Editor's Note:

In addition to tonight's new plays these stocks caught my eye and might offer an opportunity. Check them out:

UTHR - After three months of consolidating in the $65-70 zone this drug stocks looks poised to breakdown under support at $65 and its 100-dma. I would consider buying puts on a move under $64.60 and targeting the $60 area or the 200-dma.

ADS - This stock is surging to new relative highs. Instead of chasing it here consider buying calls on a dip in the $82-80 zone.

WSO - Shares just broke out past resistance. It might be a bullish entry point but keep in mind that WSO doesn't move very fast.

XEC - Aggressive traders may want to buy calls on XEC now and target a move toward the highs near $118.

FFIV - Shares of FFIV have been plunging lower. The sell-off has been harsh. I am not suggesting any trades here but aggressive traders might want to watch for a bounce soon. FFIV is nearing what should be significant support near $90.00.

- James


Fossil, Inc. - FOSL - close: 83.04 change: +1.24

Stop Loss: 78.75
Target(s): 84.90, 89.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Company Description:
Fossil Inc. is known for its Fossil branded business and for its multi-brand watch and jewelry business. The Fossil brand consists of watches and accessories as well as clothing and is distributed globally through retail partners and through its 364 Fossil stores. (source: company press release or website)

Why We Like It:
We are going to take another shot at FOSL. The stock has been pretty resilient lately. Traders bought the dip more than once above the $79.00 level in the last two weeks. Investors do not seem very worried about the impact of higher gasoline prices on consumer spending, at least for FOSL's business, not with the stock trading near all-time highs and poised to breakout higher.

Aggressive traders may want to go ahead and buy calls now. I am suggesting we buy calls on a dip at $81.75. An alternative entry point would be to wait for a new breakout past short-term resistance at the $85.00 level. If we are triggered at $81.75 we'll use a stop at $78.75 and our first target is $84.90. Our second and final target is $89.75. More aggressive traders might want to aim higher. The Point & Figure chart for FOSL is bullish with a $106 target.

Buy-the-Dip Trigger at $81.75

- Suggested Positions -

Buy the April $85 calls (FOSL1116D85) current ask $2.25

- or -

Buy the May $85 calls (FOSL1121E85) current ask $4.70

Annotated Chart:

Entry on March xxth at $ xx.xx
Earnings Date 05/10/11 (unconfirmed)
Average Daily Volume = 1.0 million
Listed on March 22nd, 2011


Everest Re Group Ltd. - RE - close: 81.68 change: -1.30

Stop Loss: 84.25
Target(s): 76.00, 71.00
Current Option Gain/Loss: - 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It seems like it has been a rough year to be an international insurance company. The world has seen "biblical" floods in Australia. There were major earthquakes in New Zealand. Now Japan has suffered the combination of earthquake and tsunami. RE's management admitted that they expect losses from Japan to be significant but it's way too early to start making estimates. Given all the bad news I suspect the path of least resistance for RE could be down.

The stock is struggling to hold on to support near $82 and its 200-dma. Tuesday's action looks like another failed rally pattern and entry point to buy puts. Granted the bulls could argue that all the bad news is baked into the stock but that proposal doesn't hold water since we don't know what the liabilities for Japan might be.

I am suggesting bearish positions now with a stop loss at $84.25. Our targets are $76.00 and $71.00. I would keep our position size small to limit our exposure.

- Open Small Bearish Positions Now -

Buy the April $80 PUTs (RE1116P80) current ask $1.30

- or -

Buy the May $80 PUTs (RE1121Q80) current ask $2.50

Annotated Chart:

Entry on March 23rd at $ xx.xx
Earnings Date 04/28/11 (unconfirmed)
Average Daily Volume = 381 thousand
Listed on March 22nd, 2011