Editor's Note:

The U.S. Federal Reserve's FOMC promised to be patient on rate hikes and stocks soared.

The widespread rally was rough for the bears. We saw CTXS hit both our entry point and then our stop loss in the same day.


Current Portfolio:


CALL Play Updates


Currently we do not have any active call trades





PUT Play Updates

Arrow Electronics - ARW - close: 55.36 change: +0.72

Stop Loss: 57.75
Target(s): To Be Determined
Current Option Gain/Loss: -25.0%
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:
12/17/14: The market's widespread bounce on Wednesday lifted ARW to a +1.3% gain. If this bounce continues the nearest resistance looks like the $57.00 level. I'm not suggesting new positions at the moment.

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: 46.51 change: +3.45

Stop Loss: 47.05
Target(s): To Be Determined
Current Option Gain/Loss: -60.5%
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:
12/17/14: It was a volatile day for shares of GBX. Crude oil spiked higher but pared its gains by the closing bell. The transportation sector rallied but the Dow Jones Transportation average underperformed the S&P 500 with a gain of +0.8% versus +2.0%. Yet something drove big gains for the railroad stocks. The DJUSRR railroad index soared +2.7%. I didn't see any specific news in the railroad industry. Shares of GBX exploded with a +8.0% gain but the rally stalled at short-term technical resistance at the 10-dma.

Today's intraday high was $46.99 and our stop loss is at $47.05. If GBX sees any follow through higher we could see the stock hit our stop loss.

I am not suggesting new positions.

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 BEARISH PLAYS

Citrix Systems - CTXS - close: 61.24 change: +1.58

Stop Loss: 61.15
Target(s): To Be Determined
Current Option Gain/Loss: -17.3%
Average Daily Volume = 1.9 million
Entry on December 17 at $59.45
Listed on December 16, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/17/14: Sometimes stocks do not want to cooperate. We listed a trigger to buy puts on CTXS at $59.45 because we wanted to catch the next move lower and try to avoid launching positions if the market bounced. The market did bounce today. All the major U.S. indices rallied from the opening bell. CTXS initially spiked higher too. Then shares spiked down to a new relative low, hit our trigger at $59.45 and almost immediately rebounded. Shares soared to a +2.6% gain and hit our stop loss at $61.15 in the process.

We were triggered and stopped in the same session.

- Suggested Positions -

MAR $57.50 PUT (CTXS150320P57.50) entry $2.66 exit $2.20 (-17.3%)

12/17/14 Then stopped out at $61.15
12/17/14 triggered @ $59.45
Option Format: symbol-year-month-day-call-strike

chart: