. Traders may wan to wait for a new move above $62.25 or 62.75 before initiating new positions.

Earlier Comments:
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.

- Suggested Positions -

Long Mar $62.50 call (CRM1422C62.5) entry $3.30*

02/05/14 triggered @ 61.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on February 05 at $61.75
Average Daily Volume = 4.8 million
Listed on February 01, 2014


iShares Russell 2000 ETF - IWM - close: 109.51 change: +0.86

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:
02/06/14: The small caps bounced with the rest of the market yet the Russell 2000 index (and the IWM) underperformed their big cap rivals. The IWM stalled at round-number resistance near $110.00.

Currently the plan is to buy calls on a dip 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


Lockheed Martin - LMT - close: 151.74 change: +1.35

Stop Loss: 147.00
Target(s): 165.00
Current Option Gain/Loss: -12.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/06/14: Our new trade on LMT has been triggered. With a cooperative market to help it shares of LMT rallied to new two-week highs above short-term resistance near $152.00. Our trigger to buy calls was hit at $152.25. I am a little bit concerned to see LMT fail twice near the $152.60 level midday. While our trade has been opened if you're looking for a new entry point I would consider waiting for a new rally above $152.70 before initiating positions.

Earlier Comments:
Our multi-week target is $165.00. That is a little bit aggressive since the $158-160 zone could be overhead resistance. Plus our stop loss is a little bit wide at $147.00. Use small positions to limit risk.

- Suggested *small* Positions -

Long MAR $155 call (LMT1422C155) entry $2.23

02/06/14 triggered at $152.25

Entry on February 06 at $152.25
Average Daily Volume = 2.4 million
Listed on February 05, 2014


SBA Communications - SBAC - close: 92.00 change: +0.28

Stop Loss: 89.90
Target(s): 99.50
Current Option Gain/Loss: - 23.0%
Time Frame: Exit PRIOR to earnings on February 25th
New Positions: see below

Comments:
02/06/14: Hmm... SBAC didn't perform very well today. Shares only added +0.3% versus a +1.2% gain in the S&P 500 and +1.1% bounce in the NASDAQ. 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

Cardinal Health - CAH - close: 66.27 change: +0.90

Stop Loss: 66.25
Target(s): 60.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
02/06/14: The stock market's widespread bounce on Thursday produced a +1.3% rebound in CAH. Shares remain below their 50-dma. I do not see any changes from our new play description on Wednesday night.

Earlier Comments:
The failure in late January looks like a bearish double top pattern. The pullback has left shares flirting with support near $65.00. Today's low was $64.78. I am suggesting a trigger to buy puts at $64.65. If triggered our target is $60.25. I would keep a wary eye on the simple 100-dma (currently near $61.60), which could be temporary support.

FYI: The Point & Figure chart for CAH is bearish with a $60 target.

Trigger @ 64.65

- Suggested Positions -

Buy MAR $65 PUT (CAH1422o65)

Entry on February -- at $---.--
Average Daily Volume = 2.9 million
Listed on February 05, 2014


CommVault Systems - CVLT - close: 65.39 change: +1.15

Stop Loss: 66.75
Target(s): 60.15
Current Option Gain/Loss: -30.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/06/14: CVLT managed to build on yesterday's oversold bounce. The stock outperformed the major indices with a +1.79% gain. The high today was $66.25. If this rebound continues we could see CVLT hit our stop loss at $66.75. I am not suggesting new positions at this time.

Earlier Comments:
We will aim for $60.15 because the $60.00 level could be support. More aggressive investors may want to aim lower since the Point & Figure chart for CVLT is bearish with a $48.00 target.

- Suggested Positions -

Long MAR $60 PUT (CVLT1422o60) entry $1.95*

02/05/14 trade opened with a gap down at $63.68
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on February 05 at $63.68
Average Daily Volume = 1.1 million
Listed on February 04, 2014


Intl. Business Machines - IBM - close: 174.67 change: +1.38

Stop Loss: 176.55
Target(s): 161.00
Current Option Gain/Loss: -34.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/06/14: Bears and put option buyers need to be careful here. Today's bounce in IBM technically confirms yesterday's bullish reversal candlestick pattern. The only good thing about today's bounce in IBM was how shares failed to breakout past resistance near $175.00 for the second day in a row. Traders may want to abandon ship or lower their stop closer to $175.00. I would wait for a new low under $172.00 before initiating new positions.

If the market rallies on the jobs data tomorrow we will likely see IBM hit our stop.

Earlier Comments:
I am suggesting we limit our risk by using small positions. If triggered our target is $161.00. FYI: The Point & Figure chart for IBM is bearish with a $156 target.

- Suggested *small* Positions -

Long MAR $170 PUT (IBM1422o170) entry $3.50

02/05/14 triggered on gap down at $172.19

Entry on February 05 at $172.19
Average Daily Volume = 6.0 million
Listed on February 03, 2014


Restoration Hardware - RH - close: 56.09 change: +0.13

Stop Loss: 58.25
Target(s): 51.00
Current Option Gain/Loss: -13.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/06/14: RH briefly traded above technical resistance at its 10-dma but eventually pared its gains. I am not suggesting new positions at this time. More conservative traders may want to lower their stop. Today's high was $57.43.

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: 35.82 change: +1.47

Stop Loss: 38.55
Target(s): 30.25
Current Option Gain/Loss: + 2.4%
Time Frame: exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/06/14: Thursday's widespread market bounce fueled some short covering and SHLD outperformed the major indices with a +4.2% bounce. The stock is near short-term resistance at $36.00 and its 10-dma. I am not suggesting new positions at this time. 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: 93.59 change: +0.77

Stop Loss: 96.55
Target(s): 90.50
Current Option Gain/Loss: +38.1%
Time Frame: Exit PRIOR to earnings on Feb. 14th
New Positions: see below

Comments:
02/06/14: SJM gapped open higher this morning but spent the rest of the session drifting sideways. More conservative traders may want to move their stop loss lower. I am not suggesting new positions at this time.

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

02/05/14 new stop loss @ 96.55
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

McDonald's Corp. - MCD - close: 94.94 change: +1.36

Stop Loss: 94.05
Target(s): 88.00
Current Option Gain/Loss: -30.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
02/06/14: Our MCD put play has been stopped out at $94.05.

I don't see any reason for the outperformance in shares of MCD today. As a matter of fact the stock should have been weak thanks to news that its Japan division saw its profits plunge -53% in 2013 thanks to a -6.2% drop in same-store sales. McDonald's Japan expects 2014 sales to fall for the sixth year in a row. That's hardly bullish. Yet shares of MCD spiked higher this morning and hit our stop loss at $94.05. Chart readers will note the rally stalled at its bearish trend of lower highs.

- Suggested Positions -

APR $90 PUT (MCD1419P90) entry $1.62* exit $1.13** (-30.2%)

02/06/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
02/05/14 triggered at $92.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on February 05 at $92.50
Average Daily Volume = 5.9 million
Listed on February 04, 2014