We are out of the AutoZone (AZO, $129.16, up $0.39) trade. The stock managed to close below $130 and stayed in positive territory for most of the day. Shares hit a high of $131 which triggered our stop of $3.30 for the February 115 puts (AZONC, $3.30, down $0.10). The puts did trade to a high of $3.90 on Monday which was just 10 cents away from our exit target.

Sometimes no matter how well you plan a trade you may miss your initial exit target, and in turn, you may give back some gains. It happens. The trade still netted 10% and could go on to do very well. But one of the number one rules in this business is to stick to your trading plan and our stop was hit.

As far as the HSBC Holdings (HBC, $45.85, down $0.85) trades…

After the bell, there were a couple of analysts from Morgan Stanley that said HSBC may have to raise $30 billion and slash its dividend in half. They also said that they didn’t see a recovery in earnings until 2011 at the earliest. Morgan Stanley slashed its 2008 earnings estimates for HSBC to $0.90 a share, down from $1.08 per share, and 2009 estimates as well, to $0.55 from $0.90 cents. For 2010, they brought down estimates to $0.50 from $0.73. There you have it.

HSBC was down another 50 cents in after-hours trading to $45.35. Could this could be the staw that breaks the camel’s back? As far as the stock goes that is. I don’t believe HSBC is in any danger of bankruptcy or that the company will be closing shop anytime soon but I do believe the negative news could impact the shares. We will have to see how it plays out on Wednesday but the stock has a 52-week low of $44.59.

The February 45 puts (HBCNI, $3.20, up $0.45) could have been picked up today at $2.85 and traded to a high of $3.50.

The March put options were again active and there was buying and selling all the way down to the 25 and 30 strike prices. The March 25 puts (HBCOE, $0.85, up $0.20) traded 25,000 contracts…

We are more interested in the 35,40, and 45 puts.

The March 45 puts (HBCOI, $5.10, up $0.50) could have been purchased at $4.75 and the March 40 puts (HBCOH, $3.40, up $0.85) traded at $2.80 shortly after the open. The March 35 puts (HBCOG, $2.15, up $0.65) traded in a range of $1.70-$2.25.

Rick Rouse