NEW DIRECTIONAL CALL PLAYS

Caterpillar - CAT - close: 53.42 change: -0.47 stop: 47.49

Why We Like It:
CAT is a big-cap industrial name that has broken out over serious resistance with last week's rally. Shares now look a little over extended and due for a pull back (as does the market). I'm suggesting readers buy calls on a dip at $50.00. More conservative traders could try and hold out for a dip closer to $49.00. If we are triggered at $50.00 our first target is $54.50. Our second target is $59.00. FYI: The P&F chart is bullish with an $85 target.

Suggested Options:
I am suggesting the October or November calls. Keep in mind that we'll exit ahead of the earnings report around Oct. 20th. My preference is the $55 strike.

BUY CALL OCT 50.00 CAT-JJ open interest=5076 current ask $4.70
BUY CALL OCT 55.00*CAT-JK open interest=6172 current ask $1.85

BUY CALL NOV 55.00*CAT-KK open interest=9681 current ask $3.25

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 50.00
Change since picked:       + 0.00
Earnings Date            10/20/09 (unconfirmed)
Average Daily Volume =         10 million  
Listed on September 19, 2009         


Consol Energy - CNX - close: 46.68 change: +0.31 stop: 39.45

Why We Like It:
Many of the coal stocks have shown relative strength and broken to new 2009 highs. CNX is one of them reaching close to $49 last week. I am suggesting readers buy calls on a dip at $42.50. If triggered our first target is $48.50. Our second target is $52.40. We'll plan to exit ahead of the late October earnings report. FYI: The Point & Figure chart is forecasting a $73 target.

Suggested Options:
I am suggesting October or January calls. October strikes will expire a few days before CNX's earnings report. My preference would be the January $45 strike.

BUY CALL OCT 40.00 SDF-JH open interest=4708 current ask $7.40
BUY CALL OCT 45.00 SDF-JI open interest=1953 current ask $3.70

BUY CALL JAN*45.00 SDF-AI open interest= 267 current ask $6.60

Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER 42.50
Change since picked:       + 0.00
Earnings Date            10/22/09 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on September 19, 2009         


Flowserve - FLS - close: 97.82 change: +0.03 stop: 88.95

Why We Like It:
FLS has displayed impressive relative strength with a big rally off its September lows near $82.00. Now the rally is getting tired under major resistance at $100.00. We want to jump on board but not at resistance. The plan is to buy calls on a dip into the $92.50-90.00 zone. More conservative traders can wait for the lower edge near $90.00. If we are triggered at $92.50 our first target is $99.25. Our second target is $107.50. However, we will plan to exit ahead of the late October earnings report. FYI: The P&F chart is bullish with a $128 target.

Suggested Options:
I would prefer to buy November options but none are available yet. That leaves us with Octobers and Januarys. My preference would be the January 95s.

BUY CALL OCT 90.00 FLS-JR open interest= 794 current ask $9.40
BUY CALL OCT 95.00 FLS-JS open interest=1245 current ask $5.80

BUY CALL JAN*95.00 FLS-AS open interest= 265 current ask $10.70
BUY CALL JAN 100.0 FLS-AT open interest= 159 current ask $ 8.20


Annotated Chart:

Picked on September xx at $ xx.xx <-- TRIGGER @ 92.50
Change since picked:       + 0.00
Earnings Date            10/28/09 (unconfirmed)
Average Daily Volume =        1.2 million  
Listed on September 19, 2009