Editor's Note:

The rally in stocks reversed midday and the S&P 500 closed near its low for the session. That doesn't bode well for tomorrow.

Today's market weakness was strong enough to see DIN, HD, and SBUX all hit our stop loss. We've decided to remove FFIV as a candidate.

Our bearish trades in ARW and GBX were both triggered.


Current Portfolio:


CALL Play Updates


Currently we do not have any active call trades





PUT Play Updates

Arrow Electronics - ARW - close: 54.64 change: -0.59

Stop Loss: 57.75
Target(s): To Be Determined
Current Option Gain/Loss: + 0.0%
Average Daily Volume = 585 thousand
Entry on December 16 at $54.75
Listed on December 13, 2014
Time Frame: Exit PRIOR to January option expiration
New Positions: see below

Comments:
12/16/14: Our ARW trade is now open. Shares continued to sink and broke down below technical support at the 50-dma. ARW hit our suggested entry point at $54.75. I would still consider new bearish positions at current levels.

Earlier Comments: December 13, 2014:
ARW is in the services sector. The company sells electronic components at the wholesale level. The company describes itself as "a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 100,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 460 locations in 58 countries."

Most of this year ARW has been reporting results that beat Wall Street's bottom line estimates but they kept missing the revenue number. That changed with their Q3 results when ARW reported on October 29th. ARW managed to beat estimates on both the top and bottom line with revenues up +11% from a year ago. Management offered relatively bullish guidance. Yet the stock did not react. That appears to be the mystery.

ARW's share price performance immediately slowed down following its Q3 report. You can see on the daily chart below that ARW plunged with the market's correction in September and October. Yet while the S&P 500 lost about -10% during that pullback shares of ARW lost more than -25%. When the market started to bounce ARW followed but its rally stalled after its Q3 report. The S&P 500 and the NASDAQ continued to rally and broke out to new highs for the year. ARW was unable to follow suit. Now the stock appears to be reversing after a failed rally at round-number resistance near the $60 mark.

With the new lower high there is a good chance the weakness in ARW continues. The stock never reversed its massive sell signal on its P&F chart. Tonight we are suggesting a trigger to open bearish positions at $54.75. More aggressive traders may want to jump in earlier (like a drop under $56.00) but we would like to see ARW trade below its simple 50-dma (currently $55.22).

- Suggested Positions -

Long Jan $55 PUT (ARW150117P55) entry $2.00

12/16/14 triggered @ 54.75
Option Format: symbol-year-month-day-call-strike


The Greenbrier Companies - GBX - close: 43.06 change: -0.68

Stop Loss: 47.05
Target(s): To Be Determined
Current Option Gain/Loss: -25.6%
Average Daily Volume = 940 thousand
Entry on December 16 at $43.25
Listed on December 15, 2014
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
12/16/14: Today's market decline also triggered our new bearish trade in GBX. The stock's initial rally, like the market's, failed this morning and GBX sank to new multi-month lows. Our suggested entry point was hit at $43.25 and I would still consider new put positions at current levels.

Earlier Comments: December 15, 2014:
Railroad-related stocks have seen a dramatic shift thanks to the sell-off in crude oil.

GBX is in the services sector. The company manufacturers railroad freight cars and ocean-going barges. They also refurbish freight railroad cars. New rules by the White House on railroad tanker cars that carry crude oil should mean strong business for GBX as companies are forced to either buy new cars or refurbish old ones to meet the new requirements.

The last couple of earnings reports from GBX have been bullish. They have strong revenue growth. Management raised their 2015 earnings guidance with their last report back in October. GBX has a huge backlog. Yet none of this seems to matter at the moment. The market is transfixed on the death spiral in crude oil prices.

How does crude oil impact the railroad stocks? The shale oil revolution in the U.S. has been a major boon for the railroads. A lot of the shale oil drilling has taken place in regions with limited or no pipelines available to move the oil to be refined. That has boosted huge demand to transport oil by rail. Forbes noted that back in 2008 there were only 9,500 car loads of oil shipped by train. Yet by 2013 that has blossomed to 407,761 carloads. The first six months of 2014 saw 229,800 carloads of oil shipped by train.

Unfortunate, OPEC, mainly the Saudis, have declared war on all other oil producers, including the U.S. shale oil industry. When OPEC met on Thanksgiving they decided to not cut production knowing full well it would drive the price of oil lower. The very next day shares of GBX plunged.

Analysts have estimated that the average price to produce U.S. shale oil is in the $70-80 per barrel range. Today WTI crude oil is at $55.69 a barrel. E&P companies are not going to produce oil at a loss. That's going to cut back demand to transport oil by rail. However, it's not just oil transports the rail companies are missing out on. If the U.S. energy sector cuts back on shale oil drilling it will also reduce the need to move tons of fracking sand and metal pipes to drill all of those wells. If that wasn't bad enough the depressed oil prices mean cheaper gas and that makes trucking companies more of a competitor to normal transportation of goods.

GBX is not a railroad. They are a derivative trade on the rails and seem to be a lot more volatile. Right now the momentum is lower. GBX has spent the last few days trying to hold support at $45.00 and it has failed. The $40.00 mark might be round-number support but the next support level looks like it's closer to $37.00. The point & figure chart is forecasting at $24.00 target.

Tonight we are suggesting a trigger to open bearish positions at $43.25. We'll try and limit our risk with a stop loss at $47.05, which is just above today's high. That's a relatively wide stop loss. I do consider this a more aggressive, higher-risk trade due to the volatility. The most recent data listed short interest at 27% of the small 23.3 million share float and that raises the risk of a short squeeze (more volatility). Consider using small positions to limit your risk.

Keep in mind that this could be a short-term three or four week trade. GBX will most likely report its Q4 earnings in the early to mid January and we'll plan on exiting prior to the report.

*small positions* - Suggested Positions -

Long JAN $40 PUT (GBX150117P40) entry $2.15

12/16/14 triggered @ 43.25
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

DineEquity, Inc. - DIN - close: 99.72 change: -0.10

Stop Loss: 97.35
Target(s): To Be Determined
Current Option Gain/Loss: +100.0%
Current Option Gain/Loss if you sold the Dec $100 call: +500.0%
Average Daily Volume = 154 thousand
Entry on November 05 at $91.55
Listed on November 04, 2014
Time Frame: Exit PRIOR to December 20th option expiration
New Positions: see below

Comments:
12/16/14: DIN finally succumbed to the market's sell-off. Shares broke their trend of higher lows and underperformed with a -2.85% decline as traders rushed to lock in profits.

Our stop loss was hit at $97.35, closing both the long call positions and the short-call position.

- Suggested Positions -

DEC $95 call (DIN141220c95) entry $1.20 exit $2.40 (+100.0%)

December 15, 2015, at the open, sold the Dec. $100 call
Short DEC $100 call (DIN141220c100) entry $1.10 exit $0.30
If you bought the $95 call and sold the $100 then the trade is +500.0%

12/16/14 stopped out at $97.35
12/15/14 sold the Dec $100 call at the open
12/13/14 Sell the Dec. $100 call on Monday, Dec. 15th
12/10/14 new stop @ 97.35
12/06/14 only two weeks left on our December options
11/29/14 new stop @ 96.85
11/26/14 new stop @ 94.85, traders may want to take profits here!
11/22/14 new stop @ 93.85
11/19/14 new stop @ 92.75
11/13/14 new stop @ 92.25
11/12/14 new stop @ 91.45
11/08/14 new stop @ 89.65
11/05/14 triggered @ 91.55
Option Format: symbol-year-month-day-call-strike

chart:


F5 Networks - FFIV - close: $128.27 change: -1.99

Stop Loss: 129.65
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 965 thousand
Entry on December -- at $---.--
Listed on December 11, 2014
Time Frame: Exit PRIOR to earnings on January 21st, 2015
New Positions: see below

Comments:
12/16/14: The stock market is not cooperating and shares of FFIV are following the market lower. Today's decline (-1.5%) looks like a breakdown of the short-term trend of higher lows.

Our FFIV trade has not been triggered yet. Tonight we are removing FFIV as an active candidate.

Trade did not open.

12/16/14 removed from the newsletter, suggested entry was $133.80

chart:


The Home Depot - HD - close: 97.06 change: -2.99

Stop Loss: 97.25
Target(s): To Be Determined
Current Option Gain/Loss: -24.8%
Average Daily Volume = 6.4 million
Entry on December 08 at $100.25
Listed on December 06, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/16/14: HD had been holding pretty well but its relative strength vanished today. Whatever dam that was keeping the sellers in check finally broke. Shares lost -2.9% and closed near their lows of the session. Our stop was hit at $97.25.

- Suggested Positions -

FEB $105 CALL (HD150220C105) entry $1.21 exit $0.91 (-24.8%)

12/16/14 stopped out @ 97.25
12/08/14 triggered @ 100.25
Option Format: symbol-year-month-day-call-strike

chart:


Starbucks Corp. - SBUX - close: 79.13 change: -1.76

Stop Loss: 79.90
Target(s): To Be Determined
Current Option Gain/Loss: -49.3%
Average Daily Volume = 4.0 million
Entry on December 10 at $83.55
Listed on December 09, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/16/14: Last week's relative strength in SBUX has expired. The stock is down sharply two days in a row. Yesterday saw it break support near $82.00. Today SBUX has broken what should have been support at $80.00. Our stop was hit at $79.90.

The longer-term story for SBUX remains bullish. I'd keep this stock on your watch list. We'll play it again.

- Suggested Positions -

Feb $85 CALL (SBUX150220C85) entry $2.29 exit $1.16 (-49.3%)

12/16/14 stopped out at $79.90
12/10/14 triggered @ 83.55
Option Format: symbol-year-month-day-call-strike

chart: