Editor's Note:

The U.S. market ignored disappointing jobs data (again) and continued its oversold bounce on Friday.

We have removed IWM and CAH as potential trades.

SBAC, IBM and RH hit our stop loss.


Current Portfolio:


CALL Play Updates

Salesforce.com - CRM - close: 61.55 change: -0.15

Stop Loss: 59.40
Target(s): 67.50
Current Option Gain/Loss: - 9.0%
Time Frame: Exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/08/14: I am suggesting caution on our CRM trade. The stock market has produced a strong two-day bounce and CRM did not really participate, which is a warning signal. Granted shares were showing strength prior to the market's rebound but it seems odd that CRM would stall as the market moved higher. There appears to be new short-term resistance in the $62.65-62.75 area.

I am not suggesting new positions at this time.

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.

chart:

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


Harman Intl. - HAR - close: 102.93 change: -0.18

Stop Loss: 102.45
Target(s): 114.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
02/08/14: The rebound in HAR also stalled on Friday, which is odd since the broader market produced a widespread gain on Friday. The overall trend remains positive. I don't see any changes from the new play description from Thursday night.

Earlier Comments:
I am suggesting small positions to limit our risk. The intraday high for HAR is $105.58. I am suggesting a trigger to buy calls at $105.75. If triggered our target is $114.00.

Trigger @ 105.75

- Suggested Positions -

buy the APR $110 call (HAR1419D110) current ask $2.50

chart:

Entry on February -- at $---.--
Average Daily Volume = 1.2 million
Listed on February 06, 2014


Lockheed Martin - LMT - close: 155.13 change: +3.39

Stop Loss: 149.65
Target(s): 165.00
Current Option Gain/Loss: +43.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/08/14: LMT shot higher on Friday morning and outperformed the major indices with a +2.2% gain. I am raising our stop loss to $149.65. Broken resistance near $152.00 should offer new support so more conservative traders may want to use a higher stop loss.

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

02/08/14 new stop loss @ 149.65
02/06/14 triggered at $152.25

chart:

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




PUT Play Updates

CommVault Systems - CVLT - close: 66.52 change: +1.13

Stop Loss: 66.75
Target(s): 60.15
Current Option Gain/Loss: -48.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
02/08/14: Our CVLT trade is in trouble. The widespread two-day market bounce has fueled an oversold rebound in CVLT. Shares almost hit our stop loss at $66.75. The high on Friday was $66.65. If there is any follow through higher on Monday we will see shares hit our stop. I am not suggesting new positions at this time.

- Suggested Positions -

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

02/08/14 CVLT is poised to hit our stop loss on Monday
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.

chart:

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


Sears Holding - SHLD - close: 35.50 change: -0.32

Stop Loss: 37.55
Target(s): 30.25
Current Option Gain/Loss: + 9.2%
Time Frame: exit PRIOR to earnings in late February
New Positions: see below

Comments:
02/08/14: SHLD continues to perform well for the bears. The rally attempt on Friday failed below short-term resistance near $36.50. We're adjusting our stop loss down to $37.55.

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

02/08/14 new stop loss @ 37.55
01/31/14 triggered @ $35.85

chart:

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: 93.37 change: -0.22

Stop Loss: 95.55
Target(s): 90.50
Current Option Gain/Loss: +41.8%
Time Frame: Exit PRIOR to earnings on Feb. 14th
New Positions: see below

Comments:
02/08/14: SJM also displayed relative weakness on Friday. The stock briefly spiked above the $94.00 level but settled with a -0.2% decline. I am adjusting our stop loss down to $95.55. 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 @ 95.55
02/05/14 new stop loss @ 96.55
02/03/14 triggered @ 96.25

chart:

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



CLOSED BULLISH PLAYS

iShares Russell 2000 ETF - IWM - close: 110.75 change: +1.24

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

Comments:
02/08/14: The market has produced a sharp rebound from its lows on Wednesday. Our IWM trade did not open and we do not want to chase the bounce.

This ETF stalled just below its 100-dma and 10-dma on Friday. If shares push higher the next level of resistance could be $112 or its 50-dma near $113.

We are removing IWM as an active candidate. Our trade did not open.

Trade did not open.

02/08/14 removed from the newsletter, trigger was not hit at $106.00
02/03/14 STRATEGY adjustment: New trigger buy the dip at $106.00,
move the stop loss to $103.75, change the option strike.

chart:

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


SBA Communications - SBAC - close: 92.91 change: +0.91

Stop Loss: 89.90
Target(s): 99.50
Current Option Gain/Loss: - 48.7%
Time Frame: Exit PRIOR to earnings on February 25th
New Positions: see below

Comments:
02/08/14: SBAC bounced from support near $90.00 on Tuesday's decline. It wasn't so lucky on Friday. Most of the market shot higher on Friday morning. Not so for shares of SBAC, which moved lower. The stock pierced support near $90.00 and fell to an intraday low of $89.82 before reversing higher and climbing to a +0.9% gain by the closing bell.

The weakness on Friday morning appears to be a reaction to a downgrade by Citigroup from a "buy" to a "neutral". Unfortunately our stop loss was hit at $89.90.

I would keep an eye on SBAC for rally past $94.00 as an alternative entry point to launch new positions.

- Suggested Positions -

Long MAR $95 call (SBAC1422C95) entry $1.95 exit $1.00* (-48.7%)

02/07/14 stopped out thanks to an analyst downgrade Friday morning
*option exit price is an estimate since the option did not trade at the time our play was closed.
01/31/14 triggered at $93.05

chart:

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


CLOSED BEARISH PLAYS

Cardinal Health - CAH - close: 67.54 change: +1.27

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

Comments:
02/08/14: CAH is not cooperating. The stock market's big two-day bounce has produced a similar rebound in CAH. We had been waiting for a breakdown below support but that seems unlikely at the moment. Our trade did not open.

Trade did not open.

02/08/14 removed from the newsletter. suggested entry trigger was not hit at $64.65.

chart:

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


Intl. Business Machines - IBM - close: 177.25 change: +2.58

Stop Loss: 176.55
Target(s): 161.00
Current Option Gain/Loss: -55.7%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/08/14: The stock market's big bounce on Friday sparked more short covering in IBM. The stock gapped open higher above short-term resistance at $175.00 and it was all over from there. IBM raced past its 10-dma and closed up +1.47%. Our stop loss was hit at $176.55.

Earlier Comments:
I am suggesting we limit our risk by using small positions.

- Suggested *small* Positions -

Long MAR $170 PUT (IBM1422o170) entry $3.50 exit $1.55*(-55.7%)

02/07/14 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 on gap down at $172.19

chart:

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


Restoration Hardware - RH - close: 59.77 change: +3.68

Stop Loss: 58.25
Target(s): 51.00
Current Option Gain/Loss: -48.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
02/08/14: The stock market's rally on Friday morning looked like more short covering. The sharp +6.5% gain in RH on Friday also looks like short covering. Shares hit our stop loss at $58.25.

*Small Positions* - Suggested Positions -

MAR $55 PUT (RH1422o55) entry $3.00* exit $1.55** (-48.3%)

02/07/14 stopped out
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.

chart:

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