NEW DIRECTIONAL CALL PLAYS

CenturyLink, Inc. - CTL - close: 43.04 change: +0.38

Stop Loss: 41.45
Target(s): 44.90, 47.25
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Company Description:
CenturyLink is a leading provider of high-quality broadband, entertainment and voice services over its advanced communications networks to consumers and businesses in 33 states. CenturyLink, headquartered in Monroe, La., is an S&P 500 company and is included among the Fortune 500 list of America's largest corporations. (source: company press release or website)

Why We Like It:
Shares of CTL have managed to hold on to their gains in spite of management's disappointing fourth quarter guidance. Now the stock looks poised to breakout higher after four weeks of consolidating sideways and digesting its September-October gains. If CTL does rally to new relative highs it could see another short squeeze since CTL has above average short interest. Aggressive traders may want to buy calls on CTL now. I am suggesting we use a trigger to buy a dip at $42.55. If triggered we'll use a stop at $41.45. Our first target is $44.90. Our second target is $47.25. An alternative entry point would be to buy calls on a breakout past $43.25.

FYI: Investors should know that CTL is currently involved with a $10.6 billion stock-swap merger with Qwest Communications (Q). The merger isn't supposed to be completed until the first half of 2011. The trend for both stocks is up and naturally looks very similar following the M&A announcement.

Trigger @ $42.55

Suggested Position: Buy the 2011 January $45.00 calls (CTL1122A45) current ask $0.25

Annotated Chart:

Entry on November xxth at $ xx.xx
Earnings Date 02/22/11
Average Daily Volume = 3.0 million
Listed on November 27th, 2010


Nucor Corp. - NUE - close: 37.54 change: -0.42

Stop Loss: 36.85
Target(s): 40.00
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: Yes

Company Description:
Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler (source: company press release or website)

Why We Like It:
Investors seem a bit confused over the future of NUE. The company's latest earnings report back in October was not very impressive. This is more of a technical play than a play on NUE's business. The stock was trading in a range before its earnings report and it continues to trade in a range now. You might call this a channeling stock. Right now NUE is near the bottom of its channel. If we were going to make a bullish bet on NUE this is the spot. There is support near $37.00 so I'm suggesting a stop loss at $36.85. I am suggesting we buy calls at current levels. Our target is the $40.00 level. More aggressive traders could aim for the $41 region.

Suggested Position:
Buy the 2011 January $37.00 calls (NUE1122A37) current ask $1.88
- or -
Buy the 2011 January $40.00 calls (NUE1122A40) current ask $0.70

Annotated Chart:

Entry on November 29th at $ xx.xx
Earnings Date 01/26/11
Average Daily Volume = 3.5 million
Listed on November 27th, 2010