NEW DIRECTIONAL CALL PLAYS

Fedex Corp. - FDX - close: 84.45 change: +1.80 stop: 80.75

Why We Like It:
The transportation index is still struggling with resistance around the 4,000 level but shares of FDX are poised to breakout to new highs. Shares displayed relative strength today with a 2.1% gain. More aggressive traders might want to buy calls now. I want to see a new high so I'm suggesting a trigger to buy calls at $85.75. I am suggesting readers use small positions given the uninspired performance in the transportation index. If triggered our first target to take profits is at $89.95. Our second target is $94.00. The Point & Figure chart is bullish with a $112 target.

FYI: Readers should note that I'm listing December options, which expire in three weeks. I would prefer to buy January calls but FDX is going to report earnings before December option expiration and we'll exit ahead of the earnings report so there is no need to pay for January's premium.

Suggested Options:
I'm suggesting the December calls. My preference is the $85 strike.

BUY CALL DEC 85.00 FDX-LQ open interest=7085 current ask $2.55

Annotated Chart:

Picked on  November xx at $ xx.xx <-- TRIGGER @ 85.75 (small pos). 
Change since picked:       + 0.00
Earnings Date            12/17/09 (confirmed)
Average Daily Volume =        2.6 million  
Listed on  November 30, 2009         


NEW MARKET NEUTRAL STRANGLE PLAYS

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

Apple Inc. - AAPL - close: 199.91 change: -0.68 stop: n/a

Why We Like It:
AAPL looks like it's at a turning point. The stock has been under performing the market the last few days. Shares have pulled back toward round-number support at the $200 level. This is close to support at its rising 50-dma and the bottom of its rising bullish channel. We should see AAPL rally from here or breakdown. You could argue that the trend is your friend but the rally looks tired off its March lows.

That's why I'm suggesting a strangle. This way we don't care what direction AAPL goes. Our risk is that shares just trudge sideways. I'm listing two different strangles. The December one is cheaper but we've only got three weeks for it to work. The January strangle gives us more time.

Suggested Options:
December Strangle: I'm suggesting the December $210 calls (AJL-LV) and the December $190 puts (APV-XR). Our estimated cost is $3.83. We want to sell if either option hits $8.00 or more.

BUY CALL DEC 210 AJL-LV open interest=42,508 current ask $1.96
-and-
BUY PUT DEC 190 APV-XR open interest=19,295 current ask $1.87

January Strangle: I'm suggesting the January $220 calls (AJL-LV) and the January $180 puts (APV-XR). Our estimated cost is $5.60. We want to sell if either option hits $10.00 or more.

BUY CALL JAN 220 AJL-AX open interest=36,748 current ask $2.82
-and-
BUY PUT DEC 190 APV-MP open interest=11,708 current ask $2.78

Annotated Chart:

Picked on  November 30 at $199.91
Change since picked:       + 0.00
Earnings Date            01/21/10 (unconfirmed)
Average Daily Volume =       15.1 million  
Listed on  November 30, 2009