JCPenney (JCP) January 32 and February 30 puts are active with total call volume of 18K calls, 10K puts. Pershing Square reported a 16.5% stake in the company on October 8th. Overall option implied volatility of 37 is below its 26-week average of 41 according to Track Data, suggesting decreasing price movement.

Amazon (AMZN) February put option implied volatility is at 38, July is at 37; near its 26-week average of 36 into Q4 EPS on January 27, suggesting slightly larger price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

One of the top growth companies over the past couple years has been Netflix (NFLX). The company has effectively transitioned from its DVD delivery business to streaming. However, the competition is heating up, and it is getting more expensive to license content.

Actually, one of the biggest competitive threats is Amazon.com (AMZN). Thursday the company announced that it has purchased LoveFilm, which is an online video rental service that's based in Europe.

Analyst Upgrades

• Diamond Offshore (DO) to conviction buy from sell and Baker Hughes (BHI) to buy from neutral at Goldman.
• Frontier Communications (FTR) to outperform from market perform at Wells Fargo.
• Syntel (SYNT) to outperform from market perform at Wells Fargo, to buy from hold at Deutsche Bank and to buy from neutral at Janney Capital.
• Kulicke & Soffa (KLIC) and Fiserv (FISV) to outperform from perform at Oppenheimer.
• 3M (MMM) to neutral from underweight and Tyco (TYC) to overweight from neutral at JPMorgan.
• Collective Brands (PSS) and Nordstrom (JWN) to overweight from equal weight, as well as Foot Locker (FL) to equal weight from underweight, at Morgan Stanley.
• Amazon.com (AMZN) to buy from hold at Lazard Capital.
• Yamana Gold (AUY) to outperform from neutral at Credit Suisse.

The Chicago Board Options Exchange (CBOE) announced that for the first time it will apply its CBOE Volatility Index (VIX) methodology to options on individual stocks when it begins publishing volatility values on five highly active equities on Friday, Jan. 7.

CBOE will calculate values for Apple (ticker symbol: VXAPL), Amazon (ticker symbol: VXAZN), IBM (ticker symbol: VXIBM), Google (ticker symbol: VXGOG), and Goldman Sachs (ticker symbol: VXGS).

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

As the e-commerce boom continues, the shares of Amazon.com (AMZN) have been hitting new highs. The company now sports a market cap of a hefty $83 billion.

Besides strong customer service -- and tremendous efficiency -- Amazon.com has also been adept at consolidating markets. It's a big help to consumers.

Monday morning, Amazon.com (AMZN) announced that the third-generation Kindle is now its best-selling product of all time, unseating former title-holder Harry Potter and the Deathly Hallows. Amazon didn't provide specific sales figures for the e-reader, but the retail giant added that more Kindle books were purchased this past Christmas Day than on any other day in history -- confirming that the gadgets are quite a popular gift.

Meanwhile, Nov. 29 -- or "Cyber Monday" -- was the peak day for holiday shopping on Amazon. More than 13.7 million items were ordered worldwide on the Monday after Thanksgiving, which translates to about 158 items per second.

Analyst Upgrades

• Thoratec (THOR) to buy from neutral at UBS.
• TW Telecom (TWTC) to buy from hold at Citigroup.
• TAL Education (XRS) to overweight from neutral at Piper Jaffray.
• Amedisys (AMED) to buy from hold at Deutsche Bank.

Analyst Downgrades

• Navigators (NAVG) to neutral from outperform at Macquarie.
• El Paso Electric (EE) to hold from buy at Jefferies.
• Hancock Holding (HBHC) to hold from buy at Wunderlich.
• California Water Service (CWT) and American States Water (AWR) to neutral from buy at Janney Capital.
• Mednax (MD) to hold from buy at Deutsche Bank.

"While the past decade has been tough on investors, some stocks have stood out and managed to soar," notes growth stock specialist Stephen Leeb, adding "Indeed, both Amazon (AMZN) and Apple (AAPL) -- which are both holdings in our growth portfolio -- recently hit all-time highs."

The editor of The Complete Investor explains, "These two stocks don't say much about tech itself, which, is a slow-growth area. Rather they demonstrate the power of a franchise.

"Further, these are not just any franchises, they're ones that uniquely affect consumer productivity and enjoyment.

Amazon (AMZN) may be an online retailer, but it is a retailer nevertheless. A big one, in fact. Consumers are increasingly turning to this site to make their shopping chores a little easier, especially during the Christmas season. With holiday buying in full force, my mind turned to this particular stock. How is it looking these days?

No, it isn't cheap. But while this equity can't necessarily be called one for the deep-value players out there, growth investors want to know if it's okay to pay up for this idea. After all, that's one of the essential concepts behind growth: you might pay a premium today, but you'll be paid back tomorrow with capital appreciation.

Google's (GOOG) management philosophy is to launch quickly and then to iterate. However, in the case of its eBook project, the process has been fairly slow. But after several years, it is finally open to the virtual public.

All in all, it's a pretty good resource, with three million books from over 4,000 publishers. Roughly two-thirds of these titles are free (since they are now part of the public domain).

There are definitely a lot of happy Beatles fans out there today, as Apple Inc. (AAPL) announced that it would finally be selling Beatles material through its iTunes store.

Fans have been waiting, not-so-patiently, for this to happen for years now, and today it has finally arrived. Apple wrote on its website that "In 1964, the band that changed everything came to America. Now they're on iTunes."

I was reading a rather interesting article in The Wall Street Journal (subscription required) about the potential for a holiday toy war between Target (TGT) and Walmart (WMT). The price war centers on toys because "parents will buy stuff for their kids even when the economy is awful."

The article adds that shoppers have attempted to buy the "biggest toy bargains" while "ignor[ing] stores' other offerings." However, the article is quick to point out improving economic conditions suggest that retailers have a reason to believe the shoppers will look around the store a bit more and be quicker to part with some cash. Is this a safe assumption? Yes, I think that it is. However, I have a couple of reservations.

OfficeMax (OMX - option chain) shares are rising today after the company reported Q3 earnings this morning, posting a profit of $19.96 million, or 23 cents per share, on revenue of $1.81 billion. Analysts had forecast a profit of 12 cents per share on revenue of $1.82 billion. This company has been struggling to deal with increased competition from Internet retailers like Amazon.com (AMZN) and big-box stores like Staples (SPLS), but today's earnings show some encouraging signs. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on OMX.

OMX opened this morning at $16.52. So far today the stock has hit a low of $16.34 and a high of $17.40. As of 12:10, OMX is trading at $16.93 up $2.08 (14.0%). The chart for OMX looks bearish and S&P gives OMX a negative 2 STARS (out of 5) sell ranking.

Of the many things clouding the equities event horizon, one of the ugliest for investors may be internet retail taxation. A recent tax bill in the amount of $269 million, sent by the state of Texas to Amazon (AMZN) stands as testament to that looming ugliness.

Amazon claims that because technically its distribution activities are headquartered in Kentucky rather than Texas, it owes no retail sales tax to the armadillo state. So, the gauntlet has been thrown down and the challenge accepted.

Analyst Upgrades

• Union Pacific (UNP) and Polycom (PLCM) were upgraded to outperform from market perform at Wells Fargo.
• Time Warner Cable (TWC) was upgraded to outperform from sector perform at RBC Capital.
• Cheesecake Factory (CAKE) was upgraded to neutral from underweight at JPMorgan.
• LaSalle Hotel (LHO) was upgraded to outperform from neutral at RW Baird.
• Graco (GGG) was upgraded to buy from hold at BB&T.
• Valley National (VLY) was upgraded to market perform from underperform at Keefe Bruyette.
• Credit Suisse (CS) was upgraded to hold from sell at RBS.
• U.S. Bancorp (USB) was upgraded to outperform from perform at Oppenheimer.
• Penn National (PENN) and Riverbed (RVBD) were upgraded to buy from hold at Jefferies.
• Goodrich (GR) was upgraded to outperform from neutral at Cowen.
• Amazon.com (AMZN) upgraded to buy from average at Caris.