9:00am (EST)

The bulls could not follow through with Friday’s last hour comeback as the bears seemed ready to stop any momentum they thought they had.  We mentioned how trading was choppy in our midday update but things got worse from there. 

The Dow finished with a 103 point loss and settled at 9,908.  It was the first close below 10,000 in 3 months for the index.  The Nasdaq ended with a 15 point loss and stands at 2,126 while the S&P fell 9 points to 1,056.

The hits keep coming for Toyota Motor (TM, $72.85, down $1.86) as the company is now recalling nearly a half-million of its Prius hybrid cars for brake issues.  The stock has been volatile of late and last night shares were up $1.70, to $74.55 in after-hours.  This morning, shares are over $75 in pre-market trading.

We have missed a couple of good earnings plays on option trades that we should have pulled the trigger on.  Last Friday we talked about our channel checks for Hasbro (HAS, $34.71, up $3.91) and said we thought the company would beat Wall Street estimates.

The problem is we didn’t want to go long over the weekend and a lot of companies have gotten shelled despite reporting solid earnings.  However, now that we have gotten through the “bulk” of earnings, some of these trades are now working as they are under the earnings radar.

We have talked about the enormous returns (and risks) on options that have less than two weeks before they expire.  The February options expire on the 19 but we should have shot the ball on Hasbro trading higher…

The Hasbro February 32.50 calls (HAS100220C00032500, $2.40, up $2.10) soared 700% yesterday and were trading at 30 cents last Friday… 

We also mentioned in our midday update yesterday that Electronic Arts (ERTS, $17.49, up $0.23) would be reporting after the close.  We haven’t really talked about the company’s recent problems but it is a stock we have followed in the past.  We knew there was a good chance shares were heading lower no matter what they said about their earnings.  Sure enough, EA gave a weak outlook and the stock tanked in after-hours to $16.04, down $1.45. 

At 3:30pm yesterday we took a peak at the February 17 puts (EZQ100220P00017000, $0.47, down $0.15) and thought seriously about sending out a trade. 

Then we wanted to figure out the returns if we made it a strangle trade by adding the February 19 calls (EZQ100220C00019000, $0.26, up $0.12).  We also knew we needed a move of 10% for the stock but we wanted to do some quick research and math.  By the time we finished we didn’t think we could push the trade out to our subscribers with five minutes left before the closing bell sounded so we passed. 

If shares open at $16 or lower the put options will be worth at least $1 which would have been a double straight-up on the put options or a 25% return if you had played a strangle by using the calls and puts.

There are a few other notable companies reporting earnings this week starting with Baidu (BIDU, $443.23, down $5.57) and Walt Disney (DIS, $29.48, down $0.06) after the close today.

On Wednesday, Wall Street will hear from Allstate (ALL, $28.36, down $0.55). 

Thursday earnings include:  Blue Nile (NILE, $49.49, up $0.25), Buffalo Wild Wings (BWLD, $46.48, up $0.11), Chipotle Mexican grill (CMG, $99.92, up $4.72), Las Vegas Sands (LVS, $15,54, down $0.17), Pepsi (PEP, $58.96, down $0.55), Philip Morris (PM, $45.53, down $0.13), Panera Bread (PNRA, $70.96, up $0.36) and Viacom (VIA, $29.70, down $0.46).

Despite yesterday’s sell-off, futures are pointing towards a strong open as the Dow futures are up 78 points to 9,973.  This should translate easily into a triple-digit open for the index and put us back over 10,000.  The S&P 500 futures are up 10 to 1,066.  Meanwhile, the Nasdaq 100 futures are higher by 19 points to 1,753.