NEW DIRECTIONAL CALL PLAYS

Volatility Index - $VIX - close: 24.24 change: +1.20 stop: 21.90

Why We Like It:
As stocks start to roll over under resistance one way to play a decline is a rise in the volatility index. I'm suggesting readers buy calls on the VIX right here with a stop loss under Wednesday's low. Our exit target is $30.00. This should be a relatively quick trade. I'm suggesting small positions.

Suggested Options:
VIX options are cash settled. I'm suggesting the December calls. My preference is the 30.00 strike.

BUY CALL DEC 30.00 VIX-LF open interest=109,541 current ask $1.30

Annotated Chart:

Picked on  November 12 at $ 24.24 
Change since picked:       + 0.00
Earnings Date            --/--/--
Average Daily Volume =         xx million  
Listed on  November 12, 2009         


NEW DIRECTIONAL PUT PLAYS

Baidu Inc. - BIDU - close: 427.15 change: -3.36 stop: 441.00

Why We Like It:
The trend on BIDU is clearly bullish. Shares have been marching higher since January 2009. After a run from $110 to $440 the stock sold off sharply following its recent earnings report. The stock has bounced back toward its pre-earnings levels near resistance at $440.00.

I suspect that BIDU will retreat again so I'm suggesting put positions. This is a very aggressive, high-risk trade. The stock can be very, very volatile. However trading options is a better way to reduce your risk than trading the stock. I'm suggesting very small positions. We'll use a stop above the 2009 highs. Our target to exit is $360.00.

Suggested Options:
I'm suggesting the December puts. Options are very expensive. This is already an aggressive trade and I'm making it more speculative with a deep, out of the money put. I'm suggesting the $370 put.

BUY PUT DEC 370 BPJ-XN open interest=1095 current ask $5.90

Annotated Chart:

Picked on  November 12 at $427.15
Change since picked:       + 0.00
Earnings Date            02/18/09 (unconfirmed)
Average Daily Volume =        2.7 million  
Listed on  November 12, 2009         


Northern Trust - NTRS - close: 49.18 change: -2.46 stop: 52.25

Why We Like It:
NTRS is a regional bank that has been under performing the market and its peers. Shares were trying to bounce from support near $50.00 but reversed sharply on Thursday. I'm suggesting bearish positions now. We'll use a stop above Wednesday's high. Our first target to take profits is at $45.25. Our second target is $41.00. The Point & Figure chart is bearish with a $39.00 target.

Suggested Options:
I'm suggesting the December puts. My preference is the $50 strike.

BUY PUT DEC 50.00 NRQ-XJ open interest=1441 current ask $2.65

Annotated Chart:

Picked on  November 12 at $ 49.18
Change since picked:       + 0.00
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =        3.0 million  
Listed on  November 12, 2009         


Research In Motion - RIMM - close: 62.98 change: -1.73 stop: 65.26

Why We Like It:
It looks like the oversold bounce in RIMM has stalled at the $65.00 level. I'm very tempted to launch put positions now but I want to see a little follow through first. I'm suggesting traders use a trigger at $61.80 to open bearish positions. If triggered our first target is $55.25. Our second target is $50.50. RIMM can be a volatile stock so I'm suggesting smaller position sizes.

Suggested Options:
We want to use the December puts. I'm suggesting the $60 strike.

BUY PUT DEC 60.00 RFY-XL open interest=18,726 current ask $3.20

Annotated Chart:

Picked on  November xx at $ xx.xx <-- TRIGGER 61.80
Change since picked:       + 0.00
Earnings Date            12/17/09 (unconfirmed)
Average Daily Volume =       18.9 million  
Listed on  November 12, 2009