Editor's Note:
We've got three new candidates tonight. I'd like to build up the OI newsletter so we're always carrying 12 to 15 active candidates (not just candidates waiting to be triggered). That's going to be tricky, especially right now since we don't want to chase new highs. However, to actually carry that many trades we might be making some format changes in the play updates and new plays section of the newsletter. I wanted to let you know now so you can bear with me as we find the right mix and layout. Please note I'm listing some additional ideas here in the editor's note.

- James

More Trading Ideas:

ESS - I was tempted to buy calls on ESS now but I think we might get a better entry point on a dip near $114.00.
BWA - this stock is screaming higher. We don't want to chase it. Keep an eye on what should be short-term support near $55.00.
BIIB - This biotech stock is seeing a mild correction after rallying to new two-year highs. Keep an eye on the $60 level as potential support.
BA - Shares are consolidating under resistance near $72.00-72.50. Readers may want to use a trigger or wait for a close over $72.50 as a bullish entry point.
UPS - UPS has rallied right to major resistance near $70.00. I would consider a trigger over $70.00 (maybe 70.25) as a potential entry point. However, the May high of $71.00 could be resistance.
FCX - Commodity names are moving higher again. FCX just broke out from a three-week consolidation pattern. I'm waiting for a dip toward $101 or $100 as a possible entry point.


NEW DIRECTIONAL CALL PLAYS

Caterpillar - CAT - close: 83.54 change: +0.36

Stop Loss: 79.40
Target(s): 84.85, 89.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description:
For more than 85 years, Caterpillar Inc. has been making progress possible and driving positive and sustainable change on every continent. With 2009 sales and revenues of $32.396 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. (source: company press release or website)

Why We Like It:
Shares of CAT spent more than five weeks consolidating sideways on either side of $80.00. Now with the market breaking out to new multi-month highs, CAT has broken out and closed at new two-year highs. We don't want to buy calls just yet. The $85.00 level is pretty heavy resistance. The plan is to wait for a dip. I'm suggesting a trigger to buy calls at $81.75. We'll use a stop loss at $79.40. If triggered our first target is $84.85. We want to exit the majority of our position here. We'll set a secondary target at $89.50 but again I warn you the $85 level should be touch resistance. FYI: The P&F chart is bullish with a $118 target.

Trigger @ 81.75

Suggested Position:
Buy the December $85.00 calls (symbol: CAT1018L85), current ask $2.18

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 01/27/11
Average Daily Volume = 7.7 million
Listed on November 6th, 2010


Costco Wholesale - COST - close: 65.40 change: -0.08

Stop Loss: 62.90
Target(s): 69.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description:
Costco currently operates 577 warehouses, including 420 in the United States and Puerto Rico, 80 in Canada, 22 in the United Kingdom, seven in Korea, six in Taiwan, nine in Japan, one in Australia and 32 in Mexico. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com and at www.costco.ca in Canada. The Company plans to open up to five additional warehouses in the next two months, prior to the end of calendar year 2010. (source: company press release or website)

Why We Like It:
I like the breakout in COST this past week. Shares spent the month of October consolidating previous gains. Friday's action looks like a failed rally at $65.00, which will hopefully lead to a minor pull back. I'm suggesting we buy calls on a dip to $64.50. If triggered we'll use a stop loss at $62.90. Our upside target is $69.00.

Trigger @ 64.50

Suggested Position:
Buy the December $65.00 calls (symbol: COST1018L65) current ask $1.91

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 12/09/10
Average Daily Volume = 3.4 million
Listed on November 6th, 2010


Nike Inc. - NKE - close: 84.11 change: +0.70

Stop Loss: 79.90
Target(s): 87.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description:
NIKE, Inc. based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned Nike subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand. (source: company press release or website)

Why We Like It:
NKE has delivered a very impressive performance once it broke out past $75.00 several weeks ago. Now instead of correcting the stock spent most of October consolidating sideways. We want to hop on board but not at new highs. I'm suggesting we use a trigger at $82.50 to buy calls. We'll use a stop loss at $79.90. Our first target is $87.25. FYI: The Point & Figure chart is very bullish with a long-term target of $115.

Trigger @ 82.50

Suggested Position:

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 12/21/10
Average Daily Volume = 2.3 million
Listed on November 6th, 2010